CMF: Regulators overhaul outsourcing debate
21 October 2016 Amsterdam
Image: Shutterstock
The changing regulatory landscape has reformed the thought process behind the decision to outsource, according to conference panellists.
"Outsourcing is all about control," explained one vendor panellist.
"My job is to hold our clients' hands when the scary regulations rear their heads," the panellist added.
"A lot of people love the idea of giving all the responsibility and duties of compliance to a third party, but there is now a fiduciary duty not to do so too much."
Delegates at the Fleming Collateral Management Forum heard that, although regulatory-driven demand for vendor solutions has never been higher, there is also a significant growth in the amount of oversight vendors' clients must now maintain.
"We must be ready to receive audits in-house from our clients' own auditors if that's what they want—and some definitely do," added the vendor representative.
A second panellist from a US bank reinforced this point, stating that process of signing up clients has completely changed in the past three to four years.
The banking vendor explained that, in the past, the conversation with a potential client revolved around the cost and competence of the solution, but now there are more questions around how a vendor can satisfy a client's fiduciary responsibility to its investors.
The new process was described by a buy-side representative that uses outsourcing services as a "balancing act" between a responsibility to maintain overall control and bring down costs.
"Outsourcing is all about control," explained one vendor panellist.
"My job is to hold our clients' hands when the scary regulations rear their heads," the panellist added.
"A lot of people love the idea of giving all the responsibility and duties of compliance to a third party, but there is now a fiduciary duty not to do so too much."
Delegates at the Fleming Collateral Management Forum heard that, although regulatory-driven demand for vendor solutions has never been higher, there is also a significant growth in the amount of oversight vendors' clients must now maintain.
"We must be ready to receive audits in-house from our clients' own auditors if that's what they want—and some definitely do," added the vendor representative.
A second panellist from a US bank reinforced this point, stating that process of signing up clients has completely changed in the past three to four years.
The banking vendor explained that, in the past, the conversation with a potential client revolved around the cost and competence of the solution, but now there are more questions around how a vendor can satisfy a client's fiduciary responsibility to its investors.
The new process was described by a buy-side representative that uses outsourcing services as a "balancing act" between a responsibility to maintain overall control and bring down costs.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
