Regulatory challenges of 2012 – part 3: All regulation

Peter Moore, head of regulation at The IMS Group has outlined a number of regulatory challenges through the coming year.

1. Volume of regulatory change – while a number of regulatory changes have been introduced since the 2008 financial crisis, 2012 marks us getting to the business end. March 2012 sees the deadline for investment adviser registration with the SEC in the US under Dodd-Frank. And European regulatory developments come into effect at the rate of one or two a year from 2012. 1 November 2012 sees the commencement of the EU regime for short selling and CDS. The regime for OTC derivatives is due to commence by the end of the year.

The sheer volume presents a challenge to firms as they may struggle to prioritise and respond to each item as it merits.

2. Regulatory weariness – senior management becoming tired of hearing about the “tsunami of regulation”

Senior management of financial services firms can be forgiven to a degree of becoming weary of the constant talk, and also the cost, of regulatory change. We are now getting to the point where it feels like “it was ever thus”, which undermines those regulatory changes (some, not all) which have validity.

The regulated community should start to hold regulators and politicians to account for delivering cost effective, proportionate, effective regulation. Very few of the regulatory changes currently in play globally were subject to meaningful cost-benefit analysis and despite the existence of global bodies such as IOSCO and G20, fewer of these initiatives were co-ordinated. As the industry is constantly told that good regulation is a cost (and also value) of doing business, the industry should mobilise itself to exact more in return, holding the lawmakers to account. This should be a priority, rather than a burden in 2012.

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