Caleb Hawkins, head of our compliance and legal desks, speaks to CEO of SteelEye, Matt Smith.
Throughout this ‘Compliance During Covid-19’ series, Caleb interviews a number of compliance professionals and experts around the market to get their insight around the market during Covid-19.
In episode 5 Caleb speaks with Matt Smith, CEO of SteelEye.
Financial market firms in general have detailed BCPs and as a result the market continues to operate efficiently.
We are seeing attitudes towards cloud and remote working change forever. Those that didn’t buy into the idea of cloud technologies or that work can be carried out effectively away from the office are now being proved wrong as entire workforces come together virtually to ensure business continuity, demonstrating that it can be done. For many firms, their workers are in the cloud whilst their technology remains on premise, which makes little sense. And for firms who had already embraced the cloud, the technological impediments have been significantly reduced.
If we look specifically at compliance, senior managers are having to quickly adapt to these rapidly changing times to ensure their regulatory processes and procedures enable them to stay on top of their obligations. Suddenly Compliance and Risk Officers are not only needing to keep track of what’s going on in the outside world but are also having to do a complete review of their internal systems and workflows to ensure they can record, store, monitor and report on the activities of a remote workforce. Given the enormity of the task and the time pressure involved, this can be a significant challenge.
If we consider things like market abuse monitoring, we have already seen a spike in attempts of market manipulation as opportunistic traders try to take advantage of the situation. It is therefore more crucial than ever that firms carry out effective trade and communications monitoring to detect and prevent any signs of financial crime or market abuse.
Will the regulator be more lenient during this time? Well, we know that the FCA will not ease up on firms during this period, as they expect all firms to have contingency plans in place to deal with major events. The FCA has been clear about the fact they still expect firms to meet all their regulatory obligations.
The challenges presented by the current COVID-19 outbreak have already resulted in a 3-month delay of the SFTR implementation.
We expect the regulator to be relatively forgiving in the first few months under SFTR as long as efforts can be demonstrated. This is one of the most important aspects of any regulatory implementation. The regulator wants to see that firms have taken sufficient steps and are working towards compliance. If this can be demonstrated, firms should feel confident that they will not come under scrutiny from the regulator, at least initially.
There will of course be a point when the regulator increases pressure and starts sanctioning firms for non-compliance. However, we would expect the regulator to issue an announcement to this effect prior to acting.
The current market disruption caused by COVID-19 has highlighted the importance of compliance and oversight, especially when employees are working remotely. Both now and in the future, financial firms need to invest in compliance, whether that is in hiring or in deploying modern and innovative technology solutions.
If you wish to give your thoughts or opinions on the market over these uncertain and unprecedented times, then please reach out to Caleb Hawkins at email@example.com.