As you prepare to close 2019 strong and get ready for 2020, budgeting for RegTech as an efficient and cost-effective way to drive efficiencies and build a strong compliance program should be top of mind.
Regulators globally continue to crack down on insider trading, market abuse, insufficient cyber programs, and other issues that put the capital markets and investors at risk. Their efforts are enabled by investments in their own technology and analytics capabilities to better perform their supervisory duties.
These advances, as well as increasing and evolving regulatory requirements, have resulted in the rise of regulatory technology, or “RegTech,” to help firms manage it all. When combined with other buzz-worthy technologies within the realm of artificial intelligence (AI) such as machine learning, natural language processing, robotic process automation, CCOs are feeling the pressure to add another hat to their collection: that of Tech Expert. However, RegTech is designed to lift the burden of compliance, not add to it. It's also intended to support your firm's compliance function, not replace it. RegTech should be regarded as a lifeline and not an additional responsibility.
The RegTech ROI
Whether you're a RegTech newbie or already use some form of software to help manage your firm's risk and compliance program, it's just as important to stay on top of technological changes and trends as it is changes to regulatory requirements. This is because as regulators' own advances in tech continue to grow, so too does their scope of responsibility, firmly cementing the intersection of technology and regulatory oversight as a package deal. Broadly, regulators regard technology as a key part of the industry’s roadmap (as detailed by FINRA’s recent report on RegTech and the FCA’s 2018/19 Business Plan). And this package deal is resulting in more enforcement actions and fines than ever before.
If firms are to survive in this landscape, they can no longer rely on manual processes alone or view RegTech as a "nice to have," but rather as essential to cutting costs, saving time, mitigating risk, and preventing the financial and reputational losses that come from a regulatory penalty. From consolidating structured and unstructured data, capturing and disseminating the impact of new rules, monitoring employee behavior, identifying potential insider trades and other market abuse, storing records, and running reports and visual analytics, RegTech will continue to deliver a high return on investment to firms and their compliance teams.
How Do You Measure Up?
As you plan your budget for 2020, it can be helpful to know what your peers are doing - how they're budgeting for RegTech, what they're using or plan to use RegTech for, and what areas of oversight they're prioritizing that technology can simplify through automation. We've put together an infographic of relevant data points gathered from recent ACA polls and surveys to help you see how your peers are implementing - and budgeting for - RegTech. Download it here
- RegTech Can Transform Your Business (Article) - ACA's Patrick Conroy recently shared his insights on the benefits of regulatory technology with FT Adviser.
- 6 Hot Topics in Employee Compliance (Blog post) - Is your code of ethics monitoring and personal trade surveillance compliance program built to beat the heat? This blog post recaps our recent webcast on this topic and provides best practices for navigating complex and evolving areas of compliance management, including cryptocurrency, pay-to-play, robo-advisors, and more.
- 6 Ways to Stay Ahead of Financial Regulators with RegTech (Blog post) - Regulators globally continue to invest in developing their technological capabilities to quickly and efficiently manage data, and they expect investment firms to do the same. In this blog post, ACA's Burt Esrig and Michael Lehman discuss what you need to know and how regulatory technology solutions can help.
- Code of Ethics/Personal Trading Technology - Understanding the Three Key Benefits (Blog post) – The adoption of RegTech is rapidly becoming business as usual for an increasing number of compliance teams, with personal trading/code of ethics compliance being one of the most significant areas of RegTech adoption. ACA's Jordan Schwartz details the major benefits of adopting a code of ethics/personal trading technology solution.
- Addressing the Rising Cost of Non-Compliance with RegTech (Blog post) - Regulators' advances in tech are supporting their ever-broadening scope of responsibility, resulting in increased enforcement actions and fines. In this landscape, RegTech is no longer a "nice to have" for investment firms, but an imperative.
- Personal Trading - Rule vs. Best Practice (On-demand webcast) - Rule 204A-1 under Investment Advisers Act of 1940 is a cornerstone of every registered investment adviser’s compliance program. In this webcast, we discuss the Code of Ethics Rule and the industry’s best practices in dealing with the personal trading requirements under the rule.
- How RegTech Helps Firms Increase Efficiency and Reduce Risk (Blog post) - Although regulatory compliance will always be a function led and directed by people, technology can support those efforts and make processes more efficient and effective. Here are five ways it can be of benefit to your firm to make RegTech an everyday part of your compliance program.
- How RegTech Can Enhance Your Firm's GRC Program: A 4-Step Approach (blog post) - Chief compliance officers (CCOs) and risk and compliance teams know they need regulatory technology to meet ever-increasing regulatory obligations as well as establish best practices for their firm’s governance, risk, and compliance (GRC) program that reduce operational risk and increase operational efficiencies. While the value added by a RegTech solution is clear, understanding the full scope of a GRC technology implementation can be a significant challenge. This blog post explains four steps for enhancing the effectiveness of your firm’s GRC capabilities using technology.