SIFMA’s annual Financial Services Technology Leaders Forum and Expo got underway last week and much of the discussion was dominated by the impacts of the Dodd-Frank Act, which encompasses 235 rulemakings, 41 reports, 71 studies authored by 11 different federal agencies, bureaus, and the Government Accountability Office, according to Tim Ryan, president and CEO of SIFMA.Many of the Dodd-Frank inspired discussions covered legal entity identifiers (LEIs), the clearing of over-the-counter (OTC) derivatives, post-trade transparency, swap execution facilities (SEFs) and data repositories.
In fact, the day before a SIFMA panel discussion on SEFs, clearing and OTC instruments, the US Commodity Futures Trading Commission (CFTC) announced that it will allow six more months before implementing key regulations spawned by the Dodd-Frank Act.
Delays aside, panel participants said the industry has to review the following impacts of OTC derivatives reform:
- With the deadline extended to Dec. 31, the legal status of OTC deals agreed to after July 15 is unclear; regulators have to clarify whether they are they legally binding
- The streamlining of rules and protocols from the CFTC and the Securities and Exchange Commission (SEC) so that they converge their regulatory approaches and avoid redundancies and overlap
- The connectivity challenge looming if the industry ends up with 30 to 40 SEFs serving different sectors and firms have to provide execution for multiple assets.
- Greater automation for the OTC market as it moves from a bilateral to a more open environment, and revamps many post-trade processes.
- The uncertainty over the nature of many of the new rules, which causes firms to delay the deployment of IT infrastructures for the new OTC environment.
In a break from the nuts and bolts discussions about Dodd-Frank, Jim Cramer, host of CNBC’s Mad Money, and founder and markets commentator for TheStreet, took aim at social media and said its power stems from “untampered word of mouth,” which can jumpstart customer acquisitions.
Citing a distressed property—an inn—that he’s involved with, Cramer said that the buzz created by social media postings helped revive international interest in the venue, particularly among Belgian and Dutch tourists. The positive reviews posted via social media helped generate more business than lowering the room rates four times, he said. In fact, he said that advertising in print media never helped drum up business for the inn. “Better to work with the lowest form of social media than the highest form print media,” Cramer said.
Despite regulatory oversight and the industry’s hesitancy over a new technology, financial services firms need to learn how to harness the customer-creating capabilities of social media, Cramer said.
Several key vendors had product news, timed for the SIFMA forum and expo:
- DST Global Solutions has made the middle office investment analytics platform Anova available as a hosted service to investment and wealth management firms globally. The hosting services will be provided by the data centers of DST Systems, the parent company of DST Global Solutions. The hosted version of Anova provides online access to investment analytics that can be customized to users’ needs. The Anova hosted service also offers support for local compliance and regulatory requirements. Clients pay a single annual subscription for the service, which covers hosting, technology support and software upgrades.
- GoldenSource Corp. released EDM Suite version 8.3.1 (EDM 8.3.1) with workflow and validation tools that enable risk managers, traders and compliance managers to achieve a firm-wide view into end-to-end risk positions. The greater transparency is in response to the Dodd-Frank Act’s push for “a more structured and proactive approach” to risk management, said Mike Meriton, CEO for GoldenSource, in a prepared statement. EDM 8.3.1 offers: independent price validation (IPV), scrubbing and Golden Copy rules on one system; streamlined workflows and connections to independent pricing providers such as MarkIt, SuperDerivatives, Interactive Data; public finance feeds from Standard & Poor’s and Moody’s, adding government and municipal ratings to the existing corporate ratings; and visibility into individual components including direct and indirect holding of a particular security for a more accurate view of percentages held to ensure regulatory compliance.
- Asset Control, maker of financial data management solutions, is partnering with Fincad to offer mutual customers valuation and analytics for fixed income, derivatives and curves via integration between Asset Control’s AC Plus data management platform and Fincad’s financial analytical library. The new link will provide customers direct access to Fincad’s library from within AC Plus. The combined capabilities support instrument modeling, valuation and data distribution.
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