An enlightening podcast discussion on what effect the regulation of the financial services industry will have was released yesterday by Finextra, featuring a discussion between Michael Dawson of Promontory, (an ex-regulator himself) and Keith Saxton, Global Director of Financial Markets of IBM.
Here are some of the highlights and our conclusions on them:
- Management information systems available to regulators and firms are not robust enough to cope with increased demands. It’s still too hard to measure risk horizontally and technology is being looked at now to help cope with this
- There was a clear identification of regulators as opportunities – especially a potential “uber-regulator” – maybe the IMF, to look at systematic risk across financial markets
- The commentators said that there was a significant data issue – that FS companies needed to build effective models of liquidity risk, and technology was urgently needed to help solve this issue
- The desire for greater transparency is becoming more real, there’s more commitment to it. First stop will be governments opening up their “national darlings” to regulators. There was a view that only technology could help FS companies manage the huge number of compliance obligations in the future.
- Regulators are keeping a sharp eye out for banks “going too fast, taking on too much risk, banks who might need to slow down” – the banks that do well out of the turmoil will need the systems and processes in place to prove that they can chew what they bite off.
