MIFID II
associations as early as possible Consider connecting with industry peers and raising issues collectively.
• Detailed impact analysis: identify business threats and strategic opportunities
arising from the regulatory changes. Also begin to look at the financial and operational impacts of the changes.
• Gap analysis and prioritisation: identify gaps in your processes and systems which
will need to be addressed in order to be compliant. Prioritise these gaps based upon their size and the time required to close them.
My Business is Based in Switzerland: Do I Need to Worry?
Yes, so moving operations to Switzerland is not necessarily the answer to avoiding regulatory capture!
Swiss trading companies that regularly do business across borders into and from the EEA will need to demonstrate compliance for all cross border activity, and if they have branches or subsidiaries elsewhere in the EEA these will be regulated.
Organisations will have to establish branches within the EEA if they wish to offer regulated services to organisations that are not eligible counterparties – which includes many of the customers of traditional trading companies.
• Stakeholder engagement: begin to educate key stakeholders from board level down within your organisation.
• Change programme design: build a high level plan including critical deadlines and high priority actions including IT
requirements. Identify what resources will be required and how the change programme will be delivered.
• Programme mobilisation: mobilise a programme of delivery projects designed to ensure
compliance. Note that timing of programme mobilisation is key – too early and you risk spending money unnecessarily. Too late and you may miss compliance deadlines.
• Education and
communications: establish a programme of education and communications activities to ensure all of the affected parts of your organisation understand what is happening.
Learning From Other Markets Other sectors, particularly investment banking, have had to deal with complex regulatory challenges for many years. Baringa’s experience of helping clients build sustainable compliance makes us well qualified to comment on the implications for trading companies. We have developed a 5 stage model of compliance best practice.
implementation perspective rather than focussing on each regulation in isolation
We recommend organisations adopt a strategic approach to regulation and compliance
• Have the required knowledge and insight to be able to lobby the
relevant regulatory authorities in an effective manner
We recommend organisations adopt a strategic approach to regulation and compliance, with compliance being a matter of concern for the board, supported by formalised processes for managing the regulatory pipeline as shown in the illustration. Our experience is that companies putting compliance at the
Andy Williams is a Director with Baringa Partners and has
over 20 years of experience in commodity trading operations and systems having worked with some of the largest oil and commodities trading organisations globally. He has also
worked on regulatory change programmes in the investment banking sector. He currently focuses on Baringa’s work with the international commodities trading sector.
www.baringa.com
• Leverage their compliance investments for strategic
advantage
• Launch joined-up change programmes that address multiple
regulatory challenges – thereby reducing the cost of compliance.
Finally, you should remember that
the part of the intent of the new regulation is to effect fundamental changes in the way in which the commodities markets operate. Smart trading companies will embrace this change for competitive advantage. •
December 2012 63 heart of their business can:
• Ensure they take advantage of any market opportunities arising from the new regulation
• Think about the holistic impact of regulatory directives
from a strategic as well as
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