IT Directors at capital markets companies are on their toes these days as the new SEC mandate for consolidated audit trail adds to the list of rules. Those mandated by Dodd Frank, The Card Act, Basel III, the Consumer Protection Act, and requirements from the alphabet soup of SRO’s and international agencies.
The aforementioned regulation requires IT Directors to design internal controls to prevent noncompliance issues before they happen and update their systems to provide more information to satisfy data request validating the compliance of the trades that are legal. At the same time, these systems need to be powerful enough to handle terabyte data aggregation in a world of nanosecond decision making, while being flexible enough to handle the next set of regulation dictates. Oh, less I forget 100% reliable too; otherwise you might find your company in the headlines next to Knight Capital or Facebook!
So what’s a company to do in the face of such a herculean task – jump in with both feet; join the gang of lobbyers to form the regulations; file exemptions against existing requirements; or simply do nothing in the hopes that it will all fall apart anyway? While IT Directors might like to join the ranks of regulators drowning in the sea of uncertainty, they just don’t have the luxury to wait and see. Management expects them to have the answers and never let it be said that an IT Director didn’t like a good challenge.
While you might not be able to guess at what quirky rule comes down the pipe, you can plan to report and capture everything. Trading systems can be reconfigured to execute on the new parameters quickly but proving compliance during surprise SEC visits requires more than just historical trade information.
Andy Wang, Bleum’s Financial Services Business Unit Leader suggests the trick is to “go back to the drawing board with a partner that’s been there. Overtime, administers have patched the patches to the point where even minor changes require massive effort. So not only is it difficult to furnish the right data at the right time, but systems and reporting are slower too. While a systems overhaul may sound costly and time consuming, it is often the best total cost option. Working with somebody that has done it, just makes it that much easier.”
And that is exactly what most companies are doing. IT Directors and their tech teams are starting to match the front office in numbers, and the only thing that exceeds the demand for qualified programmers is their cost. In order to stay on top of the core functions and ever changing business requirements, more and more IT Directors are looking for external resources to fill the knowledge gap while keeping budgets intact.
My advice, take the regulators out of the picture. You know that demand for more information will never stop. It’s not just regulators and politicians; management and automated systems continue to require more data for decision making. Whether or not Dodd Frank is ever implemented, IT Directors will continue to be challenged to refine their systems to provide accurate information, faster. If you focus on building the most flexible and powerful system possible, the derived business intelligence makes the ROI worth it anyway. Just tell management it’s those pesky regulators that require the investment!
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Kyle Lindley, Director of Business Development, Bleum, a China based IT outsourcer to MNC’s in the financial services industry.
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