Gary:

Hey folks, Gary Casagrande here from Confluence. Hope all is well. Thanks for listening in to our first podcast. Our new podcast series here at Confluence is called Confluence Connect and our first topic is regulation. Since the global economic crisis on October 9th, 2008, regulation has been a topic that is front of mind to everyone in this industry. Now that we’re 10 years after that global economic crisis, and we’ve been dealing with the alphabet soup of regulations that have come down from the global regulators, where are we now in the, let’s call it evolution of regulation and regulatory reporting? How have we operationalized all the work that needs to be done to get the regulators, what they’re looking for, what they need in order to oversee the global industry? What are asset managers looking for, third-party administrators looking for, technology organizations looking for? And what are they all providing in order to make this work? And then where do we go from here? Where do we think the regulators are going to do with all of this information? Some interesting conversations coming up.

Gary:

So I’m glad you joined us, glad you’re listening in. And I hope you’ll find this as informative and fun as I did. Thanks for listening to Confluence Connect, and our first episode here on regulation.

Gary:

Welcome everyone to Confluence Connect, our first podcast here at Confluence. And I’d like to welcome today’s guest, Sean Tuffy. Sean is the Head of Market and Regulatory Intelligence for Security Services at Citi. And Sean is also an ex-colleague of mine from Brown Brothers where he held a similar role, and I worked in a different role at Brown Brothers as well. Hey Sean, how’s it going?

Sean:

Good Gary. Great to be here.

Gary:

Thanks, thanks. And thank you for being the esteemed first guest on our podcast. This is going to be exciting and I really appreciate you joining us.

Sean:

No, happy to do it. I’m excited to get my mug to mark the occasion.

Gary:

So Sean, there’s a lot going on in the regulatory space these days. I could have said this a year ago, I could have said this five years ago, I probably will be able to say the same thing in three to five years from now. What are the sort of macro-trends that you’re seeing in your role as you talk to clients, as you guys think about the way to service your clients? What are the macro-trends? What are the big things happening in the regulatory space globally in the global investment management world?

Sean:

Yeah, sure. So as you say, there’s sort of an ebb and flow to regulatory change, but it remains constant. So when we look at 2021, it’s a year where there are relatively fewer implementations. I mean, there are some coming down the pipe, but there are generally speaking fewer. So what really is driving global policy-makers, there’s a certain sort of what we would say sort of three key areas. And so, the first is performing a COVID post-mortem. So after in particular, the market chop in March and April of last year, regulators are undergoing a number of initiatives to look at how the regulatory framework held up and what changes might be necessary. So for asset managers in that bucket, the key parts are sort of looking at money market fund rules again, looking at revisiting the concept of fund liquidity, which is always been an issue, but sort of during the market stress last year globally, bonds performed very well, but there were pockets of funds that had to suspend their NAVS.

Sean:

Generally speaking, it was because of valuation issues, not liquidity issues, but if you are an investor and you can’t get your money out, that’s sort of a distinction without a difference. Regulators are looking at. And the final one, the COVID post-mortem is rethinking some rules that are coming in. So you have in Europe, something called the CSDR Settlement Regime, which will required mandatory buy-ins for settlement fails. So that got delayed a year, till next year. And the European regulators are really rethinking, would that actually to sort of market stress? So those are the three things in the COVID post-mortem and then quickly the other two areas that people are really, the macro-areas is everyone in adjusting to life after Brexit. So as you know, the UK has just left the EU, which creates a world where we now have another regulator, regulatory regime, which to track.

Sean:

So it’s really sort of tracking where potential diversions is going to happen between the UK and the EU-

Gary:

Sure.

Sean:

-and determined and the other area around the post-Brexit world. And certainly I hasten to say that, well, Brexit happened in January. It’s really only begun process managers as we sort of adjust to the new normal in this new world and the other area that’s a particular concern to asset managers. If the EU is looking at tightening its delegation rules around what has to be done in the EU, what can be delegated out of the EU by their own admission, this is because of Brexit. And they’re concerned that a lot of asset management activity for European funds happens in London, but obviously as Gary, you and I know, asset management is a global function. So, an Irish usage suggests is just as likely to be managed in New York as it is in London.

Sean:

So that’s a major sort of macro-level threat. That’s a multi-year project, won’t happen overnight, but something we’re definitely tracking. And then sort of the final major theme, which we’re seeing everywhere is sort of ESG regulation going global. So the EU to date has really taken a lead on this just a couple months ago. The disclosure rules came in for European funds and asset managers. And they’re pushing ahead with a number of other elements, but they’re not the only regulator. Right? And so with the change of administration in the U.S., the SEC and CFTC to a degree have a renewed focus on ESG, along with regulators in Hong Kong and Australia. So for asset managers, it’s sort of tracking what’s happening in the EU because they have the most developed framework. And as you probably could test with things like GDPR and MIFID, what the EU does tends to sort of have ripple effects around the world, but also trying to navigate and manage this mosaic of ESG rules that aren’t particularly well-coordinated. So that’s a real challenge.

Gary:

So certainly a lot going on, no surprise. It’s interesting the way you framed, especially that last piece around ESG, that the European regulators are leading the charge. We often talk. And when I say we, I mean, just about everyone in this industry who talks regs, talk about this concept of fast follow, one regulator, comes out with something and other regulators are keeping their eye on it, taking a look. Maybe it was something that’s in the pile on the back of the desk, collecting dust. And then suddenly a regulation pops up in different regions of the world. Liquidity is a good example. Is there a particularly regulatory body regime region of the world that’s, in your eyes, sort of leading the charge on all the regs? Or is it that depends if it’s liquidity, if it’s fair value, if it’s settlement, it’s different regime’s, different regions.

Sean:

Yeah. It’s an interesting question. And obviously, it fluctuates, you and I are old enough to remember when the U.S. pushed back across the globe and then equally when you’re pushing it across the globe. So it does definitely sort of depend. I mean, I think that the last five years, five, 10 years even, I think it’s fair to say Europe, through the European Commission and ESMA, has really taken a lot of lead on what I would call it proactive regulation. So ESG is a great example. So I mean, regulatory world, regulations are really largely created reactively. So if you think about money market reform, something happens in the market and regulators look to see if they need to change things. And in that case, when you have reactive regulation, wherever the incident happened, that regulator usually takes the lead. So money market reform’s a great example of where the SEC is really taking the lead, because the U.S. money market industry had the most stress a year ago. But when you look at proactive regulation, or sort of regulation that sort of trying to anticipate potential issues, certainly I think it’s fair to say Europe has taken the lead and still does to an extent, and that’s really personified now by the SEC regulations.

Gary:

Makes sense, makes sense. You’ve talked a couple times about sort of the market stresses during COVID, 2020 market stresses that we’re all aware of. It’s interesting because the three things you just mentioned as global policymaking initiatives at the macro-level, COVID post-mortem, life after Brexit and ESG, none of those three things are related to the market volatility and the global economic crisis of 2008, 2009. It seems like through the 2000 teens, that was what informed just about all regulation. Would you say we’ve shifted now and it’s, the regulations we’re going to see today going forward are less about those massive events clearly from 10, 12 years ago, and it’s more what’s happened recently, or are some of those regulatory initiatives still not been implemented globally. And we’re still going to hear about the crisis from 10, 12 years ago.

Sean:

Yeah. I mean, I think it’s a little of both, but I think in the main it’s really all new policymaking will be driven off new events. And COVID being the most recent one because a lot, if not most, of the sort of post-GFC framework was in place. So a lot of what policy makers are, and however you bucket it, are doing now is looking to see how the post-GFC framework held up. And I think generally speaking, especially for asset management, the reviews are pretty positive that, a lot of the system worked as it was designed. And during that choppy a year ago, we didn’t see sort of massive fun blowouts or any real issues. Now that said, there are elements of the framework from 12 years ago, God, I feel old when I was that long ago, but they’re still coming along.

Sean:

Right. So a really a good example of that is the unclear margin rules for derivatives that are uncleared. So those two, the final two phases, which will acquire initial margin posting for unclear derivatives come in this year and next year. And so, we’re at the tail end of post-GFC reforms.

Gary:

Right.

Sean:

We’ll still hear about it, but I think as we move forward, and if you and I were to talk six months, a year from now, we’ll talk about it less. And that we’re really be talking about for the next couple of years, COVID, how to, what changes are necessary.

Gary:

Yep. It makes all the sense in the world. This was great chatting with you, Sean. It’s amazing how quickly time goes by, not just 10, 12 years, but 10, 12 minutes. You guys are doing great work at Citi, and I know that you are doing a lot of work to help your clients, and the market in general, stay in the loop on this kind of stuff through your Citi Security Services Insight Thought Leadership site. Tell us a little bit about that.

Sean:

Yeah, absolutely. So Citi Security Services Insight is sort of our portal where we deliver all of the insights that we can bring to bear from Citi Security Services and the wider Citi, to help our clients, asset managers, institutional investors, navigate the ever changing world, both looking at regulatory issues, which, we’ve just been talking about now for the last 15, 20 minutes, but also looking at sort of the market dynamics such as outsourcing or other trends in asset management that are really sort of reshaping the industry. And so what we seek to do is really help our clients understand what’s happening now, and what’s happening on the horizon to help them sort of navigate this ever-changing world we’re in.

Gary:

Oh, that’s awesome. Excellent. Well, Sean, thank you very much for joining me and I look forward so much, I’m sure you do as well, to actually seeing you in person at some point. Our listeners might not know, but you’ve got the full, straight-up American accent, but you live over in Dublin. You’ve been over there for quite some time, certainly as long as I’ve known you and hopefully you either get here stateside or I get over there soon, and I can thank you in person. Thanks again, Sean. I appreciate it.

Sean:

Thanks Gary. Great. Great to be here

Gary:

Bye.

Gary:

So, now I’m talking to Fiona McNally, Director of Regulatory Product Management at BNY Mellon Asset Servicing. Hey Fiona, how are you doing?

Fiona McNally:

Hi, Gary. How are you? Thanks for inviting me.

Gary:

I’m doing well. Thanks for joining. I super appreciate it.

Fiona McNally:

You’re welcome.

Gary:

This is, as you know, the inaugural episode of Confluence Connect, our new podcast here at Confluence. So, Director of Regulatory Product and all the other stuff I just said, I’m sure I got the title right. But what does that actually mean?

Fiona McNally:

Sure. Well firstly, thanks for inviting me to participate today, Gary. It’s great. So what it means is, I lead a global team of registry product managers and we develop products to help our global client base meet directory compliance requirements. We do a couple of different things in that we focus on delivering relevant registry intelligence to our clients, and we support many of our top clients who wish to outsource our registry reporting obligations. So in a very broad nutshell, that is what we do.

Gary:

Gotcha. Cool. Well again, thanks for joining. So right at the top, and I would imagine this rolls right off your tongue, because sounds like what you live and breathe every day, but the high-level sort of macro-regulatory related trends that you are following that you see happening in the market globally, and that you’re talking to your clients about these days.

Fiona McNally:

Sure. Well, Gary, as you know, we will never be short of topics that we want to cover regulatory change matters-

Gary:

That’s true.

Fiona McNally:

-but I thought I’d focus on a couple of the key topics that we are talking to our clients about today, and they all more or less revolve around one key main team, which is transparency. So firstly, we are talking to clients about ESG a lot, I suppose, while broadly speaking, ESG-related regulation attempts to target similar teams, including investment behavior, disclosure requirements and expectations regarding proactive engagement between investor and issuer, the way in which jurisdictions are getting to the same place differs. So for example, the focus in Europe and the UK has been more on environmental factors, especially climate regulation considerations, and in particular, the required disclosures needed to provide transparency to investors in order that they can compare similar investments, whilst in the U.S. there has traditionally been more of a focus on the social aspects of ESG, although it is encouraging to see that President Biden has made tackling climate change one of his core priorities.

Gary:

Yes, it is.

Fiona McNally:

Yeah. So when he, I obviously this is evidence when he returned the U.S. to the Paris Climate Accord during his first few moments in the Oval Office. However, this divergence in approach means that for firms who have operations in multiple jurisdictions, they may be subject to jurisdiction specific ESG registry requirements, such as the various upcoming EU ESG regulations. U.S. asset managers, for example, will face hurdles and ESG transparency requirements when distributing funds into other regions. We do expect the U.S. to develop their own solutions, to encourage investments into more sustainable economic activities, but also draw inspiration from sustainability related financial market regulations in other parts of the world.

Gary:

I’m not surprised that ESG is on that list, right?

Fiona McNally:

Yeah, sure. It’s what everyone is talking about at the moment. And trying, I suppose, to meet the challenges that it presents. In Europe, for example, given the implementation of the EU sustainable finance disclosure regulation on 10th of March, we’ve been speaking to a lot of our clients about the regulatory compliance requirements arising from that regulation. Unfortunately with the SFDR, the regulatory technical standards, which are still in draft format, elements are actually still out for public consultation.

Fiona McNally:

These regulatory technical standards outline the detailed requirements around both entity-level and product-level disclosures. And given the fact that the consultation runs through to May 2021, this may leave little time between obtaining the final version of the requirements and the expected application date of January 2022. So there’s a lot of things up in the air at the moment in respect of that.

Gary:

Yeah.

Fiona McNally:

Also in the UK, in March, there was a consultation paper on proposals to mandate climate related financial disclosures, which was issued. The intention of this consultation is to set out, to propose requirements for UK in-scope firms to align their disclosures to the financial stability board’s task force on climate-related financial disclosures. And this legislation is due to come into force in April 2022. Interestingly, the TCFD requirements are currently a voluntary framework for climate-related disclosures, but they’ve really gained traction globally as a standard, which many firms have chosen to adopt even in jurisdictions where disclosures are not mandatory. However, stakeholder pressure and investor demand means many firms are not willing to be compelled to before they disclose.

Fiona McNally:

So in our discussions with clients, it’s clear that these disclosure regulations create many challenges, and none more so than regarding the collection of relevant, comparable, and reliable ESG data, which can help clients to measure performance off their phones against the sustainability objectives set out in their websites and in their prospectuses. The next thing that we’re talking to clients about is around AML reform. So many countries and regions across the globe are in the process of introducing AML reform in an effort to enhance the industry’s response to financial crime. We do expect over the next few years that there will be changes in the Americas, Europe and APAC, and the legislative environment has evolved in many regions with legal auditing and other professional firms under the spotlight. Additionally, regimes continue to evolve in response to emerging technologies with many countries now introducing AML and CTF requirements for cryptocurrency and digital asset exchanges.

Fiona McNally:

So in the U.S. we’ve had the AML Act of 2020, which seeks to improve corporate transparency and includes mandates for new rulemaking to occur this year, including effective and reasonably designed anti-money laundering program rule, the establishment of a federal registry of entities, and future rule-making to change customer due diligence requirements to include use of the federal registry of entities. In the EU, six AML directives have been adopted over the last 30 years, with further reform proposals under consideration. In May, 2020, the EU Commission published a six point action plan aimed at improving the response to financial crime. And this included a public consultation thought industry feedback across a number of topics and is intended to inform a proposed AML regulation. Again, going to the RecTec angle, the EU also conducted a public consultation on the digital finance strategy, as well as an industry survey on the RecTec environment.

Fiona McNally:

And this activity, combined with the guidance issued across the EU and responses to the Coronavirus pandemic, speaks to the role that technology would continue to play in enhancing the industry’s response to financial crime in a robust, innovative, and more effective way. Also in the UK, they’re no longer subject to EU directives or regulations post-Brexit. However, it is likely that the UK will continue to align with the EU’s approach to addressing financial crime, and as such the UK transposed the fifth EU AML directive in January 2020, giving full effect to the relevant measures. So a lot changing in this space, Gary.

Gary:

Yeah, for sure.

Fiona McNally:

And obviously we’re working closely with our transfer agency clients globally to keep them informed of the numerous AML related changes that may impact their business. And the final item I was going to talk about today in this respect, Gary was around money market fund reform.

Fiona McNally:

So in the U.S. on the 4th of February of this year, the SEC launched a call for public comment on potential reform measures to improve the resilience of money market funds as highlighted in a report of the president’s working group on financial markets issued in December 2020. This report noted that certain short-term funding markets experienced stress in March 2020 amid economic concerns relating to the onset of the COVID-19 pandemic. The SEC is requesting public comment on the report, including the effectiveness of the previously enacted money market funds reforms, and equally in the EU, ESMA published a consultation on potential reforms to the money market fund regime in March 2021. So this aims just to review the stress experienced during the COVID-19 market volatility of 2020, and again, ESMA sets out the potential reforms to the asset and liability side of money market funds, stress testing, and disclosures or reporting. So again, we’re actively talking to our money market fund clients about these consultations and the impact or potential impact to their business models.

Gary:

And so you said at the beginning, there’s no shortage of stuff to talk about in the regulatory space. And, I kind of chuckled because that’s why I kicked off this podcast series with regulatory, because it just seems to be always on everyone’s mind. And it’s ever changing.

Fiona McNally:

Absolutely.

Gary:

You mentioned a different group of regulators, or not a different group, but a group of different regulators in that commentary. We often hear the phrase fast follow when it comes to the regulators, meaning one regulator does something and the others, appear to, on a different part of the globe, go, Hey, I like that idea. We should do something like that. Do you see one global regulator or jurisdiction setting the tone for the rest in this industry? Or is it sort of a topic by topic, case by case, thing where, one regulatory agency maybe gets the ball rolling and then others begin to follow?

Fiona McNally:

Yeah. Good question, Gary. And I suppose we don’t want to, pick anyone out because, every regulation I suppose, is trying to achieve similar outcomes, but I guess being from the EU, I might just, I suppose, talk a little bit about the role you are playing in terms of ESG. So I spoke quite a bit about it there earlier on and, I think, they really are trying to progress with an ambitious, sustainable finance action plan. Even most recently, they adopted a comprehensive package covering kind of three key areas. One was the adoption of the EU Taxonomy Climate Delegated Act, which aims to classify which activities best contribute to mitigating and adapting to the effects of climate change. A common taxonomy is something that is missing in the industry and it’s been called for.

Fiona McNally:

So this is very much a welcomed act. They also issued a proposal for a corporate sustainability reporting directive. So again, with the aim to provide consistent and comparable sustainability information, and then also the adoption of six existing acts such as MiFID, USE IT, and AFMD. And the focus here was to ensure that in-scope entities, such as investment firms and insurers, include sustainability risks and preferences in their procedures and their investment advice to clients. So I think all of them were welcomed in trying to set common frameworks and standards across the industry in terms of analyzing sustainability risk and providing consistent disclosures, et cetera. So that’s my example.

Gary:

Nope, Nope. Makes sense. Makes sense. And it’s a good lead into the next topic, clearly in the answers and the discussion, we just had, this new product type and I’m doing air quotes when I say that, because I’m used to being on video all the time in these pandemic days, but in this new product type ESG begets new regulation. Of course. So it, over the course of the past 10, 12 years, since the global economic crisis of 2009, 2010, all of the regulation, I call it the alphabet soup of regulations, that we’ve seen around the globe, have seemingly been informed by everything that happened during that economic crisis.

Gary:

One would imagine we eventually get past that point of being informed by that, and we get informed by other things. Great example, you just talked about money market reform, the money market volatility that happened in March of last year as a result of the Coronavirus pandemic. What are the things that are driving regulatory initiatives today, and have the regulators moved on from, the economic crisis being, a huge proponent of what informs them, in other words, are there other events and trends that are catalysts for regulatory action these days and going forward?

Fiona McNally:

Sure. Yeah, I think in terms of the rules passed post the financial crisis, I think what we’re now seeing is, ongoing stress tests of the regulations that were developed post the financial crisis. So many of which impose significant transparency related to requirements on financial market participants. And as I mentioned earlier, and you made reference to, money market fund reform is a great example. I think in recent months we have seen a number of adjustments to certain regulations. We’ve seen statements from regulators, we’ve seen quick fix amendments, and they all seek to implement changes to assist with kind of short and longer term COVID-19 recovery packages. I think one of the things that we’ve seen in a number of different areas, not only financial services, is the pandemic has accelerated the need to reshape business models, including through digital transformation.

Fiona McNally:

And whilst we’re aware that regulators actually intend to use digital transformation to enhance their own toolkit, with this use of SupTech, with potential use cases around market abuse, monitoring, et cetera, the results. So supervisory concern at the speed of the digitization. And in particular, regulators are focused on aspects such as outsourcing to third and fourth party vendors, with a focus on cloud service providers. And in particular, scrutiny regarding payment firms, any money providers. So I think we can expect to see a whole pile, more focus from regulators in this space, in the future months and years ahead.

Gary:

Yeah. That’s interesting. It’s almost as though the regulators are now reacting to how the market reacted to their-

Fiona McNally:

Exactly.

Gary:

-rules that reacted to the economic crisis. It’s merry-go-round of this industry.

Fiona McNally:

It’s the constant change. Yeah, for sure.

Gary:

It certainly is. So certainly it sounds like you guys are doing a lot of work with your clients at BNY Mellon in this space, dealing with this, deluge of regulations that’s come down over the past number of years. How were you working with your clients to best provide them with the services that they need in this space?

Fiona McNally:

Yeah, I guess at a general level, we are continuously in dialogue with clients to determine how we can help them, to support their regulatory needs, whether that’s through targets, regulatory intelligence updates, and or the provision or development of regulatory services to support their operating models. So I guess, that’s a continuous cycle, that’s a constant discussion with our clients. I think, as you may have guessed, specific areas of support, though, we are focusing on, right now, really revolves around ESG. So specifically the SFTR and TCFD regulatory compliance requirements. So we’re talking to clients a lot about that at the moment to, determine how we can best support their business models.

Gary:

Excellent. Well, it sounds like your clients are in good hands at BNY Mellon and in good hands with you. So thank you so much for joining me today, Fiona. It was great chatting with you.

Fiona McNally:

You too. Thanks so much for inviting me.

Gary:

Excellent. And thank you for being one of the first guests on our first podcast here at Confluence, Confluence Connect. Thank you very much.

Fiona McNally:

Thank you. Bye.

Gary:

So welcome back again. This is Gary Casagrande at Confluence. Our third and final guest in our first episode here of Confluence Connect, our new podcast, is Tom Pfister. Tom is the Head of Product here at Confluence. He has general and overall responsibilities for everything we do on the product side here at Confluence, including, of course, our regulatory suite of solutions and anything related to regulatory that our other total suite of solutions has to offer. So anyway, Tom, welcome.

Tom Pfister:

Hi Gary.

Gary:

So Tom, five years ago, you and I started working together here. That’s when I joined Confluence and it was all about in the beginning, SEC Mod was still a proposal, but it was going to be a rule real soon. And we talked often, you and I, to the markets as well, about this sort of operationalization of regulatory reporting, the dream that we had, that someday it would be as operationalized and even better than the models that folks ran for financial reporting. Talked to Sean Tuffy a little earlier, talked to Fiona McNally a little earlier, but you think we’re there, where are we on that journey?

Tom Pfister:

We’re on the road. I’d say it’s happened in pockets, or in certain locales even, but the broad market, or kind of the vast majority of players, really have it still as a contextual activity that they do in France or they doing in the Netherlands or they do in Ireland or they do in the United States.

Gary:

Yeah.

Tom Pfister:

Great. It’s difficult to imagine any single person having enough global subject matter expertise to be able to actually do it, everything on their own. Of course that’s not operationalization though. The notion that you should be able to industrialize your functions and get them out from their little pockets, right? The little bit that’s done in compliance, the little bit, that’s done in a corporate secretarial work, a little bit that’s done by a data team, a little bit that’s done by a tech team, and actually put some robustness around that. That’s still a fairly immature capability, I would say across the industry. I mean, many individuals are still kind of reassessing how they actually solve the existing regulation that they have. Are they using the tools to the fullest capabilities? Do they have the right processes in place? So they have confidence in their governance models, et cetera, to get to the point where they could start to imagine, industrialization on a large scale across their global consequences.

Gary:

Yeah. And so what helps them get there? Just, time, technology and some, creative operational, sort of process redesign kind of stuff, is that it?

Tom Pfister:

Yeah, you have got to take a look at the…I mean, it’s the classic, right? People process in technology, you got to take a look at the technology that you’re using and does it enable that. You got to take a look at the decision-making, right? Can I organize this differently rather than the individualized with the localized decision-making? And then you’ve got to look at the people themselves. Do you have the right staff? Do they have the right training? And do they have the right tools at their tools at their kind of tool belt to be able to do the things that you’d want them to be able to do. So you could get to that kind of global industrial scale, confident model.

Gary:

Yeah. Makes sense. And then on top of all of this, something I know you and I have talked about before, and many in the industry are talking about is, even the nature of the type of regulations that are passing are shifting slightly. This convergence that we’re seeing of regulation and risk, and risk reporting with inside of regulatory obligations. Can you talk a little bit about, how does that inform you in the kinds of decisions you make and conversations you have out with our clients in the market?

Tom Pfister:

Yeah, absolutely. One of the main objectives of a regulator is, of course, to monitor for systemic risk. And the ways that they do that are data requests that could do things like stress testing or liquidity risk, or any of the kind of new types of risks that the regulators are asking for. Regulation in general, in data requests like these in general, only beget more questions, right? When you get your hands on a set of data, now you have more questions that you want to ask about it. So the regulations get more detailed, right? Do you see ESMA and their commentary around the next version of AFMD? They want to add substantial detail and granularity to the reporting of AFMD because they’ve gotten their hands on the data and realized that they need more, or they need it differently, to do their systemic cross-border risk monitoring.

Tom Pfister:

So the two are colliding, probably not merging, probably kind of colliding, into effectively a risk for compliance purposes is not wholly different from risk from an investment management purposes. And then the regulators are keenly, keenly aware of that. We have actually merged capabilities in the applications to position ourselves for this, which, people will be hearing about relatively soon, hopefully. And then we continue our investment into our risk capabilities, such that when this happens, right, we are uniquely positioned amongst the industry to be able to build, to support our clients.

Gary:

You kind of stole my thunder on question number three and that, so, how are we reacting to that here? Certainly everyone is, folks at Citi, when you talk to Sean, folks at BNY Mellon, across the board, so. We’re, as you say, keeping up with these trends and ensuring that we provide the solutions and the capabilities within our offering to support how organizations like them, or asset managers themselves, are living up to their requirements in the regulatory space. Well, excellent. Tom, as always, it’s great talking to you. I appreciate it. I mean, talk to you every day just about, but someday we’ll see each other face to face again. So yeah. Thanks for joining the podcast.

Tom Pfister:

Thanks for having me, Gary. Talk soon.

Gary:

All right, thank you.

Gary:

Hey folks. So there you heard it. There’s a lot going on in the regulatory space, and that should be no surprise to any of us. Regulators were informed so much over the last 10 years by the events of the global economic crisis in 2008, 2009, 2010, and so much has happened over the course of those past 10 years. And how can we forget the pandemic, as we talked about?

Gary:

And it’s pretty exciting to be able to interview three people who think about this stuff every day. And I would like to thank and provide a round of applause and appreciation to Sean, Fiona and Tom for joining me. Hopefully you enjoyed the conversation. Hopefully it informed you. Hopefully you appreciated the candor in the discussion and the casual nature of the conversation. I’d love to hear your feedback. So please reach out to me at [email protected], or provide feedback to me in any of the multiple ways you can, through our Confluence LinkedIn page, emailing us directly at Confluence, or any of the other people you know here at Confluence. We’re going to continue to do this Confluence Connect podcast series, continue to connect with you, the listeners, the market, our friends and colleagues, and we hope to hear from you and talk real, real soon.

Gary:

Thanks for listening in to Confluence Connect.