Source: Global Banking & Finance Reviews | 22 January 2013
Like it or not, the way of working for most tier two and tier three investment firms will be changing due to the raft of regulations that have gone into effect as well as significant modifications and enhancements that are being discussed.
These include the European Market Infrastructure Regulations (EMIR) and Dodd-Frank Wall Street which require high levels of automation in order to comply.
For example, EMIR states that all standardised OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties.
Trading platforms are required to be increasingly sophisticated beasts in order to accommodate the vast amounts of trading data that they handle on a daily basis.
Many smaller firms who are currently running their businesses on spread sheets will therefore have to review how they operate. For most, a technology upgrade will need to be considered if they are to stand a chance of meeting the demands of the regulations. However, the requirements of a new system will make it complex to install, which in turn requires huge upfront investment both in time and money – both expensive overheads for a smaller firm.
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