Compliance departments baffled by new regulations - IPC

Source: IPC

Less than half of compliance departments fully understand the requirements of new trading regulations according to a survey examining compliance in trading conducted by IPC.

Survey respondents consisted of senior compliance executives (52%), compliance managers (13%) and compliance analysts (35%) at a wide range of financial firms including investment banks, asset management firms, hedge funds and exchanges.

55% of those surveyed said that they did not think their own departments understood new regulation such as the Dodd Frank Act or the Markets in Financial Instruments Directive (MiFID). A staggering 43% of respondents also admitted they did not feel that their company was completely prepared to meet the requirements of the new regulations.

The IPC survey findings are backed up by research from law firm Davis Polk & Wardwell, which recently reported that on the third year anniversary of Dodd-Frank, 62% of the act's deadlines had already been missed.

While nearly half of compliance departments say they have created new policies (47%) to improve or increase compliance, only a handful (6%) rate new the introduction of new policies as critical to improving or increasing compliance. In addition, 23% of respondents said that new technology such as specialised software is critical to improving compliance, only 12% said their organisations had invested in such software.

"These results are worrying," Bart Bartolozzi, Senior Product Marketing Manager at IPC, said. "They tell us that not only do compliance professionals admit their own departments do not fully understand all that the new regulations require of them, but they are relying on traditional methods to improve compliance - which they themselves admit are not critical to effecting change in their own organisations."

"It is clear that IT professionals have to work harder to explain how technological solutions can help 'force' compliance," Bartolozzi said. "Much like the findings of our surveys of IT professionals and traders released earlier this year, these results speak to a need for much greater collaboration and teamwork between the constituent teams who together makmake the trading functions of global financial institutions work."

The survey also found that 30% of compliance professionals said new technologies are creating compliance issues. The technologies they believe to pose the biggest challenge are tablet devices (35%) smart phones (24%), and traders using non-company equipment. By contrast, 100% of traders surveyed agreed that technological changes had a positive impact on trading, and 97% said they use their smart phone all day in their working life. These numbers point to another headache for IT professionals as they struggle to deal with traders who rely on using their own devices for work purposes, at the same time as trying to manage compliance with new regulations.

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