Last month, financial services technologists, service providers and technology vendors came together in London for the annual European Trading Architecture Summit. Delegates at the event discussed a wide range of topics relating to trading technology architecture and enterprise infrastructure; including machine learning, trading regulations and blockchain technology.
As Waters Technology reported, the European Trading Architecture Summit is of most interest to sell-side businesses, but this year there was a lot of debate around topics that will have a significant impact on the buy-side. In particular, delegates reiterated just how important regulations are as a driver for future buy- and sell-side technology investment.
These findings chime with RIMES own experience: we have seen asset managers come under increasing pressure from new and emerging regulations such as the EU Benchmarks Regulation, the Markets Abuse Regulation (MAR) and The Markets in Financial Instruments Directive II (MiFID II). These regulations are putting new data management burdens on buy-side firms that can only be addressed through investment in new governance processes and technical systems.
The extent of the challenge facing buy-side firms should not be underestimated. In addition to adding cost and complexity to the management of the exponentially-increasing volumes of data flowing into buy-side firms, regulations such as MiFID II and MAR are also mandating new market surveillance burdens on asset managers; tasks many such firms have neither the experience nor the systems to carry out effectively.
In the face of this challenge, the European Trading Architecture Summit provided some cause for concern. A poll of delegates during the session on MiFID II revealed that around half of attendees have yet to start preparing for the Regulation, which is set to come into force in January 2018. With just one year to prepare, it is possible many asset management firms might struggle to be fully compliant in time.
From RIMES’ perspective, the scale of the regulatory challenge and the short time-frame in which businesses have to overhaul legacy technology and governance processes makes the business case for managed data services compelling.
Cloud-based managed data services can be integrated with in-house systems rapidly, ensuring compliance with all existing and emerging regulations by default. The approach also enables firms to easily scale their data management capacity as the volume of data they are expected to deal with continues to grow. In terms of speed-of-deployment, ease-of-use and total cost of ownership, managed data services provide buy-side firms with a powerful solution for today’s complex regulatory environment.