MiFID II Causes Jump in Compliance Spending
Neil Barua, chief executive at IPC Systems, said the private cloud provider for financial services firms has experienced a 400% increase in the number of compliance proposals in Europe in the past year.
The demand for compliance technology has increased as MiFID II, new rules covering European financial markets, come into effect in 2018. Today the European Council approved a one-year delay to MiFID II from its original implementation date to 3 January 2018. The deadline for the member states to transpose MiFID II into national legislation is 3 July 2017. Barua told Markets Media: “MiFID II is coming like a freight train.”
In February IPC Systems completed its acquisition of Etrali Trading Solutions, which specialises in compliance. Lionel Grosclaude, the former chief executive of Etrali, joined IPC as managing director of Europe, Middle East and Africa to lead a newly created compliance business division.
“The financial industry is undergoing an amazing transformation,” Barua added. “In the next three, five to 10 years technology will be at the forefront of that change.”
IPC provides a financial markets private cloud to more than 6,000 clients across all asset classes. Barua said the firm is keen on forming partnerships with firms that provide serves for its clients, including new fintech firms. “The partnership with Algomi is a great example,” he added.
Last month IPC announced a partnership with Algomi, the fintech company that provides a bond information network.Voice calls can be tagged directly to trades to provide audit trails for the best execution requirements under MiFID II. Stu Taylor, chief executive of Algomi, told Markets Media at the time: “Our deal with IPC means the buyside can connect to a salesperson with just one click using DealCall.”
Consultancy GreySpark Partners said in a note that delays in the publication of all the Regulatory Technical Standards for MiFID II have led to financial markets companies thinking holistically when making technology upgrade decisions designed to assist with the compliance overhead, the opposite to what has usually happened in the past.
The note said: “As a result, many companies are replacing legacy, siloed data management, data processing, risk management, reporting, compliance and client-facing systems with new, streamlined solutions that are better designed to manage the reams of proprietary internal and client-centric data across the organisation.”
The consultancy gave the example of a Tier 1 bank which recently replaced multiple reporting systems per business line with one, cross-organisational data warehouse and a fully customisable reporting engine. In addition a large asset management firm replaced a spreadsheet-based trade cost reporting process with an automated, integrated, MiFID II-proof system.
More on MiFID II:
The firm's financial risk monitoring services had a 400% increase in demand since 2020.
The firm uses machine learning and natural language processing to help prevent financial crime.
FundApps automates increasingly complex regulatory reporting requirements.
There is an increasing amount of regulatory fragmentation between jurisdictions.
The COVID-19 crisis has been a major driver behind the move.