how to adapt to changing regulations in the financial markets worldwide?
TRANSCRIPT
How to adapt to changing regulations
in the financial markets worldwide
Projective’s approach to Global Regulatory Change
The times,they are a-changin’...
Regulatory changes in the market
“We meet in the midst of a critical transition from crisis to recovery to turn the page on an era of irresponsibility and to adopt a set of policies, regulations and reforms to meet the needs of the 21st century global economy”
(G20 leader statement, Pittsburgh, 2009)
2009: G20 SUMMIT PITTSBURGH
Clear commitments to further strengthen the international Financial Regulatory system
Regulatory change impacts:
1. Markets New market structures and tighter rules
2. Financial institutions New bank structures and new capital and liquidity rules
3. Tax Treatment Newglobalstandardtoincreasetaxtransparencyandfighttaxinvasion
2009: G20 SUMMIT PITTSBURGH
Regulatory changes in the market
Regulatory changes in the market
1 NEW MARKET STRUCTURES AND TIGHTER RULES
Regulatory changes in the market
AIM: � Improvetransparencyinthederivativesmarkets
� Mitigate systemic risk
� Protect against market abuse
¨ Establish regulationforfinancialinstrumentsandproductsto improvetransparencyandreducerisk
1 NEW MARKET STRUCTURES AND TIGHTER RULES
Regulatory changes in the market
RegulatingOTCderivativemarkets:
Dodd Frank Act - Title VII
European Market Infrastructure Regulation (EMIR)
Asia, Latin America, Middle East ¨ Drafting and implementing own legislation
A LOT OF REGULATION HAS BEEN PUT IN PLACE SO FAR
Regulatory changes in the market
2 NEW BANK STRUCTURES AND CAPITAL LIQUIDITY RULES
Regulatory changes in the market
AIM: � Improveboththequantityandqualityofbankcapital
� Discourageexcessiveleverage
� Reduceincentivesforbankstotakeexcessiverisks
¨ Structural reforms designed to address new regulations to protect customers and taxpayers
¨ Strengthen bank capital requirements and increase bank liquidity reservestodrivedownsystemicrisk
2 NEW BANK STRUCTURES AND CAPITAL LIQUIDITY RULES
Regulatory changes in the market
Dodd Frank Act Art Commission
Dodd Frank Act Volcker Rule:prohibitingtradingandinvestmentsincertainprivateequity funds and hedge funds
Independent Commission on Banking
UK Banking Reform: ring-fencing of retail banking
Liikanen Commission:advisingonseparationofhighrisktrading,toughercapitalrequirements,strongerbankgovernance
Commission Proposal on Banking Structural Reform
Basel Committee on Banking Supervision: stronger bank capital requirements, increasedbankliquidityreserves
“Basel III”comprehensivesetofreformmeasures,developedtostrengthentheregulation,supervisionandriskmanagementofthebankingsector.
COMMISSIONS WERE PUT IN PLACE AND MEASURES WERE TAKEN
Regulatory changes in the market
3 NEW GLOBAL TAX STANDARDS
Regulatory changes in the market
AIM: � Increase tax transparancy
� Fighttaxevasion
¨ Exchange of information between tax authorities and requests to financialinstitutionsto cooperate to address tax avoidance
3 NEW GLOBAL TAX STANDARDS
Regulatory changes in the market
Foreign Account Tax Compliance Act (FATCA)
PreventUSindividualsandentitiesfromusingcompaniesandfinancialstructureoutsidetheUStoavoidUStaxation
Crown Dependencies and Overseas Territories Regulations
Automatic tax information exchange agreements
Standard for Automatic Exchange of Financial Account Information in Tax Matters
Detailed account information and annual exchange
Financial Transaction Tax (FTT)
Enhancedcooperationbetween11EUmemberstatesintheareaoffinancial transaction tax
FIGHT TAX EVASION AND GAIN MORE INSIGHT
Regulatory changes in the market
OUTLOOK ON REGULATORY COMPLIANCE
1 Structural Reformof the Banking Sector 2 Restructuring the Rest
of the Financial System 3 Capital and LiquidityNext Phase
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ExtraterritorialRegulatory Change
Competition
IndividualAccountability
Customer CompliancePu�ing Customers First
OperationalRisk
The BankingUnion
Wholesale ConductRisk
TOP 10 REGULATORY CHANGES FOR 2014
Managing regulatory change
Sounds great! How do we manage this?
Managing regulatory change
Effectively Managing Regulatory Change
through a defined lifecycle
Managing regulatory change
APPROACH TO REGULATORY CHANGERegulatory Change Lifecycle
Managing regulatory change
1 PERFORM A DETAILED REGULATORY ANALYSIS AND DESIGN
Managing regulatory change
¨ Identify the regulations that are impacting you as a business
¨ Follow the regulatory process
¨ Align with the global political agenda especiallyoftheUSandEUwithacloseeyeonAsia
BUILD A REGULATORY ROADMAP
Managing regulatory change
APPROACH TO REGULATORY CHANGERegulatory Change Lifecycle - Regulatory Analysis and Design
Managing regulatory change
APPROACH TO REGULATORY CHANGERegulatory Change Lifecycle - Regulatory Analysis and Design
Managing regulatory change
¨ Lookforoverlapinkeyareasoftheregulations
¨ Don’t look at impacts independently
¨ Ensureamorecost-effectiveimplementation
AVOID ‘DIGGING UP THE ROAD’ MULTIPLE TIMES IDENTIFY CROSS DEPENDENCIES
Managing regulatory change
APPROACH TO REGULATORY CHANGERegulatory Change Lifecycle - Regulatory Analysis and Design
Managing regulatory change
¨ Ensurecompliancebyfocusingonoverarchingregulatorythemes
¨ Groupindividualregulationinspecificthemes
¨ Structure teams so that the subject matter experts are always focusing on their particular area of expertise
¨ Look at the outlook of this analysis to decide on how to structure your Regulatory Change programs
APPLY A THEMATIC APPROACH
Managing regulatory change
2 NOW IMPLEMENT REGULATORY
Managing regulatory change
¨ Deep Dive Detailedimpactassessment,overlayregulationwithbusinessmodels
¨ Implementation plan Triggering next stage in the implementation lifecycle
ExampleOTCreformimplementationEUEMIR,USDFTitleVIIandotherjurisdictions
IMPLEMENT REGULATORY CHANGE
Managing regulatory change
¨ Execution compliance and business strategy Changes of operating models, creation of new operating models, business processes and IT changes
IMPLEMENT REGULATORY CHANGE
Managing regulatory change
3 ENSURE THAT YOU REMAIN COMPLIANT POST IMPLEMENTATION
Managing regulatory change
¨ Management of controlled transitions fromregulatoryimplementationactivitiesinBAU
¨ Ongoing compliance monitoring and assurance
COMPLIANCE SUSTAINABILITY
CONTINUOUSSTAFF
TRAINING
CONTROLLEDTRANSITION
INTO BAU
REGULATORYCONTROL
AND SUPPORT
ASSURANCEFRAMEWORK
Projective’s expertise in this
It looks good, but can I get some help?
Projective’s expertise in this
How Projective can help you with the overall management
regulatory change
Projective’s expertise in this
“Projective is the leading independent provider of programme and project management services to the financial services institutions across Europe”
¨ Work with you to build your regulatory roadmap and determine the impacts on your current change programs
¨ Assistyoutodefinethebestholistic,thematicapproachtowardsregulatorychange
¨ Helpyouprioritizeyournewregulatorychangeinitiativesandsubsequentplanningand budgeting
¨ Workwithyoutodeliverregulatorychange-Implementaneffective,riskbasedchange program
¨ Ensure a regulatory control framework is in place post implementation to ensure regulatory compliance
PROJECTIVE’S SERVICES FOR YOU
For more info, visit www.projective.biz