Written by Candice Kabla – Senior Consultant at MThree Consulting
On Tuesday 25th April, Thomson Reuters hosted the London Financial Risk and Regulation Summit 2017.
The day’s discussions covered key challenges which financial institutions face in complying with regulatory requirements, the fight against financial crimes and methods for enforcing strong compliance and control frameworks.
Thanks to live polls answered by the audience throughout the day and presentations from many industry leaders, we left feeling positive that vendors, banks and other market participants are aware of the challenges coming over the next 2 years.
I’d like to focus on the panels which impressed me the most and the speakers who were able to challenge the consensus and think outside the box.
The day started with speaker Mariana Mazzucato, Professor in Economy of Innovation and Public Value at University College London (UCL). She pointed out how some countries and companies could have better tackled the post economic crisis approach.
Audience Poll: Does Regulation stifle innovation? 65% NO. Image credit: Twitter.com/RiskManagement
It was very interesting that she highlighted that Portugal, Italy, Greece and Spain should not necessarily try to imitate German competitivity or the UK’s privileging of consumption over investment. Instead, she explains they should rather invest in innovation and encourage entrepreneurship as they already had the right toolkit to improve their economy.
Audience Poll: Most overvalued asset classes right now? 45% Government Bonds. Image credit: TopTwitter.com
She also expressed her opinion that during Brexit, the British people did not ask themselves the right questions around the causing factors of productivity slumps and inequalities – and so didn’t other regions of the world.
During the breakout session, I was particularly impressed by two of the speakers. Susannah Hammond, Senior Regulatory Expert at Thomson Reuters, pointed out that financial institutions are so focused on MiFID 2 deadlines, that they do not pay enough attention to the new General Data Protection Regulation (GDPR) coming into effect in May 2018. She stressed that the scope of GDPR is a lot wider than existing regulations as it impacts all business areas, and all organisations managing EU citizen’s data. Read more on the principles of GDPR here. Colin Hall, Chief Data Officer at Credit Suisse, insisted that investment banks should get out of their “ivory tower”, stop “protectionism” and realise the absolute need to outsource some activities. He highlighted in particular that reference data or KYC should be done independently.
The afternoon kicked off with a MiFID 2 panel. MiFID 2 was clearly the focus of the day due to the impending “go live” date. Overall the content was less disruptive than the morning’s session, yet it was very useful to get an idea of current opinions within the industry. Despite unclarities remaining around application forms and some consumer aspects not yet impacting, the main bricks of MiFID 2 are now in place. Even with Brexit, the UK will try to maintain equivalent status. .
MiFID 2 countdown clock in MThree Consulting London Offices
Audience Poll: Finance professionals are generally confident in their organisations being ready for MiFID 2. Image credit: Thomson Reuters website
At the FRTB session (I chose this session given the high demand from our clients for services around supporting preparations for this new regulation), we got an hour of pertinent views from ex-traders, analysts, and regulation specialists. The panel dug deep into liquidity horizon, IMA validation, data crunching and the difficulty in meeting daily requirements etc. The participants all believe that for the moment no finance professionals have a full picture of the regulation, so they have revamped the architecture to be compliant. They are expecting further implementation delays and descopes (e.g. exceptions for small trading books). It will likely be 5 years before BCBS and FRTB are fully implemented.
Audience Poll: FRTB: How ready is your firm with risk modelling requirement of FRTB? 67% are 25% ready. Image credit: Twitter.com/RiskManagement
Further to this event we look forward to the Risk EMEA Summit where MThree is a co-sponsor. At this event, Anthony Ginn, EMEA Sales Director at MThree Consulting will chair the FRTB panel on day one. Click here to see who will be joining Anthony in discussing the latest developments of FRTB.