12th April 2019

Pace of global regulation to increase, finds JWG report

JWG has released a global report commissioned by MarkLogic Corporation, indicating that the pace of global financial regulatory change continues to increase. The report, “Ready for Digital Regulation?”, underscores the need for firms to increase their data integration capabilities in order to keep up with regulatory change, control growing compliance costs, and avoid penalties.

Main data points:
• There may be as many as 374 ‘legislative initiatives’ targeted at financial services firms by 2021.
• Of the 374 legislative initiatives, over 90 per cent will be applicable to both buy and sell-side firms. The expectation is that these regulations will have a greater impact on the buy-side, which has traditionally delegated much of regulatory compliance to the sell-side and is therefore less well equipped in technological resources and know-how to deal with that volume of regulation.
• This volume of regulation, coupled with growing demands from regulators, such as ad hoc requests for the complete audit trail of financial transactions, means that firms are under pressure to implement the right data management strategy to remain compliant.

PJ Di Giammarino, CEO, JWG, said: “Senior executives at large financial institutions are under substantial pressure to meet rapidly evolving regulatory requirements with project-based, manual approaches which create serious data headaches for compliance. Digital regulation offers an exciting alternative. In the future, firms will be able to update rulebooks just like a smartphone today and the refreshed software will mitigate new risks.”

JWG's prediction is for even more legislation beyond 2021 as change becomes the new normal, given new updates on the FAST Act in the US, Brexit looming in Europe, and from MiFID II revisions, which was only implemented in 2018. 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).

“Data lies at the heart of any organisation’s future strategy and is vital in how financial organisations respond to current and future regulatory challenges,” said Dr Giles Nelson, CTO Financial Services, MarkLogic. “It is also fundamental to utilising new and innovative technologies such as AI, machine learning, natural language processing and distributed ledgers. To meet these requirements, there is little choice but for firms to take a strategic and digital approach across functions and avoid the building of new application and data silos to tactically cope with the latest deadline or new technology.”