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Regulatory trends in the financial services industry

John Mason
John Mason
Global Head Enterprise Middle and Back Office, Refinitiv

A new Refinitiv webinar unpacks the regulatory trends and attendant challenges that are shaping the financial services industry in 2020 and beyond. What steps will banks and financial institutions need to take to adapt to this regulation?


  1. Banks and financial institutions (FIs) operate against a complex and challenging regulatory backdrop, and need to fully understand the scale and impact of current and imminent regulatory changes.
  2. Five notable initiatives are set to shape the industry in 2020 and beyond, including the Risk Reduction Measures (RRM) package, Basel III, and Libor migration.
  3. How can access to reliable, trusted data and leading-edge data solutions help firms respond to changing requirements quickly, accurately and efficiently?

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The financial services industry operates in an environment characterized by significant regulatory scrutiny, increasing reporting obligations, and ongoing regulatory change.

The advent of the COVID-19 pandemic has further complicated the landscape. Many banks and FIs have been required to provide additional pandemic-related information to regulators.

Against this challenging backdrop, it is critical that banks and FIs understand the full scale and impact of unfolding regulatory changes.

In a new Refinitiv webinar, our panel of experts unpacked this issue and outlined some of the major regulatory initiatives shaping the financial services industry in 2020 and beyond.

Listen to the webinar: Regulatory Trends in 2020

How is financial services industry regulation changing?

1. Europe and the RRM package
In 2016, the European Commission (EC) proposed a banking reform package aimed at risk reduction and designed to help complete Europe’s post-crisis regulatory reforms.

The package — known as the Risk Reduction Measures or RRM package — was agreed by the European Parliament in April 2019, and introduces a range of rules designed to render the financial system more resilient and stable.

RRM includes amendments to the Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD), as well as the Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism Regulation (SRMR).1

2. Basel III

The finalization of Basel III remains a moving target. Our experts outlined and discussed some of the crucial changes.

The standardized approach for credit risk (CRSA) aims to increase risk sensitivity and reduce dependency on external ratings. New exposure classes, and recalibrated and more differentiated risk weights, as well as modified conversion factors, mean that capital requirements under the standardized approach could look quite different in future.

3. The fundamental review of the trading book (FRTB)

FRTB — part of the Basel III framework — constitutes a revised set of prudential standards that specify the means by which banks must calculate market risk capital requirements.

The regulation has a January 2023 implementation deadline and is global in nature and impact.

Banks and FIs will need to:

  • Source, process, normalize and interface with real price observations to determine which risk factors pass risk factor eligibility test (RFET) compliance.
  • Source additional historical time series market data back to 2007, as well as fund and index constituents and weights information for look-through requirements.
  • Classify buckets for the standardized approach.

4. Libor migration

Libor — the widely adopted interest rate benchmark that underpins trillions of USD in financial instruments and derivatives — is due to be phased out by the end 2021.

Alternatives to Libor include overnight risk-free rates such as SONIA, SOFR and €STR that are administered by central banks, and term reference rates such TSRR that will be administered by private benchmark administrators.

With the deadline fast approaching, Libor migration presents a range of data management challenges for banks and FIs, including, but not limited to, sourcing and licensing new benchmarks, and identifying existing instruments that reference Libor and understanding their fallback language.

5. Brexit

The Markets in Financial Instruments Directive (MiFID) is a regulatory framework set out by the European Union (EU) to regulate its financial markets and promote transparency.

As the post-Brexit world unfolds, MiFID will be applied in UK law and is likely to result in the formation of a parallel regime with reference data provided by the FCA rather than the EU authority, ESMA.

The reference data provided by ESMA drives the reporting obligations rules for trade and transaction reporting, so firms will need to ensure that new reference data for FCA-equivalent fields are in place.

Access the Expert Talk: Unpacking The Regulatory Landscape Shaping Financial Services In 2020

Why are data and data management crucial?

The scale and complexity of these changes should not be underestimated, but our experts point out that many of the challenges and requirements outlined relate to data and data management.

It is therefore crucial for banks and FIs to take a proactive approach.

They should ensure that they have reliable access to trusted data and leading-edge data solutions, and that they engage with the right partners to help them respond to unfolding change quickly and efficiently.

Listen to the webinar: Regulatory Trends in 2020

1. https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/financial-services/Banking/lu-rna-eu-banking-package.pdf