A survey by The International Securities Association for Institutional Trade Communication (ISITC) reveals the full extent of what many assume, which is that nearly the entire industry sees that the operational changes stemming from regulatory reform pose substantial challenges.
Specifically, 96% of ISITC member firms polled (made up of broker-dealers, investment managers, custodians and vendors/utilities) said that adapting technology to keep up with regulatory changes is somewhat-to-extremely challenging, and the same percentage believe that just trying understand the changes is somewhat-to-extremely challenging.
?The trends uncovered by the survey have indicated what ISITC very much expected: that the majority of respondents are apprehensive about regulatory changes in regard to operational impact,? says Kevin Cullen, ISITC board member. ?Upon closer examination, this may be due, to a large extent, on the readiness of regulators to fully define new regulations. There has been slippage in the definition and roll-out of new regulations and initiatives on both a global and domestic basis.?
While nearly all firms find it challenging to understand and implement technology for regulatory reform, only 64% see compliance as extremely critical, perhaps due to the uncertainty of what compliance will mean exactly. Furthermore, only 25% expect these changes to have a positive impact. 42% don?t think reform will deliver business benefits, and 33% are unsure.
The changing rules do create an opportunity for vendors to provide new solutions, but as Cullen explains, there still needs to be more clarity before there can be significant shifts in technology.
?Many firms have adopted and deploy modern technologies that take advantage of open standards, mapping and integration utilities, and flexible data models,? he says. ?Part of the challenge lies with the implementation of the new rules by the regulators themselves. It is difficult to make application and database changes in advance of new rules if those rules are not being rolled out or enforced.?
ISITC takes a poll to identify industry challenges every year, and next year, Cullen hopes to see more tangible reactions to regulation??in other words, less apprehension and more implementation,? he says.