RegTech IntelligenceThomson Reuters Regulatory Intelligence originally published this article on 21/12/2017. Thomson Reuters Regulatory Intelligence speaks to important figures in the compliance and financial arena to hear their thoughts and discuss wider issues related to their fields. Today we talk to PJ Di Giammarino founder and CEO of regulatory think-tank JWG–IT, trusted by the global financial
With the implementation date of GDPR just seven months away, firms will need to start getting to grips with the requirements soon to be ushered in under the EU’s flagship regulation for data protection. As things stand, GDPR will kick in before the UK formally leaves the European Union, meaning that its implications will still
In exactly one year, the General Data Protection Regulation (GDPR) will apply across the European Union, yet firms are struggling to prepare for new data security obligations due to the sheer quantity of regulations due to be enforced in 2018. With the current date of MiFID II being 3 January 2018 and PSD2 due 10
What image is conjured up when you hear the term “cybercriminal”? A Guy Fawkes mask partially concealed underneath a black hoodie to the accompaniment of sinister music? Whilst this image provides an excellent trope for Saturday night TV, it does not reflect the reality of cybercrime. At our second RegTech Capital Markets Conference, we held
As the public cloud services market continues to mature and grow – up from $178bn in 2015 to $209bn in 2016, according to research company Gartner[1] – the concentration of computing resources into cloud data centres is increasingly attracting the attention of NPEs as a target for patent litigation. At a time when data security
The regulators that oversee the economy are drowning in oceans of data, but need better standards to make sense of it all. The struggle stemming from the lack of standardised data was clearly visible in 2012 when the Commodity Futures Trading Commission (CFTC) needed to trace the so-called ‘London whale’, a trader who accumulated Credit
Looking at the FinTech and RegTech conversations in 2017 we find that there is considerable confusion about some basic terms, definitions and relationships amongst policy makers, academics and practitioners alike. The now much more popular term is being used to describe many things. When you say RegTech, do you mean it to be a subset
The common image of a cybercriminal is that of a slovenly, yet highly-skilled, individual sitting alone in a basement having not seen daylight in weeks. The modern cybercriminal, however, is far removed from this. Cybercriminals are organised in large networks, often well-funded and highly talented which allows them to unleash devastating attacks. According to online
Big data and financial regulation share two striking resemblances: both are overwhelming and largely impenetrable to the uninitiated. Although combining the two is pursued with noble intentions by regulators, the result is a concoction of stress, confusion and frustration for most firms. This combination, however, is of paramount importance for firms’ and clients’ concerns about
Just before the Christmas break, as part of its quick-fire release of numerous important updates, ESMA published a new Questions and Answers document that covers MiFIR data reporting. Broken down into two separate sections, the document looks specifically at (i) LEI of the issuer and (ii) date and time of the request of admission and
In our preceding article about ISINs, we explored the pursuit of a universal OTC identifier, and discussed what has occurred in Europe to fix this gap in the financial industry. The Association of National Numbering Agencies (ANNA) created the ANNA Derivatives Service Bureau, which is based on an automated ISIN allocation engine and is scheduled
OTC derivatives, unlike other financial instruments, have never really had a product identifier. Since as early as 2014, regulators’ high expectations for a detailed product identifier for OTC derivatives have caused consternation amongst industry experts as retooling the current infrastructure to the new specifications is an enormous task that could result in hundreds of billions
This is the second in a series of occasional blogs we’ll be writing about what Brexit means for IT and IT Law in the coming weeks and months. Deirdre Moynihan reviews what Brexit is likely to mean for Data Protection, where the approach to implementing the General Data Protection Regulation could well turn out to
This is the first in a series of occasional blogs we’ll be writing about what Brexit means for IT and IT Law in the coming weeks and months. It looks at the choices facing the UK IT industry around Brexit and Article 50. In the second, Deirdre Moynihan reviews what Brexit is likely to mean
On 5 July, JWG hosted their RegTech Capital Markets Conference in London, attracting over 150 attendees from top tier banks, buy-side firms, vendors, lawyers and academics from across the industry. A speech from the FCA’s own Nick Cook at the start of the day told of the clear signs of progress being made and reiterated
Data standards was one of several key themes at the JWG RegTech Capital Markets Conference on 5 July 2016. Conversations about regulatory data standards centre on the need for alignment of data obligations and standards, data protection issues, infrastructure legacy issues and the acquisition and ownership of clean, valid and robust data that can be
The push for increased transparency following the financial crisis has had a visible impact on the financial services industry. Many regulations have created similar, but slightly different, requirements, in particular across the Atlantic. Increased – but uncoordinated – demand on data, and proof of process in different formats and languages, without proper impact assessments conducted
So, it’s official. The voting public of the United Kingdom have made their decision and, with a 52% majority, the result is final – the UK has declared that it wants to leave the European Union. Over the past few weeks, we’ve seen the polls fluctuating wildly and the odds of leaving grew determinedly, sending
In our response to the FCA’s call for input on RegTech, we recommended framing the thinking via the RegTech domains to help enable the prioritisation of new technological solutions in the context of external regulatory circumstances. As we have stressed before, RegTech is about the application of technology to solve a specific regulatory problem, not
The Fundamental Review of the Trading Book (FRTB) final text was published in January 2016 by the Basel Committee (BCBS). The aims of the FRTB BCBS standards are to better factor market risk into trading book risk models, and to prevent banks moving instruments between the trading book and the banking book in order to
With JWG’s RegTech conference coming up on 5th July, we thought it wise to spell out a few of the most pressing issues up for discussion on the day. Our first panel – Unblocking the ecosystem* – will provide a comprehensive review of the barriers to RegTech development and adoption. On this topic, we have
We were pleased to speak at the Asset Control User Conference on Tuesday about the challenges of using RegTech in the context of comprehensive MiFID II data requirements. JWG’s CEO, PJ Di Giammarino, presented a helicopter view of the regulatory landscape ahead of us, an approach to getting the cost of the data under control.
The Legal Entity Identifier (LEI) has come some way since its formal establishment in November 2011. 10 March marked a new date for going forward, when a report by the LEI Regulatory Oversight Committee (LEI ROC) set out their policy design for the phase 1 collection of level 2 relationship data for the Global Legal
The new regime for transaction reporting, being introduced under MiFID II, represents a significant overhaul and expansion of what is currently required by MiFID I. On 9 March, as part of their two-year programme on MiFID II, City & Financial Global held a highly topical event on transaction reporting under MiFID II. The last City
In November last year, at JWG’s monthly CDMG meeting, we discussed the incoming General Data Protection Regulation which – at that stage – remained a draft and the implications of the removal of the US safe harbour rule. The safe harbour rule was an agreement between the US and EU allowing businesses to transfer personal
2015 has been a year of genuine progress for the Legal Entity Identifier (LEI) project. It is fair to say that it would not have been particularly difficult this time last year to find sceptics about whether such a statement could be made at this point. ESMA have been a key driver behind this progress.
Getting your head round the main objectives of the current financial reform agenda is a task in itself, but when it comes down to the increasing data management requirements that follow hand in hand, it’s all about the nuts and bolts. Whose responsibility is it to manage this data, and keep it up to quality?
Last week, the Regulatory Oversight Committee (ROC) published their report on the progress the Legal Entity Identifier (LEI) has made since its proposal in 2011 as a solution to transparency, organisation and risk aggregation in the financial industry. The report is split into five sections: (1) Completion of the Global Legal Entity Identifier System (GLEIS)
JWG analysis. The Regulatory Oversight Committee is branching out. On Wednesday, the ROC released a consultation paper on the possible issuance of LEIs to international branches of a head office legal entity. The idea is that this may reduce the likelihood of the double trade and transaction reporting that foreign branches are often subject to
JWG analysis. As financial regulations keep piling up in the post-crisis world, it becomes increasingly difficult to recognise the similarities and differences between them. The interdependencies on the Know Your Customer (KYC) front are present, but somewhat tangled. Here we provide an overview of the current and upcoming client classification requirements under prominent regulations, and
JWG analysis. Over the course of the year, JWG’s Customer Data Management Group (CDMG) has covered in-depth customer due diligence and KYC requirements under global tax, reporting and anti-money laundering regulation, and market monitoring under MAR/MAD2. For the ninth CDMG meeting, JWG took a different direction and covered fund management regulation and the regulatory interdependencies
JWG analysis. Amongst a number of themes and issues that are raised on a regular basis at our monthly Customer Data Management Group (CDMG) meetings, data protection and the need for harmonisation are consistently top contenders. Recently, CDMG has covered the OECD Common Reporting Standard, MiFID II and the new Market Abuse Regulation, and will
JWG analysis. The Legal Entity Identifier is a top level form of identification, designed so that it can be applied and recognised universally. Essentially, it should provide one unique code for each unique entity that holds data and be able to be applied anywhere in the world. It sounds great doesn’t it? It sounds like
JWG analysis. Eleven of the industry’s most high-profile trade associations and ISDA this week urged regulators to adopt consistent and harmonised trade reporting requirements across jurisdictions. However, reporting rules are already on the books and the consequences are high for firms. In part 1 of our analysis on reporting, published last week, we explored
JWG analysis. With 40+ regulations covering 500+ KYC data requirements due to be implemented over the next 3 years, meeting the requirements poses significant challenges to all firms in the market, not least client outreach, data management and multiple, iterative, implementation dates. Combined with record fines for AML failures, and new personal liability for senior
By Darragh O’Grady and JWG. Regulatory requirements coming in over the next 3 years will mean firms need to know – and prove that they know – more things about their customer than ever before. Combined with the growth of ‘digital banking’, firms are now having to innovate on the digital front, whilst ensuring compliance
JWG analysis. There is a war going on to ‘Know Your Customer’. As regulators continue to release new requirements for firms to collect and maintain information about their clients and counterparties, the struggle to comply has turned into trench warfare fought across many fronts, and new strategies are needed to avoid a long and uncertain
On the 22nd January, over 30 stakeholders from 12 firms met Customer Data Management Group (CDMG) meeting to discuss their 2015 priorities for regulatory KYC requirements. JWG presented a summary of 40+ new regulations that require firms to manage counterparty information over the next 3 years. Alec then presented summaries of the 11 regulations in scope
By Sam Tyfield, Vedder Price. Back in 2009, the EU issued a Recommendation (which has no binding legal effect) on the use and application of RFIDs (which, for our purposes, means ID/swipe/access cards). The EU has just issued a review of the implementation of the Recommendation EU-wide and has found take-up by EU member States
By Darragh O’Grady and JWG. In this fourth article in our Blockchain series, we asked RegTechFS contributor, Darragh O’Grady, what benefits blockchain technology could bring to the establishment and maintenance of trading platforms, particularly Multilateral Trading Facilities (MTF) in the context of forthcoming MiFID II implementation planning. According to MiFID, an MTF is a “multilateral
JWG analysis. 60 attendees across the buy and sell-sides came together at Markit’s seminar in Stockholm last month to discuss today’s industry challenges. They concluded that a new focus on establishing a flexible banking operating model to meet both business and regulatory demands for data, processes and standards, is top on their wish list for 2015.
By Darragh O’Grady and JWG. According to the latest LEI research we picked up at FIMA, only 11% of the population of ‘regulated and listed’ companies have so far received an identifier. This got us thinking about what new identity solutions were out there and we called upon our blockchain guru to offer an opinion.
JWG analysis. This summer, we took a look at the emerging MiFID II/MiFIR technical standards and concluded that the ‘hearing’ that they were getting would result in a war of many parts. Since the summer, over 700 MiFID II/MiFIR responses have been submitted, the FCA has run a conference crying for action and JWG is
Darragh O’Grady and JWG. There has been much written lately on the potentially disruptive impact that digital currencies may have. However, the blockchain architecture that underlies them has also been a recent subject of a CFTC meeting to discuss the potentially disruptive impact of this new technology. We asked an architecture expert with a background
Today, JWG have published their much anticipated analysis report, ‘G20 FS reform: will you survive or thrive?’. The report surveys regulatory efforts from 131 regulatory bodies which have produced approximately 50,000 documents since 2009. It finds that the volume, pace and complexity of deciding how to comply with a continually evolving regulatory agenda are staggering:
This article originally appeared in the autumn 2014 edition of Markit Magazine. JWG analysis. The Basel Committee’s principles for effective risk data aggregation and risk reporting (BCBS 239) may be among the least well known components of the post-financial crisis reform package. Yet they could ultimately bring about the most significant changes to the
JWG analysis. We learnt something this month. The reason Europe calls it a regulatory ‘hearing’ is that it is an opportunity to hear views from both regulators and the market. Of course, that’s just part of the experience as many other senses are triggered when 400 people are locked in a basement for 2 days,
JWG analysis. The desire for tighter controls on algorithmic trading is growing globally. Trading rules in the major financial centres will quickly set new minimum thresholds. As described in our previous piece on how algos are defined and controlled, Europe is again leading the pack and would appear to have serious intent to change the
JWG analysis. Last month (20 June), the Hong Kong Monetary Authority issued a new Supervisory Policy Manual (SPM) on the topic of recovery planning (Module RE-1: Recovery Planning) following a consultation with Hong Kong’s two industry associations. This follows the Financial Stability Board’s push to implement standards in the area of recovery and resolutions plans
JWG analysis. Regulators across the globe appear divided on the question of whether tighter control of algorithmic trading is necessary. The Australians are pretty laid back about it, the Germans are ahead of the game, whilst political debate rages in the US. Regardless, while the value of algo trading to global markets is generally considered
JWG analysis. The BCBS appears to be putting the screws on national regulators to expand the scope of their Risk Data Aggregation Principles to affect more banks. Now Singapore is the first to react. June has been a busy month for all regulatory agencies, and the BCBS is no exception. With 3 consultations, 2 sets
JWG analysis. The continent was rocked by far more than parliamentary elections on 22 May. Early reports from major financial centres confirm the impact from the 844 pages of text released by ESMA on MiFID II / MIFID to be about a 9 on the Richter scale – so high that ESMA’s website gave up
JWG has extracted the following questions from ESMA‘s Consultation Paper on MiFID/MiFIR Technical Advice. ESMA needs to deliver this advice to the European Commission by December 2014 and is therefore subject to a condensed consultation process for this paper. For more on MiFID/MiFIR see here. Q1. Do you agree with the proposed cumulative conditions to be
JWG analysis. Without a consolidated viewpoint on what new risk data requirements mean, firms will be at a loss when it comes to determining best practice. We are in the middle of a massive, global industry transformation with many rulebooks. With divergent regulatory timelines, standards and existing data architectures a common and holistic ‘best practice’
JWG analysis. When MiFIR is implemented in 2016, all of the pain experienced in preparing for EMIR’s transaction reporting regime, which went live earlier this year on 12 February, is likely to be rekindled. Thankfully, at least this time around the industry has significantly more time to get prepared. Hopefully, that means enough time to
By Sam Tyfield, Vedder Price. Algo flagging is currently only the concern of direct members of German venues. But it’s going to have a much broader application under MiFID / MiFIR and become of concern to the buy-side too. Yesterday, the good Doctor Voigt of Fidessa published a blog about algo flagging. It is well worth
JWG analysis. While the US HFT debate rages and the FBI launches its investigations, Europe is quietly preparing to set a hard-hitting set of new rules for technical standards. When ESMA begins its consultation around MiFID II / MiFIR tech standards this summer, market participants will need to have their ducks in a row and
JWG analysis. Earlier this month, New York Attorney General (NYAG), Eric Schneiderman, set out his stall with a scathing attack on high frequency trading firms and their practices. Describing HFT firms as ‘parasitic’ and comparing their strategies to “Insider Trading 2 .0”, the NYAG’s statement would have been music to the ears of financial luddites
Video: Regulatory reform – 2014 helicopter view. Regulation is coming thick and fast. Seventy thousand pages a year fast! Dealing with this deluge with a page-by-page, regulation-by-regulation approach is becoming impossible as the G20 commitments become spread across many rulebooks. This means that firms trying to tackle the changes one-by-one will end up with sky-high implementation
JWG analysis. This week marked the one year anniversary of EMIR’s first implementation deadline. And what a difference a year makes … or does it? This time last year, banks and their customers were busy determining who had passed certain thresholds (determining who would be classified as NFC or NFC+), along with implementing confirmation processes
JWG analysis. There is a new film making the rounds where the evil ‘Lord Business’ locks up all the master builders in a think-tank and uses them to design his empire. Quite apart from giving JWG analysts a lot to laugh about, it’s a useful theme when exploring what is going on with OTC trade
JWG analysis. If you’re reading this post, then it’s more than likely you are in one of the many job roles that are impacted by financial regulation. Whether you are directly involved as COO or a legal, compliance, governance or risk officer, or indirectly involved in an operational, IT or business capacity, it’s clear that
JWG analysis. The European Parliament recently published (here) the latest amended text of the proposed 4th Anti-Money Laundering Directive (AMLD IV), which includes measures to help simplify the way firms conduct KYC today, and adds weight to the KYC utility business model by requiring the industry to maintain accurate and timely data on beneficial ownership.
JWG analysis. When the requirement brought about by the German high frequency trading act to tag algorithms comes into force in April of this year, market participants may well feel hamstrung by the complexity of the regime. And while the regulatory goal of improving market surveillance and reducing systemic risk may be valid, some might
JWG analysis. The first 700 of 18,000 pages of MiFID II texts have now been published, a little more than a month after the European Commission announced agreement in the trilogue process, but this milestone foreshadows a confused standards landscape that will stretch forward to implementation of the regulations and directives in 2016. For those
JWG analysis. When G20 leaders met in Pittsburgh back in September 2009, there was clear consensus on the direction that the financial industry needed to take in the aftermath of the global financial crisis. Transparency was a key theme. The view was that, by mandating industry-wide reporting obligations for OTC derivatives, regulators would be armed
JWG analysis. Until the world has a definitive LEI, we are going to have to recognise that piecemeal adoption brings with it significant hidden costs in validating, enriching and mapping for regulatory purposes. LEI watchers have been encouraged to see Saudi Arabia and Italy joining the fold in the past month. They might be just
JWG analysis. With the 12 February EMIR trade reporting deadline just around the corner, the atmosphere in the derivatives industry suggests just as much turmoil as ever. Issues surrounding LEI registration, UTI reconciliation and trade repository affiliations persist as the rush to comply with mandatory reporting rules begins. The industry is still grappling with issues that
JWG analysis. In late October, the European Banking Authority (EBA) released a consultation on the use of the Legal Entity Identifier (LEI) for CRD IV’s risk reporting requirements. Now that the consultation phase has been concluded, firms may only have around 60 days to register LEIs for all their entities that report under CRD IV.
By Tristan Dehaan, Market Data Vendor Manager Following a robust market data discussion on RegTechFS, we asked Tristan, a Market Data Vendor Manager at a European Asset Manager, to tell us about his efforts to help the industry get to more client-friendly market data contracts. At the end of 2012, speaking as a well-placed member of
JWG analysis. With 9 working days to go before compulsory reporting of derivatives trades becomes a daily reality, firms are in the final phases of implementing their individual solutions. These differ from firm-to-firm, for example some are planning to report in real-time (as in the US), while others plan to report later within the T+1
This time next year, the market is going to be a very different place. No-one knows the complete, consolidated impact of regulation on the market, and many of the parts are still in motion, but the core structure is starting to take shape. In Europe, our research tells us that most institutions are opening 2014
Trade reporting for EMIR begins in February 2014 and firms are beginning to register their entities (and their clients) for LEIs in order to meet the deadline. However, registration volumes are set to increase as the EBA’s recent consultation paper indicates that the LEI will be used for CRD IV risk reporting, significantly expanding the
Counterparty classification regimes, such as CRD IV and EMIR, give banks a good reason to centralise their reference data, and the BCBS’ Risk Data Aggregation Principles provide a clear framework for doing so. From 1 January 2014, under CRD IV, firms will need to calculate CVA and hold additional capital on all derivatives contracts. However,
The European Banking Authority (EBA) has finally published its final draft Implementing Technical Standards (ITS) (here) on supervisory reporting for CRD IV. Long awaited, the technical standards set out the near-final reporting requirements, as part of COREP, for own funds, financial information, losses stemming from lending collateralised by immovable property, large exposures, leverage ratio and
Given the exponential growth of reporting requirements since the crisis, firms often ask: ‘Where does all this data go and who has the time to look through it all?’ In fact, recent statements by regulators have made this question all the more valid given that regulators’ data systems, it is increasingly apparent, often suffer from
INSEE has now gone live as the first French pre-LOU able to issue pre-LEIs. Details can be found on their website here (in French) . Translation below: The G20 has approved the unique device for intentifying market participants (global LEI system, GLEIS) agreed at the June 2012 Los Cabos Summit, which will facilitate the management
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
Shadow banking could soon force infrastructure upgrades and additional business costs– will the industry find ways to ease the pain? As repos, securities and, potentially, CCPs become part of the transparency agenda via new shadow banking regulation, this could result in infrastructure upgrades and increased business costs looking set to be on their way in
New, prescriptive EU clearing obligation rules will require new counterparty classification and monitoring systems. Is this a standard data hub opportunity? With EMIR having entered into force on 16 August 2012, and the release of final draft technical standards by ESMA in September, firms will soon be facing rules on clearing obligations and eligible counterparty
Managing, aggregating and maintaining risk data used to be a box-ticking exercise with easily achievable targets. In 2013, landmark new global requirements mean firms will face a big step up. Over the past few years, regulation in the area of risk management information (MI) was fairly basic. In 2011, the FSA, like their US cousins,
The Office of Compliance Inspections and Examinations (SEC, FINRA, NYSE) has released an assessment of 19 firms regarding their controls to prevent misuse of material, non-public information. While not legally binding, this development is important because this is the first comprehensive statement in years regarding a regulatory view of a firms systems and controls for
In their latest landscape assessment of Basel III, the EBA came to a conclusion regarding a problem the industry has been grappling with for a long time: rules that aren’t detailed enough lead to uneven outcomes in data reporting, aggregation and assessment. The report finds that, while data quality from national regulators has improved and
Thanks to technological hiccup after technological hiccup, High Frequency Trading (HFT) remains a permanent fixture in the financial press. With each blip, regulators and politicians promise to regulate HFT, but how they are going to put effective controls in place is still an open question. Despite the noise, the issues with HFT remain the same.