Chief Business Development Officer David Murray recently appeared in Finance Magnates, sharing his thoughts on transmuting compliance headaches into valuable business insight with some Regulatory Alchemy.
This piece first appeared on Finance Magnates on 9/22/2016.
The ever-expanding regulation of the financial markets is becoming a lead weight for many shops, increasing operating expenses while dragging down profit margins.
Some consider it a necessary evil for safe, efficient markets and for maintaining investor confidence. Others see it as misguided, if well-intentioned, political meddling into what should largely be a laissez-faire system. All recognize it as a tax: it must be satisfied to avoid consequences, but it definitely isn’t promoting innovation or adding new, unique value to customers.
The costs of compliance, or regulatory tax, can be so prohibitive as to drive smaller shops to shut their doors or pivot, and larger shops to shutter whole sections of their business. Even those who are able to get themselves up to code rarely gain anything more than administrative processes, swelling compliance departments, and teeming collections of inert data – the financial equivalent of lead slag.
And as with lead byproducts, regulation is the gift that keeps on giving. Organizations today prepare contingencies for their regulatory tail-risk, that is, the likely cost of some financial penalty. They realize it is a question of when (and not if) a misstep will result in a penalty. Such a mistake might not necessarily be in maintaining compliance, but in being able to demonstrate it, and may surface long after a transaction is executed or reported.
So as with most taxes, organizations look to do the bare minimum to meet their obligations.
So what, then, is the silver lining? Read the rest here: Regulatory Alchemy: Transmuting Compliance Tax into Business Value.