[ C O V E R
moke is beginning to appear
from the old regulatory acronym
generator. MiFID II, AIFMD,
PRIIPS, EMIR, GDPR, the list
goes on. These G20-led regula-
tions have come – or are coming - to fruition
thick and fast, as regulators look to live by a
new mantra of YOFCO (you only financial
crisis once).
The legislative changes have been relent-
less in the decade following the collapse of
Lehman Brothers and the ensuing global
financial meltdown, all with the aim of bring
protection, transparency and oversight
across the capital markets.
On the one hand, one could objectively
argue the markets are now safer, end-in-
vestors are more protected, and new roles
and companies have been born out of the
extensive changes.
As Axa Investment Managers’ head of
global regulatory development, Stéphane
Janin, says so concisely, “since the last crisis,
we didn’t get another crisis” before using the
examples of AIFMD and UCITS, and their
resiliency to the Euro sovereign debt crisis
and the aftermath of the Brexit vote as proof
of regulations working the way they should.
The other side of the coin shows a different
story, mainly for the financial institutions
themselves. The cost of complying with new
regulations has been nothing short of colos-
sal, from the actual money spent on compli-
ance to exiting business which has become
non-profitable or off-boarding clients to
meet balance sheet requirements.
But as they say, there’s no point crying over
spilt milk. The changes have happened, and
most financial players have begrudgingly
accepted this reality. But what of the future
of regulations?
Well, following the introduction of the
behemoth regulation in Europe that was
MiFID II, along with the far-reaching GDPR
and various new reporting requirements,
you could argue that we have now entered a
phase of regulatory inertia, where some may
believe the biggest changes are behind them
and forthcoming rules too far ahead to worry
about.
Subsequently this is a time where perhaps
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business priorities have overtaken regula-
tory initiatives, maybe for the first time in a
decade.
“The implementation of MiFID II, PRIIPs,
and BMR marked the end of the ‘Great
Re-regulation’ that followed the global finan-
cial crisis,” says Sean Tuffy, head of market
and regulatory intelligence, EMEA, custody
& fund services at Citi. “The number of ma-
jor regulatory implementations on the ho-
rizon is greatly reduced. This has given the
industry some time to absorb the changes.”
An element of
complacency?
Does this mean the industry is complacent?
Possibly not. Part of the relaxed approach
may be because the second half of 2018 cal-
endar shows no major deadlines, while the
“Two major things have happened to change
the direction of regulations: One is Trump
and two is Brexit.”
ROBERT MIRSKY, MANAGING PARTNER, LONDON, HEAD OF THE
GLOBAL ASSET MANAGEMENT PRACTICE GROUP, EISNERAMPER
first part of 2019 is largely the same. In fact,
the biggest upcoming regulations are sitting
in 2020.
This is giving business and senior exec-
utives time and resources to focus on new
technologies and data quality, which are
both emerging as differentiators.
An empty calendar is not all that is holding
companies back from pouring more mon-
ey into prepping their regulatory models,
because at the same time there is regulatory
uncertainty; not just in the final frameworks
of some of the reporting requirements, but
due to two major geopolitical events that
have occurred in the past two years and
which could alter the regulatory landscape.
You may be familiar with them – Britain
voting to exit the European Union and a new
President being sworn into power in the
United States.
Fall 2018
globalcustodian.com
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