Regulators globally have introduced a slew of new regulations to give individuals more control over their personal data. MiFID II and GDPR in the EU have garnered the most headlines, but Australia, China, Singapore, South Korea, the United States, and the United Kingdom all have measures of their own.
Together, these regulations are changing how financial services firms manage data. But organizations that view regulatory compliance through the lens of data optimization are better positioned to adapt and comply with new regulation, saving both time and resources.
A GLOBAL PUSH FOR PRIVACY AND SECURITY
Multi-industry regulations like GDPR have an outsized impact on financial firms given the amount of personal data involved. Meanwhile, other jurisdictions are employing their own data privacy laws. For example, Australia’s proposed Prudential Standard CPS 234 Information Security aims to enhance cybersecurity practices among financial services organizations. Similar rules are being considered or implemented in Canada, China and elsewhere.
We are also seeing broader regulations aimed at strengthening the financial sector overall. Singapore’s Individual Accountability and Conduct Guidelines, the UK’s Senior Manager Certification Regime, and the US’ Customer Due Diligence rule all seek to promote more accountability and responsible risk-taking.
DEALING WITH DATA CHALLENGES
If they haven’t already, financial firms are going to need to invest resources to better manage compliance. “Asset managers need to invest senior management time and financial resources into implementing GDPR,” explains Latha Balakrishnan, director of compliance and regulatory consulting at advisory firm Duff & Phelps. “This includes investment in technology resources to cope with additional data breach identification, management, reporting and escalation.”
Beyond privacy laws, investments and technology can help address more data-intensive reporting requirements for other regulations. For example, a recent report from Liquidnet found that although 86% of respondents met MiFID II’s January reporting deadline, more than half are still struggling to collect and deliver accurate data. Across the board, firms with flexible technology capabilities have an advantage when it comes to meeting compliance requirements and minimizing distractions.
TAKING ADVANTAGE OF REGULATORY DIVERGENCE
Regulatory variants across different jurisdictions can add a layer of complexity to an already confusing picture. For example, firms outside the EU were uncertain about whether and to what degree the new regulations like GDPR and MiFID II applied to them. The belief that firms without retail clients were not subject to GDPR was a particularly common misconception, according to Ms. Balakrishnan.
Increasingly, companies are investing in both compliance expertise and enhanced data management capabilities to help avoid these rocky starts. And many are realizing that it makes commercial and operational sense to comply with regulations like GDPR even though they’re not required to do so. Transparency and data protection are the trends of the future, and investors are paying attention, so as more jurisdictions enact similar laws, early adopters will be more prepared to quickly manage regulatory change and offer investors peace of mind in the process.
Read the full article to learn more about the relationship between better data and better compliance.
