- A series of ongoing financial regulations within the EU poses an operational and functional challenge to buyside firms looking to successfully achieve compliance with the rules
- Buyside firms should look at the on-going regulations as an opportunity to overhaul existing IT systems and operational platforms to combat legacy challenges and ensure holistic implementation of the regulations
LONDON – 21 December 2016 – A new report from GreySpark Partners, a leading global capital markets consulting firm, examines the impact to-date of a collection of EU regulations posing a series of operational and business model challenges for the buyside industry in the region and globally. Specifically, the report argues that buyside firms should proactively implement regulatory changes to their businesses on a global basis and manage the compliance processes on an ongoing basis. Buyside firms that successfully combine data as an asset and technology debt avoidance thinking via the implementation of regulatory change programmes can create new business models based around the outsourcing of regulatory compliance services as a new business development strategy.
The report, Best Practices in Buyside Regulation Implementation, provides in-depth analysis of how the 11 regulations reviewed in the report will require affected buyside firms to offset the costs associated with the implementation and compliance with the mandates by addressing the need to update legacy systems used for trade management and regulatory reporting purposes and by gaining a new level of mastery over their internal operational and external client data sources. The regulations reviewed in the report include:
- the EU Markets in Financial Instruments Directive (MiFID II) and its implementing regulation (MiFIR);
- the European Market Infrastructure Regulation (EMIR);
- the EU Market Abuse Directive (MAD) and its implementing regulation (MAR); and
- the EU’s Alternative Investment Fund Managers Directive (AIFMD).
GreySpark believes that all large buyside firms should view the implementation of a buyside regulation change management programme as an opportunity to fulfil short- and long-term strategic and operational demands related to regulatory compliance. Faced with a long list of requirements, buyside firms must adjust their front-office business models and operations to ensure that they can efficiently and effectively comply with the rules without incurring an overly expensive set of costs. Instead, buyside regulation implementation should be based on deliberate cultural, governance, operational and technology utilisation processes that integrate and embed compliance procedures within business models and operational structures.
As such, two legacy challenges – the need to better manage internal and external data sources and technology debt – could hinder regulation compliance should buyside firms not seize the opportunity to address these issues when reconfiguring their programmes to accommodate regulatory requirements. Buyside firms are now challenged to reshape their legacy processes and technology in order to insert automated data and reporting processes into their IT architecture to comply with the current raft of regulations. Doing so would allow buyside firms to address legacy challenges and create a new standard of operation that can accommodate any new updates to the rules that will continue to be issued by EU authorities in the future.
Aliana Greenberg, GreySpark analyst consultant and lead author of the report, stated: “The industry typically views regulatory compliance as a costly, complicated challenge. If buyside firms do the legwork now to make compliance a more flexible, automated function, they will save time and money in the future.”
Asif Abdullah, GreySpark principal consultant and report co-author, added: “Buyside firms have typically looked at regulatory change in isolation of other business driven changes. However, as the pace and scale of regulatory change continues to increase, how regulatory change is implemented is becoming a key differentiator. This report provides GreySpark’s view on the practical steps buyside firms can take to ensure regulatory change is aligned with strategic business changes and leverage industry best practices.”
For further information on GreySpark’s research, please e-mail: firstname.lastname@example.org
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Notes to Editors
About GreySpark Partners
GreySpark Partners is a business, management and technology consultancy specialising in capital markets. GreySpark Partners works with investment banks, hedge funds and asset management firms to deliver solutions that work across all asset classes, with a particular focus on risk management and electronic trading. For further information, please visit: www.greyspark.com