Archives: News Room

By Walter Ferstand, Sales Compliance Subject Matter Expert at IPC for Traders – first published May 11, 2017

While talk of repealing the Dodd-Frank Act has been at the fore of regulatory rollbacks vowed by the new U.S. administration, in most financial industry circles the sentiment is that a wholesale dismissal of the regulation is unlikely.  And though parts of the legislation are being targeted – ostensibly to recalibrate bank lending thresholds and protections under the Consumer Financial Protection Bureau – for millions of regulated market participants, the ship has sailed regarding ethical guidelines, communications standards, record-keeping and data compliance.

The Dodd-Frank Act is often referenced as the post-2008 financial crisis law that, by defining dealer conduct standards, recordkeeping and reporting requirements and mandating trading on regulated exchanges, swap execution facilities and two-party transactions via clearinghouses, lowers risk and costs for businesses, consumers, and strengthens confidence in the market.  So what are financial firms and regulated participants to make of this repeal talk?  Even if changes were to include trading guidelines, for good reason, for most global financial firms it would (and should) be business as usual.

To better understand where we currently find ourselves with Dodd Frank it’s worth a brief visit through history of the financial markets and the different regulations that have been enacted.  Absent a Dodd-Frank Act and immediately following the 1929 stock market crash, to avoid a casino-like environment, boost market integrity and protect investors, the U.S. federal government enacted rules for compliance and mitigating risk through  a slew of then-new legislation such as the Glass Steagall Banking Act of 1933, which held that commercial banks were no longer allowed to underwrite or deal in securities, while investment banks were no longer allowed to have close connections to commercial banks. Further, the Securities Act ensured issuers selling securities to the general public disclosed material information to investors and that securities transactions are not based on fraudulent information or practices, while the Securities Exchange Act of 1934 directly regulated the markets on which securities are sold and their participants.  Lastly, the Investment Company Act of 1940 outlined investment company functions, structure, accounting recordkeeping, auditing requirements, transactions among affiliated persons and the redemption and repurchase of securities.

Fast-forward to 2010, the Dodd-Frank Act comprehensively reformed the regulation of swaps, which invariably helped accelerate the development of electronic trading within U.S. jurisdictions as we know it today.  As such, while the pace of regulatory progress has differed from asset class to asset class, a universally applicable consequence of this new market structure is an increased reliance on data and technology.1  For its part, the U.S. is shifting to shortened settlement cycles — as with the move this fall to trade plus two business days – and real-time surveillance, all of which further mitigate operational and system risk.  Organizations such as the Financial Industry Regulatory Authority (FINRA), National Futures Association (NFA) and the Commodity Futures Trading Commission continue to empower the financial markets to self-regulate and penalize member firms when they violate agreed-upon industry rules and regulations.  In yet another tightening of regulatory oversight, the CFTC moved surveillance functions such as monitoring for suspicious trading patterns that may indicate fraud or manipulation to the Division of Enforcement, while surveillance of trading activity for significant market developments and other information will remain with the Division of Market Oversight under a newly created market intelligence branch.2

Though regulation repeal is being bandied about within the highest levels of government, with regulators like the CFTC increasing its focus on market development and data analytics, financial firms in the U.S. and abroad know they must continue to enforce the long-standing regulations already in place.  What’s more, regulators outside the U.S. influence how financial firms are doing business globally. That’s one reason why evolving political climates and the prospect of a Dodd-Frank diminishment are not necessarily deterring compliance decisions for 85 percent of C-level financial firm executives, according to recent studies. To illustrate, U.S. firms that fail to keep up with global requirements for record-keeping under the European Union’s forthcoming MiFID II regulation, for example, would be at a disadvantage if called to defend themselves without the proper supporting data, and risk potentially incurring millions of dollars in fines and irreversible damage to their reputation.  Given this environment, it’s not surprising that financial firm leaders are most concerned about compliance culture and professional conduct concerns (89 percent), understanding rules and regulations (87.3 percent), and implementing new regulations (86.4 percent).

Repeals of financial regulations or aspects of Dodd-Frank may or may not be on the horizon.  In the meantime, as regulators become increasingly savvier on how to remain relevant and impactful in their oversight, surveillance happens instantaneously and regulation continues to increase. As a result, having a holistic approach to wrangling a financial firm’s data across every area of its business and automating that function will be critical. Whether doing so in order to comply with regional or global rules or be an ethical, transparent corporate citizen, an active overview of your firm’s compliance efforts is guaranteed to gain deeper insights into how your company communicates, discover efficiencies in how it operates and ultimately gain ground competitive ground in the marketplace.

By Tom McNeila, Senior Product Marketing Manager at IPC for Traders – first published May 1, 2017

Just as financial markets firms become more confident that they understand the implications to their business of Dodd-Frank and MiFID, here comes MiFID II and the General Data Protection Regulation (GDPR) expanding the number of regulations their organizations must adhere to and the number of employees affected by the regulatory requirements.

The growing portion of the workforce now considered ‘regulated users’ can pose a potential risk to profitability and reputation if these users do not follow company policies set up to meet all regulatory requirements. To address this challenge, the financial community is investing in technologies. In one recent IPC survey, more than 80% of firms stated their spending on compliance technologies has increased by more than 20% year over year.

The Role of Technology for the ‘Regulated User’

For ‘regulated users,’ education of company policy is essential, but investing in and implementing the right technology is the key component to ensuring both compliance and productivity.

Mobility is a prime example of where the need for productivity and compliance requirements intersect. Mobility offers the opportunity for productivity without the investment in infrastructure – for many a laptop and mobile phone are all that is needed. Whether it is entering new markets, establishing new geographies or offering the opportunity to be productive wherever or whenever needed, organizations need to offer their ‘regulated users’ mobility while simultaneously ensuring all regulatory requirements are met. However, mobility also offers the opportunity for behaviors that are not in line with company policy. The use of ‘zero-evidence’ applications that are outside an organization’s control is a common example of a behavior that has resulted in fines and loss of reputation for more than one financial institution.

To combat this type of behavior, organizations are unifying their communication elements under one platform. A single platform offers your ‘regulated users’ a single workflow over multiple endpoints, adding efficiency to their work processes. For the organization, this single platform ensures your ‘regulated users’ will adhere to company policies and ensures the proper recording and archiving of all communications. This achieves the balance organizations need for continued success.

It’s A Brave New World

This new ‘regulated user’ world will most likely be a thorn in the financial community’s side for as long as there are regulatory requirements, but those organizations that invest wisely and partner effectively can turn compliance requirements into a competitive advantage.

 

LONDON – May 3, 2017 – IPC, a leading global provider of secure, compliant communications and networking solutions for the financial markets community, today announced a collaboration with Chartwell Telecom that will strengthen IPC’s presence in key growth markets of Central and Eastern Europe and support its overall strategic global expansion. The collaboration will leverage Chartwell’s highly visible presence in the region and offer IPC clients superior local customer support, project management, service monitoring and professional services. The initiative is part of a wide-ranging investment program IPC is making in important markets. The announcement follows recent news of IPC’s enhanced capabilities in Russia as well as an important leadership role with the World Exchange Congress in Hungary.

“We are delighted to work with IPC and provide Central and Eastern European market participants with reliable and secure access to counterparties and trade lifecycle services through one of the world’s largest and most diverse financial ecosystems,” said Mark Zelman, Managing Director, Chartwell Telecom. “Our collaboration aims to deliver significant benefits to firms in the region including the ability to source liquidity, manage risk and hedge in the global financial markets.”

“The Central and Eastern European markets have been witnessing increased trading of liquid financial instruments such as stocks, bonds, ETFs and derivatives as well as rapid growth in pension and insurance assets,” said David Brown, Senior Vice President and Managing Director, Financial Markets Network, IPC. “The market is poised for growth and we are thrilled to work with Chartwell Telecom to expand our footprint in the region and provide market participants with cutting-edge communications and connectivity solutions.”

The IPC Financial Markets Network portfolio includes Connexus Extranet, Connexus Ethernet, Connexus WAN, Connexus Voice and Trader Voice services. IPC’s Financial Markets Network interconnects global financial centers and allows access to more than 6,000 market participant locations across 700 cities in more than 60 countries. Market participants interested in speaking to IPC’s subject matter experts can schedule a meeting with us or email us. We also encourage you to follow us on Twitter @IPC_Systems_Inc or LinkedIn.

About Chartwell Telecom

Chartwell Telecom is a value-added telecommunications service integrator, creating coherent “turn-key” basis solutions to enable enterprises to communicate across international private networks and have access to international services. In particular, Chartwell specializes in providing services to those enterprises requiring cost-effective communications with and within the United Kingdom, Central and Eastern Europe, Russia, Ukraine and CIS countries, with capabilities developing in other European countries through its partners. http://www.chartwelltelecom.com

About IPC

IPC is a technology and service leader that powers financial markets globally. We help clients anticipate change and solve problems, setting the standard with industry expertise, exceptional service and comprehensive technology. With customers first and always, we collaborate with each to understand their individual needs to help make them secure, productive and compliant within our connected community. Through service excellence, long-developed expertise and a focus on innovation and community, we provide agile and efficient ways for our customers to accelerate their ability to adapt to the ever–changing requirements for advanced networks, compliance and collaboration with all counterparties across the financial markets. www.ipc.com

Certain statements contained in this press release may be forward-looking statements. These statements may be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should” or “will” or similar terminology. Any forward-looking statements are based on current expectations, assumptions, estimates and projections. Such forward looking statements involve known and unknown risks and uncertainties, many of which are beyond our control. Actual results may differ materially from any future results expressed or implied by these forward-looking statements.

 

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More and more fixed income traders are looking for ways to source liquidity, generate alpha and mitigate risk effectively, while still remaining compliant. We are increasingly seeing institutional investors, including pension funds, endowments, sovereign wealth funds, insurance companies and corporate treasuries sourcing liquidity from other buy-side firms as well as non-dealer banks. Communication, collaboration and connectivity are key as market participants need to be linked to one another. As the buy-side increasingly looks to trade with other buy-side firms and non-dealer banks, they need to have reliable connectivity throughout the entire trade lifecycle and the ability to rapidly access a ready-made ecosystem of liquidity venues, counterparties, brokers/dealers, trade lifecycle services and market data.

IPC’s Global Product Marketing Director Ganesh Iyer discusses more in the article, Capitalise on buy side firms, originally published on April 12, 2017 in FT Adviser. Read the full article here.

This article was republished with permission by the copyright holder, Thomson Reuters. It first appeared in the Thomson Reuters Regulatory Intelligence subscription service for compliance and risk professionals.

Written by Richard Satran for Thomson Reuters Regulatory Intelligence – first published on April 19, 2017.

A wave of financial services deregulation promised by the administration of U.S. President Donald Trump has so far had little impact on decision making by top risk and compliance officers, a survey at a major industry conference last month found.

Political issues are “not yet weighing heavily on compliance decisions” for 85.2 percent of those polled by financial services communications firm IPC in its survey taken in March, entitled “The C-Suite and Compliance.” However, 9.8 percent viewed the potential regulatory changes as important enough to postpone key decisions for later in the year. Only 4.8 percent saw them significantly affecting decisions already made.

The response came from top level risk and compliance executives, with 81 percent holding C-level positions as chief compliance officers or chief legal counsels as well as chief risk, data, information and operations officers, and chief executive officers. The survey was compiled at the 2017 Securities Industry and Financial Markets Association Compliance and Legal Society Annual Conference on March 19-20, in San Diego.

The Trump administration took office in January with a flurry of activity aimed at peeling back the Dodd-Frank legislation of the prior administration. But delays and legal obstacles have so far stalled most of the initiatives.

Nearly seven years after the passage of Dodd-Frank, which resulted in an unprecedented roll out of regulations for financial firms, compliance executives say they are “supporting business goals” and continuing to implement regulatory requirements.

“Global financial services firms’ regional politics tend not to play as a large a role as one might expect,” explained Michael Speranza, IPC senior vice president, corporate strategy. What’s more, he said, “generally, the region having the most stringent regulatory requirements will guide how you do business globally.”

Speranza said that U.S. firms that fail to keep up with global requirements under the European Union’s MiFID II record-keeping obligations would ‘place a U.S. firm at a disadvantage ” if regulatory questions arise. “Trying to defend yourself without this data can be a tricky proposition,” he said. “Non-compliance can lead to millions of dollars in fines or reputational damage for companies not wise enough to take it seriously.”

The potential demands of regulators outside the United States are keeping firms wary of easing compliance, he said. It explains why compliance culture and conduct concerns remain the top issue for the group made up largely of chief compliance, risk, data, information and legal officers, with 89.3 percent calling a top concern. Understanding rules and regulations remained a high priority (87.3 percent), along with implementing new regulations (86.4 percent).

Nearly all of the firms increased investment in risk and compliance programs over the past year. Most of the firms (80 pecent) said spending had gone up 20 percent, another 5.9 percent spent 10 percent-to-20-percent more. Just 6.0 percent stayed at the same level.

By Robert Powell, Global Director of Compliance at IPC for bobsguide – first published March 29, 2017

With MiFID II implementation high on financial firms’ agenda, there is going to be a major change in the way that trading communications are recorded and stored. Both mobile and electronic trading communications have increased significantly over the last few years, which is reflected in the new rules that extend the scope of communication recording and surveillance to include all types of interactions, including text, IM, email, mobile, and social media. This is an ever-growing challenge for financial firms who must capture data from all their regulated users involved in pre-, during and post-trade activities and include communications from far beyond the trader’s turret.

Under MiFID II, records will also need to be retained for a period of five years, which will push firms to review and update their retention strategies. In the United States, the Commodities Futures Trading Commission’s (CFTC) rules require voice calls to be retained for one year while text communications are retained for five years.

One of the biggest change for businesses is that these new interactions are creating significantly greater volumes of data from disparate sources that must be retained and managed for potential regulatory requests and review. Unsurprisingly, most firms want to manage this data holistically as opposed to using a resource-intensive and siloed approach to each type of data source. It’s becoming increasingly important for firms to rely on a platform that stores and catalogues both e-communications and voice communications – seamless capture, archive and analytics through a convenient and cost-effective cloud-based system instead of one requiring more onsite infrastructure and people to manage.

Record retention and voice recording

With regards to voice recording, MiFID II stipulates that firms must conduct surveillance of key communications to ensure that they are compliant with market rules. In order for this to be effective, clever technology will need to be deployed; technology that can identify the context and impact of what is being spoken about, and can deliver insight into risks to ensure no wrongdoing is occurring.

Most financial markets records retention regulations also demand electronic communications and voice recordings be preserved, as far as possible, in their original form. This can be challenging when managing voice recordings should the quality of audio recordings not be good enough. Furthermore, voice recordings take up a lot of space so firms will need to ensure that they have adequate storage to hold this data. The good news is that the market is responding and newer communication devices are offering pristine audio for compliant call capture, retrieval and analytics to meet regulator requests.

Another challenge firms are facing is that many have legacy platforms that were built to meet the initial demand for WORM (write-once, read-many) storage at the advent of Dodd-Frank’s records-retention requirements. However, these systems are aging, and many are, or soon will be, end-of-support or end-of-life. Businesses are subsequently facing a costly hardware refresh and many are looking to outsource their archival.

Reducing risk holistically

As the European regulatory environment becomes more complex – and upcoming regulations such as General Data Protection Regulations (GDPR) will only add to the complexity – there is a growing need for a unified archiving platform for customers providing a single pane of glass into all of their communications. Increased regulatory requirements have also added several important reasons to automate the archiving process which should be heeded for customers to remain competitive. Firstly, customers must attest that records have not been altered at any point in the archiving process, and they must remain tamper-proof for the duration of their retention. Secondly, customers must have tighter control over enforcing their retention policies across all forms of communications, and further ensuring that they are not over-retaining data – something GDPR refers to – by having a defensible set of policies and procedures for deletion. Finally, when needed, customers must be able to quickly reproduce all communications leading up to a specific transaction or in a given time period.

The increasing breadth and complexity of record-keeping and record-delivery guidelines is pushing firms to find a way of holistically managing all communication data from the point of origination through capture, archive and transaction analysis. Indeed, this will be a competitive advantage for financial services firms that want to ensure that they comply with regulatory requirements, such as MiFID II, as efficiently as possible and improve their risk management capabilities.

With less than a year to go until MiFID II is enforced, firms need to be taking steps – if they aren’t already – to put tools and processes in place that will meet the new regulations around voice recordings and archiving. They should be focusing on finding means of capturing calls more efficiently and effectively, and implementing a unified archive that will guarantee the safe keeping and easy access of their data for the following five years. It’s crucial that businesses remain compliant without the risk of any misunderstandings – the repercussions of failing to do this are just too high.