In response to the Covid-19 pandemic, and the subsequent disruption caused by remote working and extreme market volatility, firms need to rethink their approach to operational resilience for their trading businesses, not only to ensure business continuity, but also to manage regulatory change and develop greater agility and efficiency. That’s the recommendation of a recently published Refinitiv white paper, which explores operational resilience in trading.
One particular area of interest, according to the report, is the increased focus that regulators have been placing on operational resilience, even prior to the pandemic. The UK’s FCA issued a policy statement, PS21/3, in March this year, having started its open consultation on the subject in 2019. And the Basel Committee also recently published its own Principles for Operational Resilience.
It’s clear that operational resilience is developing into a new international regulatory requirement for trading firms, and that national regulators are developing their own rules in light of the Basel Committee’s new principles. The white paper cites a number of recent publications from regulators around the globe, who are also looking at subthemes such as cyber risk, third-party risk, outsourcing and the cloud.
A number of recommendations are made in the report. For example, trading teams should consider the operational resilience aspects of day-to-day compliance with regulatory requirements. Trading teams should also consider how modifying processes and systems to comply with any new regulations could temporarily impact their operational resilience.
Data is also an important factor. The white paper describes how firms can take a more strategic approach to the operational resilience of their data sources and usage.
One key takeaway of the report is that robust operational resilience can result in more agility within the business, which can become a competitive advantage for firms Trading teams should therefore consider operational resilience when making investments in new technology solutions, and explore cloud-based options as a way to achieve their goals.
The white paper concludes that although operational resilience is a new regulatory requirement, considered in the right way, it contains the possibility for trading teams to transform themselves in new and exciting ways that deliver real value.