Last week, JWG had the pleasure of taking part in a podcast to discuss the recent publication of our Brexit research paper. Hosted by Julia Schieffer from DerivSource, the podcast, which can be found here, takes an in-depth look at some of the most pertinent issues raised in the report.
The discussion focused on the fact that there is a popular belief that, if the UK decides to leave the European Union, it will be free of the current rulemaking environment and the much maligned ‘regulatory red tape’. However, the reality for operations and technology professionals that support investment firms is that they will enter a decade of uncertainty about what agreements they need to have in place with customers, how they sell their products to them and whether the way in which they do business will land them in jail. Not only will the business models become uncertain, the operating models will require a ‘mother of all change programmes’ lasting ten years and accompanied by a ten-year bill for that change management.
With up to 60% of the financial services rulebook being thrown in the air if the vote is to leave, we’re facing potential chaos as rule makers inevitably succumb to external pressure to change the laws. It is unfeasible to hope that these pages could merely be copied and pasted over to a pure UK model of governance. Even small amounts of tinkering could mean very big directional swings for businesses and that means huge psychological and financial tolls across the industry.
As PJ Di Giammarino, CEO of JWG, stated, “Fundamentally, the biggest thing we think businesses will need to come to grips with is tracking their overall regulatory change portfolio and having the ability to spot, know and eventually be able to do the changes in a better, faster and cheaper manner.”
We’ve narrowed it down to two main factors that will have the biggest influence on the development of the new FS operating model post Brexit: RegTech and change management. Some firms will move quickly to sort out their approach and will gain competitive advantage. The rest of the ‘herd’ will move slowly – making consultants, lawyers and technology providers the ultimate winners over the next decade.
With all this in mind, on Tuesday 5 July, JWG is hosting its very own RegTech Capital Markets Conference. With the opening speech entitled ‘RegTech: overcoming blockage, budgets and Brexit fallout‘, there will be a lively discussion of how RegTech can reduce the regulatory burden and ease compliance, in the wake of a historic vote by the people of the UK deciding whether their future will be in or out of the European Union. To find out more about the event, please click here.
DerivSource podcast link: http://derivsource.com/content/brexit-will-leaving-eu-create-more-red-tape