JWG CEO PJ Di Giammarino

Database supplier Mark Logic says financial services firms will be challenged by 374 new regulations by 2021.

Financial regulations specialist JWG was commissioned by Mark Logic to investigate the universal challenges facing clients such as The Bank of England, KPMG and ABN-AMRO.

JWG’s Ready for Digital Regulation report advises on how to prepare for more regulatory change while managing the growth of compliance costs and avoiding penalties. Researchers interviewed senior executives from 12 tier-1 global financial institutions.

Mark Logic claims its report outlines the details of the 374 new legal challenges for compliance departments between now and 2021. Of these, it says 90 per cent are applicable to both buy and sell-side firms.

The regulations overload will be caused by new updates on the FAST Act in the US, Brexit pressures in Europe and from the 2018 MiFID II revisions. In the second half of 2018, JWG found over 2,150 documents in the regulatory pipeline, which were predominantly from Europe (33 per cent ) and North America (33 per cent).

The biggest impact will be on the buy side of financial services, it says. This could cause problems because the staff there have traditionally delegated regulatory compliance duties to their peers in the sell-side. This means many fintech staff may be under-resourced and ill-prepared for the incoming volume of regulation.

Meanwhile, regulators may ramp up the pressure through ad hoc requests for the complete audit trail of financial transactions which will test their data management strategies severely, says the vendor.

The ‘substantial pressure’ imposed on senior executives to comply with new waves of regulation will not be relieved by project-based, manual approaches said JWG CEO PJ Di Giammarino. Fintech needs to evolve so that firms can ‘update rulebooks like a smartphone [so that] the refreshed software will mitigate new risk,’ said Giammarino.

by Bill Boyle
IBS Intelligence Senior Editor