Global regulators have no intention of slowing down, which means the buy side has no choice but to move beyond manual systems, says Robert Jeanbart, division CEO for the Financial Information part of the SIX Group companies.
Robert Jeanbart, division CEO, Financial Information, SIX Group
A few things are clear to Robert Jeanbart, division CEO for the Financial Information part of the SIX Group businesses, despite a raucous year that featured an industry racing to meet the MiFID II deadline and other mandates from global regulators.
The first moment of clarity is that the regulators have no intention of slowing down, Jeanbart says. In addition, financial services firms are going to need more services to keep up with the regulators, which leads to a third realization: maybe regulation has nudged the buy side to move beyond some manual processes, he says.
An industry veteran, Jeanbart has been running the Financial Information business group since 2014, officials say. Among other key positions, Jeanbart has served as global head of market data and information services at SunGard, now part of FIS. He has also taken on the role of CEO of Infotec S.A. and served for 15 years at the former Reuters Ltd (now Thomson Reuters) in many managerial positions with his most recent post that of managing director (MD) for the U.K. and Ireland.
Throughout his long career, Jeanbart has seen many industry developments but the ones that have had the greatest influence upon his career path have been “the advent of thin-client technology and APIs [application programming interfaces],” he says. “At the time of their introduction, they had a huge impact on mobility, flexibility and inter-connectivity for both people and software development,” he says.
In fact, they are also the key aspects that have helped firms comply with the data demands of regulators.
For the SIX Financial Information division, regulatory demands have fueled clients’ needs for reference data and for the regulatory services that build upon that data, Jeanbart says.
“Well I would say regulations require reference data, but currently, when you serve clients with regulatory services, we provide services on the data,” Jeanbart says. Reference data serves as the DNA for the efficient processing of transactions that are under the scrutiny of regulators.
While some are predicting a tapering off of regulation, for 2018, Jeanbart does not foresee any slowdown even after a year that was heavily focused on meeting regulatory demands.
“Nothing would be like 2017,” Jeanbart says. Leading the way was the new deadline for MiFID II, which was moved from early 2017 to early 2018. “The regulators gave people time to be ready for it. … [but] 2017 was hectic in terms of demand, and in terms of implementations.”
In fact, he referenced the fact that by the fall of 2017 many financial services firms were still looking to fill MiFID II-related posts and that firms advertised to fill more than 1,500 openings via LinkedIn. It’s a sign that some “banks are panicking. They are just getting recruitment going because they need to do it,” Jeanbart says.
However, he suspects that the flurry of hype and activity in the run-up to the MiFID II deadline will settle down.
“If you ask me, ‘Would regulation continue to grow in the next coming years?’ I would tell you that there is nothing today that indicates that regulators are going to slow down,” Jeanbart says.
While regulation gives firms agita and governments income via fines and penalties, there may be an upside to the intense regulation globally since the Great Recession.
“Regulations, in general, are becoming so complex that it is absolutely impossible for buy-side firms, and even sell side firms to handle these regulations in a manual way. No chance,” Jeanbart says. “Today, almost every single transaction in the financial markets calls for at least three or four regulations at the same time.”
This can get quite complex as many transactions require multiple layers of reliable data and support such as portfolios that have to pass through the MIFID II and the Packaged Retail and Insurance-based Investment Products (PRIIPs) filters, for example. These regulations and others are compelling firms to “to automate, to integrate, and to have a single database for everything,” Jeanbart says.
In addition, firms may be looking to “a whole array” of advanced methods for optimizing reference and other data related to the processing, reporting and maintenance of financial instruments, Jeanbart says.
“Today, I would say the bigger driver … at least for us and the business of collecting data is artificial intelligence [AI]/machine learning,” Jeanbart says. For instance, the amount of instrument openings is “horrendous every month,” and higher levels of automation will be necessary to deal with that “and the deletions of instruments every month.”
Yet the need to facilitate one-million new instrument openings followed by the need to delete 900,000 instruments is creating less agita among operations staffs than the job loss fears that come via AI/machine learning implementations.
Jeanbart cautions, however, that AI may cause many in Ops to change their jobs rather than lose them.
“I think artificial intelligence is like IT 20 years ago when people said, ‘IT will eradicate peoples’ jobs.’ It might make your current job invalid, but … artificial intelligence is nothing but human intelligence put into machines. You need to program these machines, you need to program the processes, you need to describe the whole thing,” Jeanbart says.
“So, I would say there would be shifts, maybe, in terms of the nature of jobs. But that would not impact peoples’ overall employment … But, then again, the question is, who is prepared to learn, and who is not prepared to learn?” Jeanbart adds.
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