The changing regulatory landscape and the impact of global and jurisdictional variations

The changing regulatory landscape and the impact of global and jurisdictional variations

By Dawd Haque, Market Initiatives, Regulatory Transformation & Strategy, Deutsche Bank.

Dawd, can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?

My main role is to identify upcoming Regulatory changes, which will impact Deutsche Bank Corporate and Investment Bank Operations and Technology Globally. I perform an impact assessment and socialize this with senior management. I work with sponsors and stakeholders on prioritization and scheduling. During the interim between announcement and compliance date I work with internal and external stakeholders on open question and issue remediation using my formal and informal networks. 

I am the primary Deutsche Bank representative on many Trade Association Committees and Working Groups (AFME, GFXD, ICMA, ISDA and UK Finance) and have had the honor of chairing several industry best practice groups. I represent Deutsche Bank on the DerivServe Steering committee which is the primary business forum advising the DTCC Trade Repository board.
I represent the industry at both the CPMI IOSCO and FSB forums looking to design, implement and govern a global harmonized Transparency regime for financial Markets.

I have worked in various Front and Middle Office business roles at The European Bank for Reconstruction and Development, Barclays, Deutsche Bank, JP Morgan, Royal Bank of Scotland, Standard Chartered Bank and UBS. Following this, I have worked on Front to Back Regulatory change initatives for Barclays, Bank of America, BNP Paribas, Goldman Sachs and Northern Rock before rejoining Deutsche Bank in 2014.

At the Technology & Innovation Risk Summit, you will be presenting on ‘Assessing the changing regulatory landscape and the impact of global and jurisdictional variations’. Why is this a key talking point in the industry right now?

Due to the global nature of many Market participants both inherent to their own structure but also the clients they serve there are many regulations that need to be complied with. If we consider Regulatory Reporting, dependent on the trade, the actors location and domicility a single trade must be reported several times. This simple requirement becomes very complex when one considers the variations below:

  • Report Timings
  • Report Types i.e. Real time vs Transaction reporting
  • Reportable asset classes & products
  • Report formats and configurations
  • Attributes & values
  • Location reports are sent to
  • Validations & tolerances
  • Return receipt of acceptances and rejections
  • Velocity of reporting obligation change

These have led to firms having to create discrete reports and in the worst cases completely separate infrastructure to support each jurisdiction and or report. Thereby increasing Operational risk, Regulatory risk, complexity and Costs for the reporting parties and arguably has made the cross border monitoring of risks harder if not impossible for Regulators.

Local, regional and global regulatory authorities are in the process of altering their reporting requirements and engaging with the Industry and each other on how to align the requirements.

With the near to midterm alignment of rules the industry and supporting infrastructure will face many challenges, risks and costs which is the basis of many of my Trade Association and peer discussions at present.

Can you provide your insight into the further implementation of the G20 Pittsburgh Directive and how it will affect the landscape?

Risk mitigation and transparency have transformed the Financial Markets in the last 10 years. Every area of Wholesale banking has been transformed from pre trade client interactions through to final settlement. The complexity of this transformation is in the many to many relationships between functions performed by a financial institution and the regulatory obligations upon them.

The area I will focus on today is the Financial Stability Board & CPMI IOSCO mandate to provide guidance on Cross Border harmonization of Transparency and Risk mitigation techniques.

CPMI IOSCO have now published guidance papers for the Unique Transaction Identifier (UTI), Unique Product Identifier (UPI) and Critical Data Elements (CDE) data dictionary.

The Financial Stability Board are now working on Governance arrangements for these artefacts.

The industry have been collaborating with these bodies in the development of the global industry standards and the majority of the guidance is a vast improvement on the current divergent models used today. As with all great ideas, implementation will be the key to success.

The industry will continue to work closely with local regulators as they interpret the guidance and incorporate this into local regulation. It is only then we will be able to judge the impact. If those translations differ, the challenges will increase.

 


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