Five years on from the onset of the global financial crisis, it’s plain to see that regulatory reform efforts at the national and regional levels have diverged presenting an urgent need for a coherent and coordinated response from regulators. Given the risk that regulatory divergence poses, it’s no surprise that this key issue was high on the agenda at the World Economic Forum in Davos last week. I joined one of the more interesting discussions on this topic in a working group meeting consisting of heads of banks, asset management firms, insurance companies, rating agencies and government representatives – all of whom ardently discussed the impact of regulation on innovation. (more…)
Regulation and technological innovation are among the key subjects being hotly debated both on and off the official agenda at the 43rd annual World Economic Forum which kicked off in Davos this week. These topics were especially scrutinized during the WEF’s Disruptive Innovations in Financial Services working group meeting on Thursday. This group, of which I am a member, includes a small number of senior representatives from leading banks, insurers, wealth and asset management firms and financial organizations. (more…)
Reading the headlines this week as Goldman Sachs, JP Morgan Chase, Wells Fargo and Morgan Stanley topped market estimates, as Bank of America posted losses due to mortgage-related charges stemming from the financial crisis and Citigroup’s earnings jumped over last year but missed market estimates, I was struck by the extraordinary distance the financial sector traveled in 2013.
When we began monitoring the TRust Index metrics in Q1 2013, there was considerable uncertainty for global financial institutions and world markets. By year-end, with world equity markets close to six-year peaks, our Q4 TRust Index data showed a stronger industry had passed the five-year anniversary of 2008′s crisis. However, despite encouraging trends like tightening credit spreads and positive longer-term earnings forecasts, the Top 50 Global Financial institutions continued to score lagging trust in our news and social media sentiment analytics.
The recent financial crisis, which started in the US in 2007 and reverberated around the world, demonstrated that cooperation on regulation and oversight of the global financial system has never been more important. Regulatory divergence is not only economically costly, but encourages regulatory arbitrage and undermines the ability for financial authorities to export regulatory approaches to the rest of the world. It can also introduce duplicative or inefficient practices for both providers and users of capital, thereby undermining global economic growth.
Clearly, regulation and its impact are at the top of the list of issues for members of the financial industry. This is why, together with the Atlantic Council and TheCityUK, we have released a 2nd version of our report, The Danger of Divergence: Transatlantic Financial Reform & the G20 Agenda. First published in 2010, the new 2013 report calls for more effective and closer cooperation between the transatlantic economies and the need for regulators to send consistent messages to market participants. This includes regulators in Asia and emerging financial centres, to build a coherent regulatory framework for the international financial system – not just the west. (more…)
Throughout 2013 headlines have focused on the challenging conditions that have persisted across European markets and economies. Against this backdrop it is even more impressive to have had the opportunity last evening to celebrate the accomplishments of seven women colleagues as finalists at the European Women in Sales Awards, and to honour Zhanna Martyniuk, Direct Account Manager for us in Switzerland as the winner in Financial Sales.
Since joining Thomson Reuters in 2009, Zhanna has served in Austria and Switzerland. Now based in Geneva, she predominantly focuses on 139 clients in the Commodities and Energy Sector for Central Europe. In addition to demonstrating consistent outperformance against targets, she embodies ambition, professionalism, teamwork and is considered a role model in her team.
The Women in Sales Awards is designed to find the most exemplary women in sales across Europe and recognizes general sales ability, track record in achieving and exceeding targets and understanding of the implications of change on the wider business. Spanning many organisations (including global companies like Google, LinkedIn, Oracle, PepsiCo and GE) and eight industries, the fact that one-third of the finalists were Thomson Reuters sales professionals is a stunning endorsement of the breadth and depth of talent in our organisation. Our other colleagues recognized as finalists were: (more…)
It’s been three years since China became the world’s second largest economy, behind the United States. Despite having this economic powerhouse status, China’s currency is not yet in the equivalent ranks of the ‘majors’ or most actively traded currencies. But, perhaps we are getting closer. Some recent changes certainly point to this.
Just two months ago, the UK chancellor George Osborne and China Vice Premier Kai Ma signed a landmark agreement which will potentially create Europe’s first RMB offshore market in London, worth RMB 80 billion (or about US $13 billion). This is on top of the RMB 144.6 billion (US$ 23.7 billion) that China has already designated for foreign investment. I should note that other centres, including Paris and Frankfurt, are also vying to create such hubs in Europe as well. These would effectively create the first offshore RMB market(s) outside of Asia, following the creation of RMB offshore centres in Singapore and Hong Kong. The Financial Times recently cited estimates from HSBC that HK accounts for $12-13 billion each day, doubling the amount traded last year. (more…)
This article originally appeared on The TABB Forum
The financial industry has been buzzing with news that some financial institutions may ban the use of chat rooms and instant messaging, returning, instead, to voice communications. This follows observations that some of the biggest scandals that emerged from the financial industry in recent years were uncovered through reviews of online chat room histories.
But blaming the tool for the behaviour of those using it will not solve the issue. Chat rooms and instant messaging have become ingrained in how business is conducted across the financial landscape. The activity and behaviour, if not addressed from a cultural perspective, will go back to phone or in person conversations. It would certainly be much better to manage these interactions electronically, where there are audit trails and more controls can be put in place.
So far, the risks have been high for banks. Reports, such as this one from Reuters earlier this month, speculate that financial firms could well end up paying $125 billion globally to clear up misdeeds from the financial crisis. For an overburdened compliance team, the easy solution might be to simply shut things down, but there are ways for institutions to reduce the headaches whilst still meeting the communications needs of a 21st century workforce. (more…)
Compliance scandals involving money laundering, violations of Know Your Customer regulations and sanctions breaches are estimated to cost between two and five percent of the world’s gross domestic product, according to estimates by the International Monetary Fund. They also continue to contribute to the loss of trust in our industry, which is still negative according to our own Trust Index, that measures trust in global financial institutions using social media sentiment analysis.
Last night, we hosted our 9th Annual Compliance Awards in London, which brought together over 350 of the industry’s leading compliance professionals, regulators and professionals from related industries. Their accomplishments and contributions illustrate the high standards that compliance businesses and professionals should strive to achieve.
The volume and pace of regulatory change continues to show that firms need to be diligent, organised and pro-active in their approach to managing risk and compliance. In fact, through our Regulatory Risk solutions we currently track 110 regulatory updates each business day and figures from our Cost of Compliance survey earlier this year revealed that 81 percent of compliance professionals expected an increase in the volume of regulatory information this year with almost half expecting this increase to be significant.
As a result, firms are beginning to invest quite heavily in compliance. Press reports, such as this one by Reuters, have cited banks ambitious investment plans related to compliance and we’ve seen high profile hires at a number of firms this year. New elite SWAT compliance teams are being created within firms, senior managers are now visibly and vocally demonstrating support for the compliance function and promoting a compliant culture, and compliance functions are being encouraged to build and maintain relationships with regulators as well as help their boards deliver an increasingly risk-focused agenda.
As a global leader in providing unbiased, accurate and up-to-the-minute news and information to our customers across a variety of professions, it is essential that trust remain a cornerstone of how we do business. For more clarity on trust and its role within each of our businesses, we talked with several of our business leaders to gather their thoughts on the importance of trust in the professional areas we serve.
“Trust is foundational to financial markets — without it, they simply cannot function effectively. Credit, in fact, derives from the Latin credere, to trust. And as we’ve seen in the five years since the financial crisis, restoring trust is a critical element of rebuilding financial markets and our global economy. As a partner to financial institutions throughout the world, we view trust as essential to our business relationships and to our reputation. Our customers rely on us for accurate, unbiased and complete news, data, analysis and insight. They entrust $300 billion in transactions and 11 million secure messages every day with us. They count on us to put their interests first, keep their information safe, and continuously innovate to provide best-in-class products, services and support. They expect from us the integrity that is a fundamental principle of our culture and what our role as a leader in the global financial marketplace demands.”
Read the full article to hear more from our business leaders on what trust means to them.
Check out our other stories on trust:
Those of us in the financial industry have been looking carefully at the signs of recovery and how to read them. Earlier today I hosted a Thomson Reuters Newsmaker with the UK’s Chancellor of the Exchequer George Osborne and Reuters editor-at-large Sir Harold Evans and the overriding sentiment is that a British recovery is under way, but “the job is very far from done.” (more…)