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“When we’re advising client on regulations
in general it tends to be more around making
the business fit for purpose, implementing
an operating model to deal with what is
likely to come,” says Robert Mirsky, manag-
ing partner, London, head of the global asset
management practice group at EisnerAmper.
“If we talked about this a year ago I would
have said there are operating model changes
that need to take place.
“It’s been 10 years of constant change in the
regulatory reporting space.”
IAN RENNIE, MANAGING DIRECTOR, KAIZEN REPORTING
“Then two major things have happened
to change the direction of regulations. One
is Trump and two is Brexit. What it has
meant is that the US is in a position where
the leadership is saying ‘why do we have so
many regulations?’. The Treasury has come
out and said about the asset management
industry that ‘it is a tremendously important
industry for the average man on the street’
so the increasing burden and costs are being
passed on to the end investor.
“So there is a changing mind-set. General-
ly speaking, if the US decides not to follow
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Global Custodian
Fall 2018
along with what Europe is doing then Eu-
rope is out of luck. What the response is to
that will be very interesting.”
Regulatory fatigue
These geopolitical events may have hit the
pause button on major operational changes
with so much uncertainty. At the same time,
there is also an element of regulatory fatigue,
whereby the rules have come in such quick
succession in recent years that even the reg-
ulators are said to be flagging slightly. This
has meant that without impending deadlines
the thought of additional preparation work
for forthcoming deadlines may not be high
on the agenda.
“It’s been 10 years of constant change in
the regulatory reporting space,” says Ian
Rennie, managing director at Kaizen Report-
ing. “Senior managers in the clients we deal
with – tier one banks, asset managers, hedge
funds and brokers – they are dealing with
this fatigue.
“MiFID II was certainly the most complex.
It was just the wide-ranging nature of it and
it was the most complicated since the Dodd-
Frank Act.”
While it was inevitable this would happen
to market participants, the more surprising
twist in the tale is that the fatigue has im-
pacted regulators as well. Constant fightback
on rules, ever-changing deadlines and the
rejection of pleas for increased budgets and
staffing to deal with the weight of the load
have taken their toll over the decade. Now a
range of reporting mandates have come into
force, they are also coming under pressure
to use the data in order to meet the G20
endeavours of increasing transparency and
oversight of the markets.
“There is a huge burden on the regulator to
monitor and review the information they are
collecting,” adds Mirsky. “Regulators over
the world are trying to add resource as the
governments look to cut resources.”
Without 2018/2019 deadlines, the focus
may now switch to data quality. Reporting
rules have conjured up widespread con-
fusion across the market with demanding
requirements along with inconsistencies
across different regulations. This could also
be the first area regulators begin clamping
down on. Rennie believes the pressure will
be coming from above.
“There will be a continuous focus on the
quality of the data, with the regulatory
bodies coming under huge pressure from