Check-the-box mentality is over
23 January 2018
Chris Ekonomidis of Synechron Business Consulting, discusses regulatory challenges, collateral trends and the use of blockchain
Image: Shutterstock
Synechron is one of the fastest growing consultancies. Describe your new role and what areas you will cover?
I was hired as senior director and US regulatory practice head for Synechron Business Consulting. I will be focused on risk and compliance consulting in the US.
Which regulations will be key for your clients in 2018?
Since our clients are global, we have clients preparing for all of the upcoming financial regulations. However, I think that in 2018 regulations such as the Fundamental Review of the Trading Book (FRTB), General Data Protection Regulation, Securities Financing Transactions Regulation, and Consolidated Audit Trail (CAT), as well as a continued focus on capital and balance sheet optimisation will be key. It will be interesting to see what affects the recent go-live of the second Markets in Financial Instruments Directive (MiFID II) will have on trading and liquidity.
What developments are you noticing in the regtech space? And what does your firm offer in that area?
Regtech will play a key role in financial institutions’ strategies as they relate to new regulations, like FRTB and CAT, by implementing a tech-driven approach to proactively meet regulatory needs rather than the reactionary approach many financial institutions have taken in the recent past. Utilising a tech-first approach to regulatory requirements will lay the groundwork for firms to gain more long-term benefits from each obligation and better management of data and risk overall to achieve greater economies of scale.
It will also allow firms to provide additional business value by leveraging and extending their regulatory obligations past a simple check-the-box mentality. For example, know-your-customer mandates could be used to better manage the overall client lifecycle.
What collateral trends and challenges are you seeing at present?
Right now, banks are getting a better understanding of collateral in general, where it is placed, and how it can be best used. For example, how it can be leveraged to generate alpha, optimising regulatory capital, and the automation of margin calls collateral management processes. By utilising emerging technologies to tackle collateral challenges, banks and trading firms are beginning to explore moving collateral costs further upstream to the front office and displaying a more precise all-in cost prior to trade execution.
Improved transparency for pricing and liquidity from MiFID II could open up the bond market and allow firms to lend a greater portion of their inventories at better prices, based on enhanced market insight.
Is there an increase in the use of blockchain, and how far does Synechron see this technology developing?
Blockchain was a hot topic in 2017, and in 2018 we expect it to continue to dominate in moving from pilots and proof of concepts, to production. That being said, there is a huge potential for the use of blockchain in repos and securities lending market that will continue to mature in 2018.
What are your views on artificial intelligence and machine learning? And how do you see these developing within the capital markets space?
Like blockchain, artificial intelligence (AI) and machine learning (ML) will continue to hold a large part of firms’ technology and innovation initiatives and budgets this year. Firms are now looking at using AI and ML to optimise collateral management and are making strides toward improved collateral transformation using these technologies.
I was hired as senior director and US regulatory practice head for Synechron Business Consulting. I will be focused on risk and compliance consulting in the US.
Which regulations will be key for your clients in 2018?
Since our clients are global, we have clients preparing for all of the upcoming financial regulations. However, I think that in 2018 regulations such as the Fundamental Review of the Trading Book (FRTB), General Data Protection Regulation, Securities Financing Transactions Regulation, and Consolidated Audit Trail (CAT), as well as a continued focus on capital and balance sheet optimisation will be key. It will be interesting to see what affects the recent go-live of the second Markets in Financial Instruments Directive (MiFID II) will have on trading and liquidity.
What developments are you noticing in the regtech space? And what does your firm offer in that area?
Regtech will play a key role in financial institutions’ strategies as they relate to new regulations, like FRTB and CAT, by implementing a tech-driven approach to proactively meet regulatory needs rather than the reactionary approach many financial institutions have taken in the recent past. Utilising a tech-first approach to regulatory requirements will lay the groundwork for firms to gain more long-term benefits from each obligation and better management of data and risk overall to achieve greater economies of scale.
It will also allow firms to provide additional business value by leveraging and extending their regulatory obligations past a simple check-the-box mentality. For example, know-your-customer mandates could be used to better manage the overall client lifecycle.
What collateral trends and challenges are you seeing at present?
Right now, banks are getting a better understanding of collateral in general, where it is placed, and how it can be best used. For example, how it can be leveraged to generate alpha, optimising regulatory capital, and the automation of margin calls collateral management processes. By utilising emerging technologies to tackle collateral challenges, banks and trading firms are beginning to explore moving collateral costs further upstream to the front office and displaying a more precise all-in cost prior to trade execution.
Improved transparency for pricing and liquidity from MiFID II could open up the bond market and allow firms to lend a greater portion of their inventories at better prices, based on enhanced market insight.
Is there an increase in the use of blockchain, and how far does Synechron see this technology developing?
Blockchain was a hot topic in 2017, and in 2018 we expect it to continue to dominate in moving from pilots and proof of concepts, to production. That being said, there is a huge potential for the use of blockchain in repos and securities lending market that will continue to mature in 2018.
What are your views on artificial intelligence and machine learning? And how do you see these developing within the capital markets space?
Like blockchain, artificial intelligence (AI) and machine learning (ML) will continue to hold a large part of firms’ technology and innovation initiatives and budgets this year. Firms are now looking at using AI and ML to optimise collateral management and are making strides toward improved collateral transformation using these technologies.
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