FRTB will force banks to change their operating models, bringing them out of product and trading desk silos. Bank trading culture and the trading desk concept may need to evolve to accommodate a wider picture of risk taking.
Asset managers resist bank-like capital and liquidity regulations being contemplated by regulators. But new requirements appear unavoidable given recent regulatory trends.
The Fundamental Review of the Trading Book was supposed to redefine how banks collectively manage risks. Yet, risk can still be a ‘ghost in the machine’.
While Hong Kong struggles to reduce and contain money laundering activities at existing financial institutions, the role of cryptocurrencies in undermining compliance and enforcement capabilities is overlooked.
Like a wild west cowboy town, Asian crypto-trading has overwhelmed regulatory efforts to control and discourage its growth. But regulatory confusion and misunderstanding have created opportunities and pitfalls.
Blurring the regulatory distinction between banking and financial technology creates both opportunity and pitfalls.
Recent FCA case highlights cost of mismanaged outsourcing. Potential IT problems are brewing for private equity GPs too as big deals systemically overlap banking system.
If almost all communications between sales-traders and clients is classified as “research”, severe distortions will hit the economics of quality investment insights.
The Basel regime has shown itself to be incomplete and not universally applicable. With the Trump administration seeking to allow a return to proprietary trading, profound implications for global banks’ risk management are only just beginning to surface.
Super regulator’s major obstacle will be resisting the cycles of international financial history while meeting the challenges of a big, fast-growing economy.