Compliance automation can protect financial services firms from regulatory violations. Here are three ways regtech platforms can improve compliance management from Star's Director of Product Strategy & Marketing, Tim Ward
In many ways, regulation in the financial services industry is a positive thing—after all, what could be more important than keeping client information and money safe, and keeping markets operating safely, predictably, and ethically? On the other hand, superfluous regulation can cause operational bottlenecks and challenges that hinder firms’ abilities to service clients.
Given the ever-expanding list of global regulations that can have serious impacts on a firm’s reputation and bottom line, the financial services industry needs a better approach to managing compliance than traditional manual or semi-manual processes. Enter “regtech,” or regulation technology. Regtech compliance tools are evolving to fill the vacuum created by this industry need for moving toward automation, and can fundamentally improve the way compliance departments handle regulation.
THE EVER-EVOLVING ROLE OF COMPLIANCE MANAGEMENT
Why is regtech important? Consider how challenging it is for compliance officers to do all the legwork necessary to protect their firm from regulatory violations. From pre-clearing trade requests to ensuring employees complete certifications to maintaining insider lists on spreadsheets, compliance officers certainly have their work cut out for them.
When performed manually, these activities place a great deal of strain on compliance officers. The role of compliance officers is constantly evolving, and it’s already difficult for them to keep up with changing roles and responsibilities. Automated regtech platforms can improve compliance management in a number of ways.
1. REGTECH PROMOTES PRE-CLEARANCE FOR KEY ACTIVITIES
With the help of a regtech platform, pre-clearance can be quick and easy for employees. They can simply log in to the platform and submit a request form before carrying out a certain activity—making a trade or political donation, for instance. Sophisticated platforms can even give approval or denial in a matter of seconds after the submission, so there’s no question of whether an action is within the boundaries of the firm’s code of ethics.
Web-based regtech platforms make it even easier, as employees can access the tool from anywhere and at any time to submit requests. The more efficient you can make pre-clearance for your employees, the more issues you’ll prevent, and the more time and effort you’ll save for compliance officers down the line.
2. REGTECH ALLOWS FOR STREAMLINING OF CERTIFICATIONS AND ATTESTATIONS
Certifications and attestations might seem like a box to check, but they are much more important than a simple pro forma exercise. Not only are these processes a regulatory requirement, but they also ensure employees take accountability for reading and abiding by relevant policies, and offer protection for firms should issues arise in the future.
But the process of collating each employee’s data into a certification or attestation can be time consuming for compliance teams. Look for a regtech platform that automatically collects and combines all of an employee’s activity information into one file. Automating this task takes the menial work from compliance teams’ shoulders, and having all the information in one place means employees have fewer files to review. The platform should also be able to store approved certificates for future reference and allow your team to easily download and view the files whenever you need them.
3. REGTECH SIMPLIFIES INSIDER LIST MANAGEMENT
Regtech compliance tools provide a convenient and centralized solution for list management. They help compliance teams assess which projects may result in the exchange of material nonpublic information (MNPI) within the firm and which employees and third-party contacts may have received such information. A regulator may request this information at any time, and firms have a relatively short response period, so keeping accurate and comprehensive records is essential.
Regulatory compliance can be a real challenge, but regtech compliance tools and the automation they bring go a long way toward keeping that challenge manageable.