26 Nov Regulators Get Real

We and others have been talking for some time about how the industry is caught firmly in the Regulators’ spotlight. The weight of new regulation, and its impact on Capital Market firms, technologies and budgets, is truly enormous. And this isn’t just sabre-rattling on the part of the Regulators – every day seem to bring more news of a firm being fined for some kind of breach, and the fines keep getting bigger. What is clear is that Regulators’ patience is wearing thin when it comes to compliance, and the time window to get the house in order is rapidly shrinking.

Take as an example the changes to the FSA handbook published this month in response to the EU Short Selling Regulation (SSR). To quote, SSR will:

• Require holders of net short positions in shares or sovereign debt to make notifications once certain thresholds have been breached;
• Outline restrictions on investors entering into uncovered short positions in either type of instrument;
• Give powers to competent authorities to suspend short selling or limit transactions when the price of various instruments (including shares, sovereign and corporate bonds, and ETFs) fall by set percentage amounts from the previous day’s closing price.

In the UK we recently helped a client implement new monitoring rules in their deployment of the Apama Market Surveillance and Monitoring Solution. We were amazed at how small a time window the Regulator gave the client to comply given the new rules had to be designed, built, tested and deployed live – something we achieved in around 20 days due to the open and customizable CEP platform on which the Apama solution is based.

What this tells us is that the age of rigid, hard-coded surveillance applications is well and truly over,  and the watchword is now agility. How flexible is yours?