By FINTECH Books Contributor, Oliver Blower
DISCLAIMER: THESE ARE THE EXCLUSIVE VIEWS OF THE AUTHOR AND NOT THE AUTHORS CURRENT OR FORMER EMPLOYER(S)
‘If you do what you’ve always done, you will only ever achieve what you’ve always achieved’ [Henry Ford]
The regulated financial markets are the pinnacle of free market economics and have a long, well documented, history of organic evolution driven primarily by the pursuit for profit. However in their quest for profit market forces require participants to take ever increasing levels of risk which create cyclical downside ‘shocks’ whenever the risk outweighs the return and the market is forced to self correct.
In an effort to smooth these shocks and protect investors global regulators are becoming ever more present in their governance and stewardship of these markets. However often these attempts are perceived by market participants as reactive, Orwellian and counterproductive and the charge is nearly always that regulators and market participants are disconnected from one another with neither fully understanding the others objectives or methods.
Many market participants will recite countless examples of this disconnect and the regulatory requirement (as translated through internal legal departments) to simply ‘do as you are told’ with little explanation of why or indeed the full background to the problem for which they are being asked to implement the solution. The economic effect of this is a feeling of ‘taxation without representation’.
Regulated firms have been blindly implementing regulatory mandated technology and business practices since 2008 with little or no regard for their economic benefit. But what if firms could change their attitudes and turn their regulatory requirements into business opportunities? Such an attitude would not only create PL benefits to firms and positive returns for shareholders but justify the billions of dollars being sunk into implementation and execution of regulatory driven agendas.
The author believes there is a better way.