The financial regulations that are being introduced around the world, including Basel III, Dodd Frank, and the European Market Infrastructure Regulation, represent some of the biggest changes in financial services in 70 years, says SungGard's Tony Scianna, deputy head of strategy for the capital markets business.
"Yet even as we await further details of these rules, new regulations are being announced. With all of this uncertainty, regulatory risk – the risk of not being ready when the wave of regulations goes into effect – has moved alongside traditional definitions of risk to become a top concern,” adds Scianna.
Regulators will require firms to report a greater breadth and depth of up-to-date information, possibly on demand, to assist their efforts to reduce systemic risk and increase transparency.
The borders between geographies, asset classes and lines of business will continue to break down as regulators and management demand an enterprise-wide view of activities, risk and exposure, says SunGard.
SunGard notes that the cost of clearing and expense associated with additional regulations in certain highly regulated asset classes are likely to rise, which might negatively impact profitability.
To help manage costs, firms will look for off-the-shelf, flexible and easily adaptable technology frameworks to help them meet whatever regulatory requirements develop.
Firms will need to be able to capture relevant data in as close to real time as possible, standardize it, and have access to it 24/7 for reports to relevant agencies and their own management.
Budget that was allocated in 2011 but unused due to continued uncertainty may be re-evaluated, says the report, adding that firms may not allocate the same level of funding in 2012, potentially leaving them under-budgeted when the implementation details are finally confirmed.
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