Non Compliance. Pretend and Extend or Defer and Defy.
It is bad business not to exercise effective regulatory compliance as an integral part of the business processes in any industry. Without self-regulation non compliance is the result of poor risk management. It is directly visible and potentially catastrophic.
The ability to embrace regulatory compliance depends primarily on the decipline and culture of the organization. Regualtory compliance depends on how the GRC part of the daily processes and activities are organized and monitored. Due to the crisis, the global financial community will continue to be on the hit from the oversight on almost every front.
One of the primary reasons for the compliance complexity magnitude is due to the difficulty of real-time and interconnected global transactions and markets. Therefore financial organizations across the world must reshape their businesses to fit the markets that are also restructuring to meet customer demand.
In spite of the compliance complexity and magnitude the primary reason why the regulatory overload enters a viscious circle is because financial institutions sontinue to build on this complexity because transactions and processes are fragmented and siloed.
The epicenter of implementing the new regulatory compliance must start with the culture of the organization that bridges the GRC gaps between the compliance and trading departments. Developing effective culture of compliance takes time and requires concentrated effort by C level GRC staff, heads of oversight and business departments.
Communications channels ensure that they are aware of each other's needs and then, with consideration, weave those needs into their own operations. It is ultimately the management function in a securities firm, not the compliance department, that has the responsibility to supervise business units and to direct firm and employee activities to achieve compliance with applicable laws.
However, it is also essential for the compliance department to provide supervisors with the tools to accomplish the activity specified within their policies and procedures and promote an organizational culture that values and promotes compliant behaviors.
One of the outcomes of the continued increase in compliance requirements and regulatory oversight is that compliance is now front and center on the trading desk.
In order to adapt to this compliance-centric approach, financial services firms are looking for new ways to evolve their culture of compliance, stay informed of regulatory change, communicate and train on policies, and ensure that their frontline employees are fully enabled.
Every day, thousands of professionally trained financial examiners are in the field taking a close look at the way traders operate, focusing most specifically on those that pose the greatest risk to markets and investors.
Whether in the U.S., UK or across Europe and Asia, financial market regulators conduct routine examinations as well as inquiries based on investor complaints and suspicious activity.
What tools are currently provided to the trading floor? Compliance manuals? Policy portals? A critical factor in achieving compliance is ensuring that all those involved in the trading activity understand and acknowledge the requirements and potential impacts of relevant legislation and changes to internal procedures. In many organizations, these procedures are delivered in the form of a compliance manual or electronic file folder of documents.
COMPLIANCE, FRONT & CENTER BY MIKE ROST
Due to the significant increase in regulation, what used to be delivered as a small booklet may now be the size of a phone book. With the current volume of information, organizations need to investigate new tools to communicate changes to regulations to those involved in trading activities.
To successfully manage policies and written supervisory procedures, organizations need to move beyond the policy manual approach and invest in solutions that can aggregate content from multiple sources and that enable those at the trading desk to view, acknowledge and accept policies and procedures. To complement the evolving library of policies, firms should also consider delivering in-context e-learning and training solutions as part of the communication process. Through interactive courses that drive active learning, retention, understanding and adoption, organizations are able to actively support enterprise-wide education or specific jurisdictional or departmental programs.
Are your current processes optimized to deliver this volume of complex and evolving compliance information? The bottom line is that, through technology, organizations have the opportunity to make compliance far less complex and to empower those operating on the front lines to more easily and effectively adopt and comply with the multitude of regulatory requirements and procedures.
A simplified approach is to provide tools that deliver regulatory intelligence, policies and procedures, and regulatory training direct to the trading desktop or mobile device.
By delivering regulatory intelligence directly to the trading desktop and providing the user with compliance-related news, expert analysis, upcoming regulatory development alerts, and a comprehensive library of rulebooks spanning regulatory agencies, SROs and exchanges, you effectively ensure compliance by making it a natural part of the trader's daily workflow.
Updates to policies and procedures could then be pushed directly to front-office staff all the while tracking acceptance and adoption and providing compliance teams with the ability to create on-the-fly reports and maintaining a complete audit trail for the regulator. By leveraging the power of the trading desktop, this information could be tagged and searchable, so the user can quickly find the insight that is important and relevant.
To embrace regulatory compliance is to make it part of the culture of the organization and part of the daily activities of the frontline staff. To evolve to this level of maturity, organizations should consider not only evaluating their current culture and processes between the front office and compliance teams, but evaluate new tools and delivery methods to place compliance front and center for those ultimately responsible for executing in a compliant manner.
