The True Scale of Global OTC Swap Reform

When the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank) was passed back in July 2010, you could be forgiven for thinking that this was the regulation for global OTC swap reform. The US really were ‘first-to-market’ on this one, by a long margin, and we didn’t hear about OTC swap reform from other parts of the globe for the best part of another two years.

Skip forward to August 2012 when the European Market Infrastructure Regulation (EMIR) was passed – the European equivalent of Dodd Frank’s Title VII – and the penny started to drop that this was unfolding to be a far bigger initiative than many folks had first thought.

Now, if you had asked me earlier this year “was there life outside of Dodd Frank and EMIR”, I would have said yes and I could have told you that Canada and Australia had their own OTC swap reform programs, and that Hong Kong and Singapore were also looking to do something.

But that was about it.

It was only when I started digging deeper, that I realised how far off the mark I was. I mean, I only forgot Japan – the third biggest economy in the world – and I know they trade swaps out there for sure! Continue reading

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Extraterritoriwhat?!

“Extraterritoriality”.

When I first came across this term last year, I couldn’t even spell it, let alone tell you what it meant, but in today’s complex world of regulatory change and OTC swap reform it’s kind of important to understand.

So what’s it all about?

If you look it up in the dictionary, you get “the right or privilege of a state to exercise authority in certain circumstances beyond the limits of its territory”.

And that pretty much sums it up.

In the context of financial regulations, it means that if a country thinks that your firm or business should fall in-scope of a particular regulation, even though your firm or business may not be based in that country, then the regulatory scope to comply will be extended to include you.

The basis behind extraterritoriality is straightforward – if it wasn’t applied, the entire global financial services sector would simply relocate to a jurisdiction that didn’t bother with regulations. Continue reading

MiFIR is Part of EMIR, Right?

OK, second time this month I have had this “isn’t MiFIR part of EMIR” conversation, least of all the number of times I have had it this year, so let’s have a go at clearing this up.

It’s probably easier to understand how this all came about if you wind back the clock to April 2010 when CESR issued technical advice to the Commission recommending possible revisions to the Markets in Financial Instruments Directive (MiFID) that was implemented way back in November 2007.

This formed the basis of what was to be known as the ‘MiFID Review’.

The primary objective of the MiFID Review was to bring areas of the market that had escaped the MiFID net, such as broker crossing networks and dark pools, into scope, as well as update the regulation to capture market advancements in technology, such as automated trading and high frequency trading.

Now wind forward the clock, and in stumbles EMIR, which clearly had some overlap with what was trying to be achieved with the MiFID Review. Continue reading

Efficiencies Derived from Regulatory Architecture

Under the weight of regulatory complexity, clients have been looking at how the traditional approaches to implementing regulatory change have struggled to deliver in recent years.

In a previous blog here, I looked at a solution that addresses just this and introduces the idea of deploying a Regulatory Architect to manage Regulatory Architecture.

In a follow-up blog here, I looked at the Role of the Regulatory Architect and how Regulatory Architecture embeds intelligent process and structure into the change programme, enabling the strategy to realise efficiencies that result in a faster and cheaper delivery.

So what efficiencies do Regulatory Architecture bring to the table? Continue reading

The Role of the Regulatory Architect: Bridging the Gap

In a previous blog here, I looked at why there is a business case for using Regulatory Architects to manage Regulatory Architecture.

If you have ever been involved in a regulatory change project, you will likely have experienced the many ‘pains’ that are encountered when trying to understand, let alone implement, complex regulations.

The role of the Regulatory Architect is to alleviate these pains by bridging the gap between the regulatory process and project delivery.

Bridging The Gap

So what are some of the tools that the Regulatory Architect might use to ‘bridge the gap’ and enable greater implementation efficiencies? Continue reading

Regulatory Architecture: A New Stategy for Managing Regulatory Change

When we look at a typical change program, we wouldn’t think twice about deploying an IT Architect to manage the IT Architecture or a Business Architect to manage the Business Architecture so when a change program involves complex regulations, why don’t we deploy a Regulatory Architect to manage the Regulatory Architecture?

Regulatory Architect

Regulatory change programs are unique to themselves and bring with them a different set of ‘pains’ that require different solutions to solve.

So what are some of the current ‘pains’ in the market? Continue reading