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Opinion: How Many ‘R’s Are There in Financial Services Regulation?

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By Alex Foster, Global Head of Strategy & Business Development – BT Financial Technology Services

Throughout history, the letter ‘R’ has represented a succession of important codes of conduct.

We have the famous ‘three ‘R’s of education’: reading, writing, and arithmetic, which can be traced back as early as 401 AD from Saint Augustine’s The Confessions (although most historical sources quote a speech by Sir William Curtis in 1795). During the 17th century in the New England colonies they added a fourth ‘R’, that of Religion.

Then, in the 1930s, Roosevelt introduced the three ‘R’s of Relief, Recovery and Reform – the latter of which is still relevant today forming part of the banking reform acts of 1930.

And in 2009, a year after the deep depression and the financial crisis, the International Monetary Fund came up with a new set of five ‘R’s — Rescue, Recovery, Rebalancing, Regulation and Reform.

But, when it comes to financial services compliance, there are many more ‘R’s which need to be considered. From Dodd Frank, EMIR to MIFID II, regulations are in place which require financial services institutions to Read, Record, Retain, Restore, Retrieve, Replay, Recite, Recreate and Reconstruct — all of which need to be done Reliably! We are talking ‘R’s to the nth degree, and all of these ‘R’s are in place for one reason — to mitigate Risk.

Regulators can call for a reconstruction of a trade at any time. So, there is a need for Real time Recording and Retention of all customer interactions. Firms need to be able to Retrieve, Research and Replay, to Resolve customer or compliance queries. They can do this by using sophisticated analytical ‘Rummaging’ techniques, all with a Retention management wrapper.

In a recent webinar hosted by A-Team Group, BT’s Tim Furmidge, Head of Product Management, Financial Technology Services illustrated how systems can be introduced in a staged way. He also discussed how the proactive management of firms’ risk and compliance environments can not only help them stay ahead of the regulatory wave, but also deliver significant productivity gains.

So, in a world where penalties for non-compliance include fines and reputational damage, financial services firms would do well to remember their ‘R’s.

And what of the three ‘R’s in school today? Well, in my daughter’s school, it’s been expanded to the six ‘R’s — Resiliency, Reflective, Resourceful, Responsible, Relationship and Risk — all attributes which could be applied to financial firms when addressing their compliance challenges.

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