SFS: Industry regulations set to challenge firms
09 May 2024 US
Image: Belikova Oksana
Rule 10c-1a is 鈥� going to be transformative鈥�, said Igor Kaplun, global head of business development, S&P Global Market Intelligence Cappitech, at the Securities 麻豆影视传媒 Symposium.
The new regulation was introduced by the Securities and Exchange Commission (SEC) to increase transparency in the market. It requires the reporting agent to report information to a registered national securities association (RNSA) by the end of the same day as the transaction.
The panel discussion focused on the inherent challenges this regulation will bring. Jonathan Lee argued the rule is 鈥渕ore complex鈥� than it first appears: 鈥淚t will be expensive to implement, and difficult to put into practice,鈥� he explained.
The panel concurred, predicting an extension would be needed for market participants to respond effectively.
Another panellist held a more optimistic view, arguing that the regulation would be a chance to make improvements within the market. He explained how firms are struggling with dealing with data quality and suggested the new regulation could help to mitigate this.
In the second half of the panel, discussion shifted to the Office of Financial Research鈥檚 (OFR) final rule, adopted on 6 May.
According to the OFR, the Final Rule aims to improve transparency within the US repo market by establishing a data collection for non-centrally cleared bilateral transactions.
However, once again, the panellists voiced similar concerns. Jonathan Lee鈥檚 discussion of the various ways this rule would manifest, including daily reporting to the OFR by US covered reporters, elicited an audible response for audience members.
Lee described the 鈥渞ude awakening鈥� the rule will have on various market participants. 鈥淔irms have got a very short space of time to implement what's going to be highly scrutinised reporting,鈥� he said.
鈥淭his won鈥檛 just be in the US, but on a global basis. It's very much front and centre of systemic risk.鈥�
Despite the panel鈥檚 consideration of the challenges posed by upcoming regulation, Kaplun upheld a measured stance of the regulatory process.
鈥淭he first rollout is never going to be perfect,鈥� he argued, highlighting the various alterations that have been made to regulations over the past year, across various jurisdictions.
鈥淭he goal of the regulator is to use that data to monitor systemic risk. It鈥檚 not just getting data in, but asking does this data make sense, and what does it say?鈥�
The new regulation was introduced by the Securities and Exchange Commission (SEC) to increase transparency in the market. It requires the reporting agent to report information to a registered national securities association (RNSA) by the end of the same day as the transaction.
The panel discussion focused on the inherent challenges this regulation will bring. Jonathan Lee argued the rule is 鈥渕ore complex鈥� than it first appears: 鈥淚t will be expensive to implement, and difficult to put into practice,鈥� he explained.
The panel concurred, predicting an extension would be needed for market participants to respond effectively.
Another panellist held a more optimistic view, arguing that the regulation would be a chance to make improvements within the market. He explained how firms are struggling with dealing with data quality and suggested the new regulation could help to mitigate this.
In the second half of the panel, discussion shifted to the Office of Financial Research鈥檚 (OFR) final rule, adopted on 6 May.
According to the OFR, the Final Rule aims to improve transparency within the US repo market by establishing a data collection for non-centrally cleared bilateral transactions.
However, once again, the panellists voiced similar concerns. Jonathan Lee鈥檚 discussion of the various ways this rule would manifest, including daily reporting to the OFR by US covered reporters, elicited an audible response for audience members.
Lee described the 鈥渞ude awakening鈥� the rule will have on various market participants. 鈥淔irms have got a very short space of time to implement what's going to be highly scrutinised reporting,鈥� he said.
鈥淭his won鈥檛 just be in the US, but on a global basis. It's very much front and centre of systemic risk.鈥�
Despite the panel鈥檚 consideration of the challenges posed by upcoming regulation, Kaplun upheld a measured stance of the regulatory process.
鈥淭he first rollout is never going to be perfect,鈥� he argued, highlighting the various alterations that have been made to regulations over the past year, across various jurisdictions.
鈥淭he goal of the regulator is to use that data to monitor systemic risk. It鈥檚 not just getting data in, but asking does this data make sense, and what does it say?鈥�
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