[ A D V E R T O R I A L ]
The rise of uncertainty
What new considerations do securities industry participants need to take
into account in elaborating their commercial and operational strategies?
A
popular question from panel
moderators and journalists to
people in positions of corporate
responsibility is: “What keeps
you awake at night?” The honest
answer is probably the same things
that keep other people awake at
night. What I’d like to set out here,
however, are some of the recent
developments that need to be con-
sidered during waking hours for
their potential impact on strategic
decision-making and, if necessary,
put out of mind before turning in
for the night.
In the space available, I’d like
to identify some areas of poten-
tial concern – more of a survey
landscape than a list of considered
solutions to anticipated problems.
Compliance spend
The first is regulation. While
most financial services firms are
resigned to devoting increasing
resources to compliance in the
near- to medium-term, there are a
number of dangers I see that can-
not be addressed simply through
extra spend. Reports suggest, for
example, that a repeal of at least
part of Dodd Frank is under con-
sideration in the USA. This leaves
firms uncertain about where to
devote the time, money and effort
required to ensure compliance.
Less widely reported is the status
62 // TheTrade // Summer 2018
of negotiations between the EU and
Switzerland on the status of equiv-
alence in the regulation of financial
services. There is no dispute over
the technical equivalence of the
Swiss regulations; yet recognition
of equivalence has been limited to
only a year. Such an outcome might
act as a warning to those engaged
in bringing Brexit negotiations to a
successful outcome. While the UK
may well replicate many of the EU
regulations in an effort to achieve
equivalence, the Swiss experience
suggests that political calculations
are not always predictable.
Political uncertainty
A second area of uncertainty arises
from political developments. A
as evidenced by attitudes to the EU
budget. Friction in an organisation
that is used to moving forward
through unanimity in its key deci-
sion-making bodies could lead to a
slowdown in its ability to progress
its engagement with non-EU actors.
At the same time, the much-re-
marked shift in global economic
power from west to east will have
implications – as yet unclear – for
the global currency and interest
rate environment even without the
new banking crisis and recession
which I believe is inevitable, if
difficult to predict from a timing
“The much-remarked shift in global economic
power from west to east will have implications
– as yet unclear – for the global currency and
interest rate environment even without the new
banking crisis and recession which I believe is
inevitable, if difficult to predict from a timing
perspective.”
sharper nationalist sentiment in
parts of the EU, for example, could,
if reinforced, complicate the man-
agement of that regional grouping
perspective. As we discovered
in retrospect from the last crisis,
certain levels of debt, whether
sovereign, corporate or personal,