Coping with the costs and burdens of a decade of regulatory reform for derivatives and other instruments is hitting hard the bottom lines for many securities trading firms.
“They’re spending the money, right?” says James L. Koutoulas, Esq., CEO of Typhon Capital Management, who spoke to FTF News during FTF’s CMD Ops 2017 (collateral, margining and derivatives) conference in New York City this past October.
“The regs have gotten so in-depth and so diverse between different jurisdictions that it’s pretty hard to manage on a manual basis,” Koutoulas says. “They’re implementing technology. They’re compressing their margins. They’re adding staff. It’s a very high cost to the industry.”
There has also been a lot of information to digest from the domestic and overseas authorities such as the volumes via the Dodd Frank legislation and the actions of the European Securities and Markets Authority (ESMA). “The definition of the word swap [via Dodd-Frank] was over 300 pages,” Koutoulas says. “It’s been 10 years of ever more complex, broader rules.”
At the CMD event, Koutoulas took part in the “Regulators Ease the Burden” session, which focused on how regulators are taking steps to ease some of their burdens. In Europe, for instance, authorities put forth proposals to help firms cut costs and scale back some of the reporting chores. For U.S. markets, the CFTC’s chairman launched the “Keep It Simple Stupid (KISS)” initiative to gather feedback on how to lighten the load on current regulations.
CREDITS:
Video Production: Janene Knox and William J. Poznanski, Jr.
Interview conducted by: Eugene Grygo, chief content officer, FTF News
Co-Producers: Sarah Hathaway, vice president, Financial Technologies Forum (FTF) and Eugene Grygo
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