Introduction
Financial regulation changed significantly following the global financial crisis of 2008, which badly exposed gaps in the pre-crisis global regulatory framework. In the years since, regulators have sought to increase transparency and improve standards as the industry develops while demonstrating a willingness to pursue aggressive enforcement actions where necessary.
Although the sell-side has typically attracted the most regulatory scrutiny and received the heaviest fines, the buy-side is also dealing with an increasingly complex and robust range of regulatory requirements. Indeed, the growing size and systemic importance of the buy-side means that it is increasingly in the regulatory spotlight when it comes to the development of new rules and practices.
Not only are regulators working through a post-pandemic backlog of policy development and enforcement in long-standing traditional areas such as market abuse and communications surveillance, but there are also clear signs that financial regulators are taking on a much more ambitious and varied remit than ever before. New and emerging areas such as green finance, digital assets, and artificial intelligence are fast becoming key priorities for regulators aiming to keep up with industry developments and set standards accordingly.
As regulatory pressures continue to grow, buy-side financial firms must optimize the effectiveness of their compliance officers, portfolio managers, and trading desks in an efficient and cost-effective manner.
In this post, we discuss several significant trends and areas of investment that buy-side firms must consider as they seek to optimize their compliance regime, as they address the increasingly fast-moving and assertive regulatory landscape they operate in.
Key Buy Side Compliance Challenges
A recent survey conducted by Waters Technology found that when asked to identify their greatest compliance challenges, 52% of buy-side firms reported that their processes were too manually intensive and lacked automation.
Forty-two percent stated they needed help understanding the minutiae of regulations and translating them to technologies and workflows. Additionally, 39% felt poor accuracy and reliability due to fragmented, legacy or proprietary systems presented a significant challenge.
As these results show, buy-side compliance teams face significant challenges. Today, many buy-side firms rely on legacy solutions built on less sophisticated technology designed to function in a simpler, less demanding regulatory environment. Such technology, which often operates in siloes, leads to inefficiencies, including manually updating each system as regulations change. All of this adds up to direct or indirect costs in the form of human time, technology inefficiencies, or unaddressed risks.
To better operate in today’s environment and prepare for what’s over the horizon, buy-side firms must take a different approach.
Rather than viewing every compliance obligation as requiring its own specific point solutions. Firms should seek compliance solutions designed to be as comprehensive and integrated as possible, backed by the regulatory expertise to help clients adapt and scale quickly as regulations evolve.
Using such a solution allows firms to:
- Embrace automation and ingest, organize, analyze, and report vast amounts of data quickly and efficiently.
- Facilitate regulatory compliance by providing those involved in the compliance effort with timely, relevant, detailed, and accurate data.
- Ingest data from existing technologies, including third-party solutions, and minimize the stress on your firm and compliance professionals and their efforts to create a credible and defensible program.
Bloomberg’s Suite of Compliance Solutions
This holistic, integrated, and scalable approach defines Bloomberg’s Compliance and Regulatory Solutions. Comprised of the following key offerings:
- AIM’s Trade Compliance Modules
- Vault’s Integrated Archival, Analytics, and Surveillance Suite
- BTCA’s Trade Surveillance and Best Execution Solutions
- RHUB’s Regulatory Reporting Tools
Bloomberg’s powerful suite of Compliance and Regulatory Solutions provides Buy Side compliance, technology, and risk officers effective ways to manage their firm’s regulatory risks and business mandates with a trusted technology provider that can scale and adapt to an ever-changing regulatory landscape.
Our suite of offerings help manage the end-to-end compliance workflow from policy to prevention, retention to surveillance, and discovery to reporting, all fully supported by Bloomberg’s unparalleled level of service, global regulatory expertise, and powerful Terminal community.
AIM’s Trade Compliance module provides AIM users access to over 800+ templates to support in-trade policies for pre- and post-trade controls covering a vast array of regulatory and business rules well as end-of-day compliance checks, all directly connected to front-office trader and risk officer workflows.
Vault’s Integrated Archival, Analytics, and Surveillance suite provides one of the industry’s most powerful AI and Rules-based communication, voice, and trade compliance offerings. Focused on helping firms meet their books and records and surveillance obligations, Vault can capture, archive, transcribe, translate, surveil, and analyze over 100 communication, voice, and trade channels in over 60 languages, including nearly all major corporate, mobile, and voice channels such as MS Teams, WhatsApp, Zoom, and many more.
BTCA delivers comprehensive, automated, and data-rich trade surveillance across all asset classes. BTCA features a flexible capability framework to precisely identify possible market abuse, suspicious trading, and best execution breaches using data-driven suggested thresholds. Comprehensive workflow tools and integration to the wider Bloomberg Professional Service to prioritize, investigate, and evidence cases and a rich set of analytic tools and KPIs to help firms identify underlying causes and trends to help them correct deficiencies, improve their surveillance policy, and better utilize resources.
Bloomberg Regulatory Reporting Services (BRRS) offer a comprehensive suite of solutions that help firms navigate the complex and evolving regulatory reporting landscape. Our global, cross-asset, muti-jurisdiction solutions fulfill the needs of buy-side firms across all markets. Bloomberg’s Regulatory Reporting Services can be easily integrated into any firm’s workflows via standard APIs or with Bloomberg’s own order management, execution or confirmation solutions. Our Regulatory Reporting Hub (RHUB) is a leading trade and transaction reporting solution covering a range of jurisdictions that benefits from using Bloomberg data to enrich and verify reports. Our Assurance services provide a comprehensive control framework designed to provide firms with the transparency and regulatory intelligence needed to ensure reporting quality, regardless of the primary reporting solution utilized.
Bloomberg’s customizable and scalable technology allows buy-side firms to respond quickly to changes in the regulatory environment and how the firm operates. In addition to mitigating regulatory risk, Bloomberg’s suite of tools ensures compliance with corporate mandates.
Get connected to a holistic compliance solution
From end-of-day compliance checks to communication and voice surveillance to trade surveillance, regulatory reporting, and many other critical tasks, Bloomberg’s compliance and regulatory solutions help buy-side firms minimize the stresses and strains of compliance without compromising their ability to comply with increasingly complex and demanding regulations and laws.
Through automation, proactive risk mitigation, high-quality reporting, and the avoidance of compliance violations, among other benefits, Bloomberg’s compliance solutions can generate significant and sustainable cost savings.
To avoid attracting regulatory scrutiny and maintain compliance with onerous laws and regulations, buy-side firms must excel at compliance in all its forms. To comply with regulations and minimize the administrative burden, buy-side firms need access to a flexible, scalable, and effective integrated solution. Bloomberg’s end-to-end Compliance and Regulatory solutions provide an all-encompassing offering.