EMIR, MiFID, and Dodd Frank: What have we learned and what comes next?

EMIR, MiFID and Dodd Frank struck fear into the heart of financial institutions in the years following the financial crisis. Whilst many in the industry recognised the need for reform, they were also wary of the practicalities and challenges of implementing regulatory change projects. The rules were as new to technology providers as they were to financial institutions, so with a shortage of specialist regulatory reporting vendors many firms set about creating their own in house solutions.

Fast forward to a new decade and these regulatory topics are far from off the table. ESMA has already consulted on EMIR REFIT, and is expected to issue further details this year, whilst MiFID II and MiFIR are also under review in 2021. Then there is political change. Whilst EMIR and MiFID both include some equivalency agreements between the UK and EU there is still likely to be divergence between the two bodies, whilst in the US the new administration has a substantially different stance on regulation to its predecessor, and numerous members who championed the Dodd Frank Act.

Several years on from the first introduction of these rules, you would expect firms to be in a stronger position to tackle any changes. And in a sense, they are. They have had plenty of opportunity to practise interpreting and applying new regulatory requirements and launching regulatory change projects. However, in light of recent events, firms are under more pressure than ever to meet any new requirements with a minimum of resources. As the economic reality of the pandemic starts to bite, budgets will come under pressure. Even relatively small updates to regulations can require a lot of changes to systems and technology, but it can be hard to make a compelling case for investment when the business doesn't understand the level of complexity generated by change. Moreover, the in-house legacy systems used first time around are now struggling to keep up, increasing the risk of reporting failures or inaccuracies and costing companies money as they pour more IT resources into maintaining them.

The difference now is that technology providers have caught up with the regulatory landscape. The growth of RegTech means that there is simply no need for organisations to struggle to build their own solutions. Why devote scarce and expensive IT resources to building something that a specialist partner can deliver for you, and have up and running quickly and efficiently?

Moreover, with regulatory change continuing to increase, regulators and industry participants are seeing the value of a more strategic approach. Regulators are beginning to settle on a common language for reporting, increasingly shifting towards the ISO 20022 standard (which presents another practical challenge in itself). Financial institutions are also now looking to embed this standardised approach in their own reporting programs, adopting consistent methods across the numerous jurisdictions and regimes that they operate in.

This brings us back to efficiency – as the pressure is on to do more with less, firms will need to optimise their regulatory reporting programs to make the most of the resources that they have. By far the more effective way to do this is looking at any future regulatory changes as part of a wider, holistic regulatory change program, and working with partners who can support this approach.

To discover how we are working with organisations to deliver one, streamlined system for regulatory reporting across multiple jurisdictions and regimes, please contact me using the form below.