RegTech Intelligence

The state of regulatory engagement models: the truth hurts!

In May, the CFTC’s Bart Chilton characterised regulatory cost benefit analyses a “sword of Damocles” calling out for more qualitative data.

Since then, multiple no-action letters and a court case against the SEC have shown that there are deep-seated issues with CBAs that regulators are having trouble keeping below the surface. For the SEC and the CFTC, the Government Accountability Office’s recent report has only made the headache worse. The GAO’s release on “Agencies Efforts to Analyse and Coordinate Their Rules” offers a damning assessment of the entire process, accusing the CFTC and SEC of “informal coordination” in poorly evaluating the qualitative benefits and costs of their approaches due to the “lack of reliable data.”
The truth hurts.
So why are we having such foundational conversations so late in the game? The bottom line is that a fundamental issue, going back to the origins of G20 regulation has not been solved: the creation of a proper business case for how banking should be supervised. Politicians have continued to muse about the vast political intents of regulation, while industry experts have been scrambling to make sense of how to meet all these different objectives at once. The fruits of this chaotic process are now obvious: mismatched global regulation that is fit for neither purposes of politicians or regulators.
The G20’s regulatory reform programme has begun one of the largest technology and operations projects the system has ever seen, but progress will be stalled if we continue to do it in the dark. Better targets, blueprint and road maps are needed urgently if we don’t want to fail. The bottom line is that we can’t make this a success today without better engagement models that include banks at a meaningful level for regulation that will endure tomorrow.

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