The challenge of tackling regulation continues to cause undue worrying and stress for many in the world of investment banking. The problem is not that complying with individual regulation in itself is difficult (although some are more difficult than others), it’s simply that the volume, pace and concurrency of regulatory change is compounding the problem for banks.

The typical response has been to implement a series of tactical solutions in order to meet the minimum requirements. This may work on a short term basis, but ultimately this strategy is unsustainable. Using tactical work-arounds often result in the unravelling of the prior ‘fix’ when a new regulation is introduced. And, as we all know, getting regulation wrong can inevitably result in enormous fines.

What is the problem banks face?

Within the ‘New Normal’ of constant regulation, one of the biggest challenges is that regulation and their interpretations can evolve over time. The question for banks is how do they keep track of these changes and keep on top of their reporting obligations? How do they show the progress they are making in implementing the required changes?

One of the consistent and important themes with regulators around the globe is the need for transparency. We know that banks need more systems to collate, aggregate and distribute relevant data in a timely and accurate manner. In this context, how can regulatory change be captured and synthesised efficiently?

Also firms require trade and transaction reporting from many regulatory bodies and each body demands reports be to their individual requirements, encompassing different trade details, fields and formats. This is clearly a challenging and extremely daunting task to undertake.

A holistic view?

A thorough analysis of the trading business is required, in order to create a comprehensive global trading footprint. To help with this analysis, a standardised model for regulation onboarding and ongoing maintenance is required. Firms need to keep abreast of the regulatory changes holistically impacting their organisation.

Ideally the impact of regulatory change would be visualised with users able to log onto a platform and see a holistic global view, showing the status of trade and transaction reporting across all regimes. This could then become the basis for producing the business requirements that will be implemented.

We know however that regulations and their interpretations can evolve over time; a tracking of interpretation changes mapped to requirements implementation is always going to be necessary if any holistic viewed is to be achieved.

Conclusion

What banks need most is a holistic view of change and the associated impact that regulation brings, allowing for a rapid response and the planning of future changes.

Banks need a system that has full audit capability and holds historical data, allowing for trending analysis to be completed and for recurrent issues to be identified and mitigated.

Banks need to establish a more refined way of dealing with the change and to create standardised processes to implement the change driven by regulations, in order to manage their ongoing regulatory risk.

Bringing all of this together across the bank in a single holistic dashboard makes sense and provides a practical solution for all banks that are struggling in the face of the ‘New Normal’ challenge of continual regulation.