In a world that is becoming ever more inundated with new RegTech solutions, it is becoming tougher and tougher to understand which product might be the right fit.
In a recent post by Ascent RegTech, the company detailed the increasingly complex sector that is developing and how companies – specifically investment advisory firms – can work with the platform that works for them.
Ascent said, “Investment advisory firms are faced with navigating an increasingly complex regulatory landscape, especially as they look to expand into new states and across enhanced product lines. Because most regulatory practices are outdated and unrefined, compliance becomes even more difficult for investment advisory firms to manage.”
Often, compliance requirements are not maintained in a centralised location – which can create a situation where companies are trying to address state and federal regulatory feeds in different places – which Ascent claims can easily lead to overlooked obligations.
What are some of the signs that a RegTech platform can be the answer to the compliance challenges a company has? Ascent said, “You’re an SEC registered securities investment advisor, broker-dealer or investment company, or a CFTC registered commodity trading advisor, pool operator or merchant. Your firm is growing, but your compliance team isn’t. If your firm is in a growth phase, it makes sense to invest the majority of your budget in just that—growth—instead of costly compliance resources.”
Ascent also cited an example that your compliance team may be strapped for time or is looking to add new products or serve different geographies. For the latter point, the firm said that expansion of any kind causes increasing regulatory complexity.
The firm offered another example, “You’re looking for support meeting regulatory requirements in one or more of the following areas: SEC (Securities and Exchange Commission), CFTC (Commodity Futures Trading Commission), FINRA (Financial Industry Regulatory Authority), NFA (National Futures Association), Trading systems and venues, Clearing, settlement and depositories, Anti-money laundering and counter-finanncial terrorism, governed by the OFAC (Office of Foreign Assets Control) and FinCen (Financial Crimes Enforcement Network), Consumer privacy and/or consumer protection.
When it comes to choosing a RegTech solution, is key to know what problems you are trying to solve. Ascent remarked, “Are you laser focusing on your company’s regulatory obligations and changes? Make sure your RegTech provider can surface relevant areas of regulation—that is, the exact individual actions your firm must take, or refrain from taking to be compliant—as well as keep them up to date as rules change.
What if a company is implementing RegTech into day-to-day practices? “The benefits of RegTech are only realised when RegTech tools are properly implemented, so ensure that any provider you evaluate offers a dedicated support team to help you adopt and make the most of their solution.”
What about if you are reducing total fines and penalties? Ascent said, “A major catalyst for firms looking to add RegTech to their compliance solution is the desire to avoid being penalized by the SEC, FINRA or other organisations. Check that your potential partner can provide proven success stories from firms like yours.”
Read the full post here.
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