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Top 10 for 2016

Our outlook for financial markets regulation

Our Top 10 for 2016, produced by Deloitte’s EMEA Centre for Regulatory Strategy, predicts the key strategic regulatory issues that the financial services industry will face in the coming year. Each topic is accompanied by a view on the sector impacts across retail banking, capital markets, insurance and investment management.

The regulatory top 10 for 2016

Here, we have detailed the top 10 areas for consideration with links to further reading. You can also access the full interactive PDF:

1. Culture

2. Conduct risk

3. Competition

4. Structural reform of the banking sector

5. Measuring risk exposures

6. Capital calibration

7. Data and regulatory reporting

8. Technology and innovation

9. Operational resilience

10. Market participants adjusting to a new world order.

Click on the topics to find out more or download the full report.

 

Financial Services regulatory timeline tool

The tool provides you with a clear and simple high level view of recent and upcoming milestones for the financial markets initiatives discussed in our Top 10 for 2016 publication. It is an interactive tool designed to provide you with a forward-looking view of key regulatory events. The tool also provides links to related Deloitte analysis and insights for each topic.


 

1. Culture

Larger firms will continue to grapple with defining and embedding a common culture, specifically one that resonates from the board and the top of the firm across all business areas and jurisdictions. Two key challenges will be to determine the levers that will encourage the right behaviours and to measure their effectiveness in facilitating cultural change.

Further reading:
Aggregate impact of regulation on the work of boards | Rising above the detail
Individual and collective responsibility | Rewriting Agatha Christie
The fair and effective markets review | Fundamental change in FICC markets
FCA business plan | What to expect from the FCA in 2016-17


 

3. Competition

While regulatory initiatives focused on competition will not lead to forced structural change or price regulation, regulators will continue to implement changes to improve competition. Consideration of competition issues will permeate and influence policy and supervisory decisions.

Further reading:
FCA competition study seeks better value for money in the asset management industry
MiFID II: ESMA publishes final draft technical standards
Navigating MiFID II |Strategic decisions for investment managers
Payments disrupted | The emerging challenge for European retail banks

4. Structural Reform

Delivering structural reform in financial services has proceeded in fits and starts. In 2016, resolvability will increasingly drive regulatory interventions as authorities focus on the practicalities of resolution planning. For banks in particular, there will be increased focus on what is being done to ensure operational continuity.

Further reading:
EBA critiques critical functions in recovery plans
Global bank booking models | Making a success of structural reform
TLAC | Final standards are only the start of a longer journey

5. Measuring risk exposures

New proposals being developed for the measurement of risk exposures will have a widespread impact and place significant new demands on firms, both in terms of the capital required to be held and the systems and processes needed to calculate the requirements.

Further reading:
Bank capital regulation | Where next for the good ship Basel?
Looking Forward |The future of the SSM and banking in the Eurozone
 

 

 

6. Capital calibration

After several years of changes to the make-up of the regulatory capital regime, in 2016 the focus will be on the calibration of the overall framework, and the distribution of capital between firms. That said, there remains significant uncertainty about the amount of elements of the debate which will be finalised in the coming year.

Further reading:
Bank capital regulation | Where next for the good ship Basel?
Looking Forward |The future of the SSM and banking in the Eurozone

7. Data and regulatory reporting

Firms can deal with data by investing heavily now to realise the long-term benefits, or via ever-bigger “sticking plasters”. The ultimate winners will be firms that bite this bullet soon. In 2016 this will become much more apparent as the number and overall complexity of demands on firms increase further, with supervisors spending more time assessing firms’ capabilities.

Further reading:
Aggregate impact of regulation on the work of boards | Rising above the detail
Navigating MiFID II |Strategic decisions for investment managers
MiFID II: ESMA publishes final draft technical standards
Looking Forward |The future of the SSM and banking in the Eurozone

8. Technology and innovation

Technology must remain close to the top of firms’ agendas in 2016. Established players will need to invest in technology, not only to satisfy the demands of their supervisors, but otherwise risk seeing their business shrink. Innovators will increasingly have the ear of politicians and supervisors.

Further reading:
Insurance disrupted | General insurance in a connected world
Payments disrupted | The emerging challenge for European retail banks

9. Operational resilience

Supervisors will pay increasing attention to operational resilience. The supervisory spotlight will be on risk identification and mitigation, contingency planning, stress testing and on market-wide exercises (such as the Resilient Shield exercise in the UK) to assess the resilience of individual firms and the system as a whole.

Further reading:
MiFID II: ESMA publishes final draft technical standards
Navigating MiFID II |Strategic decisions for investment managers
Looking Forward |The future of the SSM and banking in the Eurozone

10. Market participants adjusting to a new order

Uncertainty over future market structure and dynamics will persist as prudential and collateral rules bite deep and transaction costs for trading activities continue to increase. The seeds of significant change will be sown in 2016 for trading across all instrument classes, affecting both pre- and post-trading structures.

Further reading:
MiFID II: ESMA publishes final draft technical standards
Navigating MiFID II |Strategic decisions for investment managers

View previous editions

 

About the EMEA Centre for Regulatory Strategy

The EMEA Centre for Regulatory Strategy monitors regulatory developments and provides an expert, objective perspective on opportunities and challenges for clients. It utilises Deloitte’s Risk and Regulation, Strategy Consulting and other relevant areas of expertise to understand, influence and advise on regulatory change, with a particular focus on the strategic business model and aggregate impacts.

The Centre is headquartered in London with local representation across Europe. Our core team of dedicated professionals has extensive experience in regulation, through a combination of former regulators and risk and regulation strategy advisors and consultants.

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