Lombard Risk annual regulatory conference tackles ‘tsunami of regulation’

Lombard Risk Management Plc hosted its second Annual Regulatory Update Conference – with chairman Philip Crawford warning of a ‘tsunami of regulation’.

More than 300 delegates from 170 different firms – double last -year’s attendance – took part in the event at the Andaz Hotel in London.

This year’s conference was designed to bring the audience up-to-date with short, medium and longer term regulatory requirements, highlighting the key issues firms need to consider to meet the ‘new normal’ in a fast-changing regulatory environment. The event included two key panel sessions and a small exhibition featuring the British Bankers Association, Katalysis, Planixs, SunGard, PWC, Accenture and Oracle.

Philip Crawford, Executive Chairman of Lombard Risk, opened the event by describing how ‘the tsunami of regulation has become a series of overlapping waves.’

‘The demands made of the industry are considerable and the time frames challenging,’ he said, with the requirement to jump when regulators snap their fingers strained by the sheer level of operational change required to provide compliant processes integrated with strategic planning.

Philip noted that whilst regulation is often seen as a compulsory yet cumbersome process for firms, once firms are properly equipped to address their regulatory requirements they gain considerable benefits in their ability to manage their firm effectively.

‘We will work with you to see that is the case,’ he said. ‘It is a benefit that is due to come out of all of this regulation, which is about running businesses appropriately and more efficiently.’

James Phillips, Director of Regulatory Strategy at Lombard Risk, next composed a complex and involved picture of the Capital Requirements Regulation’s (CRR) new reporting requirements, considering not only the EU-wide supervisory reporting framework for FINancial REPorting (FINREP) and Common REPorting (COREP) but with the added category of what he called LIQREP (liquidity reporting), as national authorities such as the UK’s Prudential Regulatory Authority (PRA) collect intraday liquidity data, and aspects of capital adequacy rules such as the Liquidity Coverage Ratio (LCR) come into play at the end of 2015.

Hanbury Hampden-Turner, Regulatory Product Functional Authority at Lombard Risk then identified the additional workload these measures could introduce for capital market firms, noting that Additional Monitoring Metrics (AMM) contain 4092 cells – per currency – of which nearly 500 would require a reporter to ‘slice data in a unique way, netting it, running calculations on itand producing a result.’

As to this significant data challenge, Tom Fish, Risk and Prudential consulting Director from PwC, said that firms typically took one of four approaches to dealing with it.

1. To fix data at source to drive better reporting – one of the more challenging approaches – which requires the building of data organisations
2. To focus on reporting metrics, striving to get the key metrics that are always needed correct
3. To attempt to define regulatory requirements and build capabilities around those requirements, a highly comprehensive approach typical of larger banks trying to tick every box
4. The final approach is to invest in new architecture in order to harness tangible business outcomes with better reporting and decision making

Feedback from the audience included one attendee who said the event was  ‘information-rich, clear and concise’ while another praised the ‘high-level coverage of all new changes’.

Another said it was  an ‘educational session, well presented’ and one described how ‘key challenges faced were clearly illustrated’.

The ‘panel was extremely knowledgeable’ and there was a ‘full structure with a  good speakers list’.

The topics outlined in the event are now being covered in more detail in the Lombard Risk online business briefings (webinars) overthe coming months. Guest speakers and Lombard Risk REG-Xperts will share the results of their research and experience and explain the regulations and the impact each will have on a firm’s reporting requirements (e.g. Liquidity update, PRA branch reporting, Tax regulations such as FATCA, OECD and CRS,Single supervisory mechanism (SSM), SREP and disclosure etc).

To find out more and to register online visit the Lombard Risk website.