With most conference events in 2020 migrating from their traditional physical environments into the digital realm, so it was the case for the Symphony Innovate 2020 event, which saw participants congregate online in a reflection of changing work habits and patterns associated with the global pandemic.
COVID-19 has challenged the robustness of banks’ model risk management and EUC policies. In a context where market behaviors are uncertain and changing rapidly, banks need to adapt their approach to model risk management in order to keep business running as usual, whilst maintaining the quality of their pre-pandemic controls.
Beginning in the early 2000s, when the algorithms and software capable of performing transaction cost analysis (TCA) on a semi-automated basis first became prevalent, the definition of the function was always: a method of determining the effectiveness of a set of transactions performed by a counterparty – the key word within that definition being ‘effectiveness.’
Despite astronomical sums being spent by banks on surveillance – almost US$ 740m by 15 surveyed Tier I and Tier II banks alone in the first two years after MAR came into effect in the UK1 – electronic surveillance is still in its infancy, and gaps in efficacy and performance mean that there is appetite for further spending, development and automation.
Since MiFID II’s research unbundling rules came into force in January 2018, the ‘value’ of research has become a pressing question. The regulatory intention being to eliminate any practice of inducements to utilise execution services by setting explicit fees for the distribution and receipt of research materials.