A report from GreySpark Partners, a capital markets consulting firm, has outlined the scale of the compliance challenge facing buy-side firms in the run up to MiFID II’s January 2018 implementation deadline. In its report, GreySpark argues that firms must act now to make the changes to governance, risk and compliance systems demanded by the Regulation.
Significantly, the report suggests that strategic investments by buy-side firms will not only enable them to achieve MiFID II compliance, but will also allow them to quickly and cost-effectively adapt to future regulatory changes. GreySpark has identified a clear opportunity for buy-side firms to enhance key functions through strategic technology investments, including liquidity sourcing and surveillance and monitoring.
The report goes on to highlight the scale of the impact MiFID II will have on the data management functions of buy-side firms; demanding they collect, process and store data in much greater volumes than in the past. For GreySpark, this change demands a new approach to data management, and firms should look to upgrade their data management and data compliance systems in such a way as to improve performance and future-proof their operational models.
GreySpark’s findings dovetail with RIMES’ own position: that today’s turbulent regulatory environment represents an unprecedented challenge for the buy-side. The old ways of managing data and data compliance are no longer fit for purpose and firms have no option but to transform their data capabilities if they are to control costs and avoid non-compliance.
RIMES believes the best way for firms to adapt to regulations such as MiFID II is through managed data and compliance services. This approach avoids the large upfront capital costs associated with complex IT infrastructure modernization projects, and benefits firms by enabling them to achieve compliance in a greatly reduced time frame. Moreover, new services coming to market, such as RIMES’ RegFocus, enable buy-side firms to adapt to the new market surveillance requirements of regulations such as MiFID II and MAR; functions they have not been required to perform in the past.
Buy-side firms looking to take the advice in GreySpark’s report should therefore seriously consider managed data services as an alternative to the traditional in-house model. Such services are future-proof by design and capable of lowering the total cost of the data estate. Even in our increasingly complex regulatory environment, managed data services allow buy-side firms to focus on what they do best, safe in the knowledge they can meet their compliance reporting requirements.