Back-of-a-spreadsheet Compliance Management

When a new financial regulation starts to appear in draft form, getting to grips quickly with its most critical elements is vital, in order to gather the spirit of its intentions as well as to be able to focus on the areas that will create most work for an investment firm’s Compliance team.  Achieving this quickly can initially mean taking a “back-of-a-fag-packet” approach in order to prioritise activities and workload.  And initially, that “fag packet” may well be a spreadsheet.

Spreadsheets can be a valuable first step to building an overview of the requirements, of the individual people and managers who must be involved, and of the target dates and timescales in order to assure compliance.  But spreadsheets have no in-built intelligence or understanding of the regulations, and no integration with the workflow, processes and systems of the investment firm.  With multiple regulations – MAD, EMIR, Dodd-Frank, FATCA, MiFID II, etc - simultaneously impacting thousands of investment firms, relying on spreadsheets alone doesn’t deliver a real solution for bringing compliance under effective control across the firm.

A primary aim of today’s regulations is to change the way that firms work, and, in order to achieve compliance, firms have to make changes to their business processes, from the initial customer sign-up and on-boarding through to clearing, settlement, transaction reporting and custody.  Effecting those changes is a major challenge in itself.   Those changed processes then need to be monitored on an ongoing basis to ensure that they continue to work effectively as the firm moves ahead and as additional regulations are also introduced.

Spreadsheets are free, but failure to comply with regulations has a very high price indeed.  Compliance teams need to have more than a “back-of-a-spreadsheet” approach if they are to meet the continually changing regulatory requirements of today’s global financial markets.