Opening the fourth annual SWIFT Business Forum London on 29 April Alderman Fiona Woolf, the 686th Lord Mayor of the City of London (and the first woman to hold the post), addressed a packed plenary room at London’s The Brewery. She welcomed delegates, who had turned out in record numbers despite the travel challenges created by a 48-hour strike on London Underground. She then highlighted the relevance of the theme for the forum – Doing good business in an era of re-regulation – as “one that captures the challenges we face, but also hints at the opportunities as well”.
Arun Aggarwal, Managing Director, UK, Ireland & Nordics, SWIFT, elaborated further on the theme. For London’s financial services industry, “doing good business” means “being compliant in both letter and spirit, achieving appropriate, quality earnings and being valued and responsible”, he said.
Business journalist Paul Lewis then moderated a lively opening panel on financial crime compliance (see video), during which Tracey McDermott, Executive Board Member at the Financial Conduct Authority (FCA), made it clear that still too often the basics of fighting financial crime are not performed well enough. “Where we see that things are wrong, we will intervene and have done so,” she warned, but she added: “As regulators, we do need buy-in from you, the industry.”
Following a series of dedicated business streams and special interest sessions (see boxes), the SWIFT Business Forum London 2014 was brought to a conclusion by a session on cyber security. SWIFT Chief Information Officer Mike Fish reflected the prevailing view of how to deal with the shifting cyber landscape.
More collaboration is needed to tackle the many challenges identified during the forum – as well as to capitalise on the many opportunities – Alain Raes, Chief Executive, EMEA and Asia Pacific, SWIFT, reminded delegates in his closing remarks, before thanking them for battling through the tube strike to join the event.
Dedicated business stream – Compliance
Fighting financial crime: solutions for compliance
Accuracy over-riding priority. Legacy systems a challenge: ideal is one defined technology architecture and a single data management strategy – not split by geographies/business lines. Collaboration can help – though utility solutions have challenges due to varied organisational structures and risk appetites.
On the alert: mining big data for compliance
Big data useful for identifying areas of concentrated financial crime and feeding that into driving business strategy. Because financial services was early adopter of technology we think there are barriers where there are not. Not difficult to gather, analyse large, disparate groups of data. Other industries see no barriers.
In the spotlight: shadow banking
Regulators increasing focus on financing in quest to shed light on shadow banking. Repo market is ‘shrinking’ as a consequence – ironic since it held up well during the crisis. Is the regulatory focus on repo justified? Could a new emphasis on FX take the spotlight off repo?
Dedicated business stream – Investors
T+2 settlement: the impact on investors
Larger firms have the IT systems and processes to move to T+2 without great difficulty – but what if rest of the community not ready by the deadline? Currently unclear what’s in scope/out of scope on a country by country basis. T+1 a step change too far?
The regulation challenge: outsource or DIY?
Possible for investment managers to outsource some preparation for regulation? Challenge is, need to build expertise in-house, keep oversight on implementation. Benefit in shared services model for non-differentiating technology/offerings such as regulatory reporting?
The future of fund distribution: evolving business models to adapt to the new normal
European funds landscape changing: drivers include regulation (RDR, MiFID2), aging population, lack of trust, small percentage of people holding big percentage of assets. Business models need to adapt: clarity, transparency on full admin costs essential.
Dedicated business stream – Market infrastructures
The evolution of MIs: meeting the resilience challenge
Increased complexity (big data, cloud computing, more players, more regulation, real-time) and increased vulnerability (cybercrime). Three resilience priorities: operational risk, cyber, recovery & resolution. A financial institution cannot be dragged down by a market infrastructure failing, or vice versa.
Payments MIs: managing speed with safety
Can the mainstream keep up with innovation? Harder to adapt major infrastructure than create an app… but every transaction has a counterparty risk and that is ‘where rubber hits road’ on future payment models.
Securities MIs: building on harmonisation
Positive outcome of regulation: driving more efficiency, reducing risk: industry needed push of regulators to create T+2. Changing competitive landscape: tougher for new entrants due to EMIR requirements raising the bar; T2S may not change CSDs overnight, but in the end only the most competitive will survive.
Special interest sessions
T2S: Reaping the benefits – in partnership with BNP Paribas Securities Services
“What are you trying to achieve? Are you trying to support an ETF that is multi-listed? Or to provide safer, cheaper markets? A factor such as collateral on its own is not the answer to life, the universe and everything.”
The new, changing digital landscape – in partnership with Lloyds Bank
“How close are the digital teams and innovators to the overall banking industry? We need to maintain our interaction with customers to continue to understand their needs. We need to think in a more entrepreneurial way – and pick our battles.”
Re-engineering retirement: identifying opportunities and threats in the new pensions landscape
Opportunity for product innovation due to regulatory and socio-demographic developments – but digitisation of pensions industry has a long way to go.
The future of cash and securities processing: Is 24/7 possible and desirable? – in partnership with Clearstream Banking
“There is a fear that collateral can be locked away because a deadline has been missed. We want to ensure that we can keep collateral moving throughout the infrastructure.”
Trade reporting: Now and in the future – in partnership with CME European Trade Repository
Technically trade repositories are working, but volumes are not that high – and no fines yet. “Delegated reporting still leaves you with ultimate liability.”
Extended Remittance Information: Leveraging investments to improve automation and drive revenues – in partnership with HSBC
Heavy investment in XML is supporting automation – helping the community to reduce costs, gain control, centralise messages and minimise manual errors. Collaboration is key.
Bringing it all together: Behavioural monitoring to protect innovation – in partnership with Fiserv
Is financial crime really a non-competitive arena? Integrating fraud analytics into the AML space is bringing value.
Exhibitors and trade associations
Aqua Global, Altus, B2 Group, Barclays, Broadridge, Calastone, Corfinancial, Fiserv, Intercope, Intix, PPI AG, SmartStream, Trace Financial.
ACT Association of Corporate Treasurers, BBA British Bankers’ Association, COOConnect, CISI The Chartered Institute for Securities and Investment, CSFI Centre for the Study of Financial Innovation, ICMA International Capital Market Association, ISDA International Swaps and Derivatives Association, ISITC The International Securities Association for Institutional Trade Communication, TISA Tax Incentivised Savings Association.
|08:00 – 09:00||Welcome coffee and registration open|
|09:00 – 09:15||Opening remarks
|09:15 – 09:25||Keynote – The future of London as a financial centre
|09:25 – 10:30||Opening panel – Fighting financial crime: strategies for compliance
In 2012, the updated Financial Action Task Force (FATF) Recommendations raised the bar for effective implementation of the legal, regulatory and operational measures needed to successfully combat money laundering and terrorist financing. Now, FATF’s international standard framework for the measures countries should implement in order to combat financial crime is on its way to being enacted in EU law, as the revised Anti Money Laundering Directive and Funds Transfer Regulation continue their progress through the EU Parliament. How far will these regulatory changes reshape the AML/KYC environment for firms operating in the London market? What are the operational impacts for banks of a tougher regime for fighting financial crime? Is there scope to take a collaborative approach to complying with the more rigorous standards for AML/KYC being put in place – and if so, how could the industry kick-start such a collaboration?
|10:30 – 11:00||Coffee break, networking and exhibition open|
|11:00 – 12:00||Dedicated business streams
Sanctions compliance and KYC related activities are consuming more and more of financial institutions’ precious resources. The more jurisdictions a business operates in, the bigger the burden. Having measures in place to fight financial crime is a prerequisite for being in business, but it brings no competitive advantage. How do we achieve the right balance between maximum compliance and cost effectiveness? What do financial institutions need in terms of solutions? Do utility approaches make sense? And what will be needed to make them work?
The UK and Irish capital markets will move to a shortened T+2 securities settlement timeframe from October 2014, in advance of the anticipated deadline of 1 January 2015 in the EU Central Securities Depositories Regulation (CSD-R). What impact will T+2 have on the investor community? How will collateral and liquidity management requirements change? Will investors need to modify their processes – or will their service providers solve the problem for them? What will be the cost implications, and who will end up paying?
With the regulators mandating greater use of market infrastructures, what are MIs doing in order to maintain availability and ensure both operational and financial resilience – especially in light of the CPSS-IOSCO requirements? Are MI users comfortable with how their infrastructures are responding in this evolving landscape? And how are MIs dealing with the ever-increasing threat of cyber-crime?
|11:00 – 12:00||Special interest sessions
T2S: Reaping the benefits
With testing starting this year and the first live usage scheduled for 2015, TARGET2-Securities (T2S) is rapidly moving from theory to reality. For all players involved in securities settlement in Europe, 2014 is a crucial year for decision-making related to T2S. Do you fully understand how T2S will impact your business model and your operations? Do you have a clear picture of the services you will require in the post-T2S environment? Are your chosen service providers giving you enough of the right information about how they can help and what you need to do when? This session will explore what you need to know – and do – in 2014 in order to be sure of reaping the benefits of T2S in your business going forward.
The new, changing digital landscape
Financial institutions are making significant investments and technology upgrades in response to the changing digital landscape. This session will explore how these will create competitive edge and increase efficiency. What is the current state of play with mobile payments, and what further developments are under way to drive adoption and usage of mobile technology? The card industry may still centre around credit and debit cards, but this session will explore how new virtual and digital developments are re-shaping the ways in which consumers pay – and how quickly we will see a move from plastic cards. In addition to the benefits of convenience and reliability, the session will examine the evolving security and privacy issues providers of new payment technologies must consider.
|12:00 – 13:30||Lunch, networking and exhibition open|
|13:30 – 14:30||Dedicated business streams
Faced with an ever-increasing need to monitor risk to meet compliance obligations, banks need a consolidated view of their business activities. Local activities can to cause global headaches – so how can organisations be sure that boardroom policies are supported by back office activities? How can advances in big data availability and management be exploited to create insights here, and is it possible – or even advisable – to develop industry standards and best practices in this area? How far is the industry prepared to go to shed more light on areas of concern?
AIFMD, RDR, MiFID… How many more? The onslaught of regulation impacting investment managers continues. Is it a valid option for asset managers to outsource their compliance responsibilities to their service providers – and what are the pros and cons of this approach? With regulators preoccupied with the potential impact of the failure of major outsourcers, what does the investment community need to do to mitigate this risk? Are the increasing costs of regulatory compliance affecting fund performance, or is this just a rounding error? And as global funds move from West to East how much does the obligation to comply in multiple jurisdictions compound the compliance challenge for investors?
Payments Market Infrastructures (PMIs) concentrate payment, clearing, and settlement activities and trade data in order to manage risk better and to reduce costs and delays. By performing centralised activities, however, PMIs also concentrate risks and create interdependencies. In a landscape being fundamentally changed by more intense regulatory scrutiny, ever-faster payments and the emergence of new entrants, to what extent are new players disrupting the market and transforming the payments paradigms, how is the business and risk management picture for PMIs changing? How is this impacting their communities? And how well are PMIs evolving in line with these changes?
|13:30 – 14:30||Special interest sessions
The future of cash and securities processing: Is 24/7 possible and desirable?
Given the very positive developments following the extension of the processing day into the Asian time zone, extending the processing day into the US time zone is the natural and logical next step. What impact would this have on your internal processing and your current activities in Europe, Asia and the Americas? How would you benefit from such an extension? This session will explore what institutions what institution would need to do to accommodate 24/7 processing and how this might change the competitive landscape.
Trade reporting: Now and in the future
EMIR reporting requirements for positions and trades for over-the-counter and exchange traded derivatives began on 12 February 2014. This session will summarise the developments to date, discuss the shortfalls of reporting, and provide an open forum to debate the future of trade repositories. Focusing on what has happened since 12 February, the session will look at efficient and simplest reporting mechanisms, delegated reporting alternatives, the competitive landscape and lessons learned, and porting transactions. Looking forward to 11 August, topics up for discussion will include collateral and valuation reporting and AIFMD reporting requirements and impacts. Focusing even further ahead, the session will explore what the future looks like for trade repositories, in light of MiFID II, ARM reporting and REMIT.
|14:30 – 15:30||Dedicated business streams
As part of their ongoing reform of the banking sector, EU regulators are turning their attention to shadow banking activities, specifically securities financing. Their aim is to improve the transparency of securities lending and repo transactions, ensuring that authorities and all market actors get an appropriate understanding of how the markets work and the magnitude and nature of any potential risks. As a result, market participants involved in securities financing will need to comply with new rules around transaction reporting, adding further to the already heavy regulatory compliance burden for financial institutions. What is the timeline for the legislation impacting shadow banking? What is the value of regulating this part of the market? What implications will it have at the business and operational levels for financial institutions? Does the regulation of shadow banking have any implications for competition between different types of market players? Can firms leverage the investments they have already made to comply with regulation such as EMIR? And what do market participants need to do this year to prepare for this next frontier of regulatory focus?
The future of fund distribution: evolving business models to adapt to the new normal
The European fund distribution landscape is changing, as drivers like the Retail Distribution Review and MiFID2 force the emergence of new business models. So what is the new normal for European fund distribution? How are fund managers reviewing their distribution strategies and weighing up the benefits of active versus passive approaches? Is the industry still reaching smaller investors? What will be the impact of the generational shift away from risk assets, and is there a need to focus on emerging markets in order to survive?
Regulation such as Dodd-Frank and CSD-R and harmonisation initiatives such as T2S are fundamentally reshaping the environment for securities market infrastructures – and their communities. New MIs – trade repositories, new CSDs – are being created, and existing providers are being forced to look at new services in order to compete. Meanwhile, MI communities need to formulate coherent strategies to accommodate interactions with these new infrastructures – from both a process and technology perspective. Are MIs doing enough to help their communities to streamline their communications with their infrastructures? And are they working successfully with their users to capitalise on this move to standardisation across all of their activities – from reporting, clearing, settlement and asset servicing?
|14:30 – 15:30||Special interest sessions
Extended Remittance Information: Leveraging investments to improve automation and drive revenues
Corporates of all sizes are always looking for more streamlined accounts receivables processes , and many have chosen to use ACH payments to reduce costs – but ACH payment systems were not designed to carry large amounts of remittance data. This is creating a reconciliation problem. This session will explore how banks and corporates must leverage the huge investments made in new XML formats to provide more value-added information – to further automate the reconciliation process and create new business opportunities. Hear from corporates about their proof of concept experiences of the new solution, the value derived and what they want from their banks in this area. And hear from banks about how the Extended Remittance scheme enables them to increase customer loyalty and build a foundation for additional services.
Bringing it all together: Behavioural monitoring to protect innovation
A commercial banking client uses your latest tablet app to initiate an unusually large wire transfer to a new counterparty in a foreign jurisdiction. Legitimate transaction, or something else? Before that message completes (or even starts) its journey, the bank needs to address a growing myriad of security and integrity risks, ranging from identity theft and internal fraud to money laundering and sanctions violations. This session explores the worrisome state of behavioral monitoring software implementations as a means to keep up with regulators and criminals, but also with innovation in digital channels and (payment) infrastructures. Can risk technology get it right and bring a competitive advantage?
|15:30 – 16:00||Coffee break, networking and exhibition open|
|16:00 – 16:45||Closing panel
Cyber: The battle continues
The threat to cyber security is growing ever more intense. As attacks become more sophisticated, are our industry’s defence mechanisms keeping up? What do financial services players need to do from a strategic and an operational/technology perspective to stay ahead of the cyber attackers and protect their businesses and their customers? And is there enough collaboration between players to fend off this common threat?
|16:45 – 17:00||Closing remarks
|17:00 – 18:30||Cocktail, networking and exhibition open|