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Intolerable Burden on Compliance Officers Hindered by Legacy Systems

The heart of the white paper examines potential technology solutions to the problems highlighted by the FSA’s “MiFID Thematic Review” published in 2009. The white paper concludes that significantly more investment in new systems technology is required by financial services firms, to benchmark the firm’s performance, against client contracts and service level agreements. It goes on to suggest that a rules based approach to systems design will provide a historical data line, that in time, will enable more proactive compliance, preventing breaches rather than detecting them.

Gary Wright the author of the white paper from B.I.S.S. Research commented “During the course of researching this white paper we gained valuable insight into the working day of compliance officers and were staggered by the almost impossible task they are confronted with every minute of the day. Increasing complexity of market transactions and continuous rule changes or enhancements by the regulators has put a huge stress on legacy systems that support firms. The results are crazy, with compliance officers spending significant amounts of time trying to prevent rule breaches or chasing shadows caused by front and middle office systems not up to the job. In one case a compliance officer at a leading firm said that they would often spend hours negotiating reporting responsibilities with their counterparties. It is clear that the financial services industry has to take a fresh look at new systems technology which moves the emphasis to prevention rather than detection.“

Given the current market conditions the paper also stresses that more dynamic payment models for acquiring such technology should be considered, for example third party outsourced or ASP services. The savvy financial firm should aim to invest in technology available with an attractive commercial structure allowing for future proofing of their responsibilities to monitor, review and record transactions, accounts, products and transactions.

Stephen Thurston, City Sales Director at Business Systems (UK) Ltd concludes “Investors are ultimately driven towards market players with demonstrable long term integrity underpinned by brokers who implement effective surveillance technology. Investing in the very latest ‘competitively priced’ surveillance and analytics technology should be a no-brainer, if it can be tailored to specifically meet the individual needs of a firm at little extra cost and take future regulatory change in it’s stride – all the better.“