Financial Markets 2016 Part 2 Treat new regulations as a job opportunity - Viewpoint - careers advice blog Viewpoint careers advice blog

Financial Markets 2016 Part 2 Treat new regulations as a job opportunity - Viewpoint - careers advice blog What will be one of the biggest trends for financial markets in 2016? Increased regulations, regulations and even more regulations. A raft of reforms are in the making or about to be implemented this year that will have a dramatic impact on the financial sector in the years ahead. Here we look at some the key changes and the opportunities for candidates. Basel accords: towards more responsible banking Basel III, the latest version of the Basel Accords, aims to avoid a repeat of the 2008 financial crisis by enhancing the regulation, supervision and risk management within the banking sector globally. This set of recommendations requires banks to maintain adequate leverage ratios and meet certain capital requirements. The accord will be implemented progressively across the European Union between 2013 and 2019. “Basel III, together with the broader regulatory change agenda, is set to redraw the banking landscape. It will have a profound impact on profitability and force many banks to transform their business models. It will also require firms to implement significant process and system changes,” says PWC in a note on the impact of the accord. This set of regulations requires a new breed of regulator This set of regulations requires a new breed of regulator and in-house compliance expert. But it also forces financial organisations to rethink business models and innovate, which then creates a huge range of new roles, many of which may be completely unique. What financial regulations are to come in 2016  Along with Basel III, a flurry of new regulations will soon be implemented or are being drafted will deeply alter the banking system. They include: IFRS 9 Financial Instruments: the latest and updated version of a financial reporting standard that has been developed by the International Accounting Standards Board (IASB) as a result of the financial crisis. The standard will   be mandatory from 1 January 2018, but is due to be unveiled in 2016. MiFID II: the EU’s response to the financial crisis. The Markets in Financial Instruments Directive regulates firms providing services to clients linked to assets such as shares, bonds, units in collective investment schemes and derivatives, and the venues where those instruments are traded. After suffering delays, the directive now has a start date of January 2017. The Senior Managers and Certification Regime (SMCR): this is regulated by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). It will come into operation on 7 March 2016 in the UK for traditional financial services firms such as banks, building societies, credit unions and PRA-regulated investment firms. The new regulation will make the most senior individuals in a financial firm more accountable by requiring them to document their specific duties to identify who ought to bear responsibilities in case of an issue. The candidates’ fitness and propriety for the role will be assessed by the regulators, who will consider the firms checks and assessment of candidates. The Certification Regime: this new rule is attached to the aforementioned SMCR and applies to individuals who do not perform senior management functions, but whose roles are deemed capable of causing significant harm to the firm or its customers. These individuals do not require approval from the regulators. However, firms have a duty to assess and certify the fitness and propriety of these individuals on recruitment and annually afterwards. EU Banking Structural Reform: this proposal developed by the EMEA Centre for Regulatory Strategy aims to ban proprietary trading at the largest banks operating in the EU and may also require banks to separate trading activities from their retail deposit taking. Asset Quality Review (AQR) and Stress Testing (ST): financial health checks carried out by the European Central Bank on the banks it supervises directly. They review the value of assets of the participating banks’ balance sheets to ensure that they are adequately capitalised and could sustain a reasonable degree of financial stress. TTIP reforms: the European Commission has announced plans to reform the investor-state dispute settlement mechanism (ISDS) of the Transatlantic Trade and investment Partnership (TTIP), which aims to resolve disputes between foreign investors and states. Further opportunities in risk and compliance New career opportunities in risk and compliance are arising Yes, increased financial regulations can be restrictive and candidates looking for senior positions in banking have to understand they will be under a much greater degree of scrutiny by the institutions they work for and by regulators. They will be held accountable if something goes wrong on their watch. However, as a result of this new regulation flooding in, new career opportunities in risk and compliance are arising and we have noticed significant wage and rate inflation in this field. There is a shortage of skills in some areas in particular, such as data science, strategic analytics and reporting, as well as financial crime and treasury. Remember: every crisis is an opportunity. 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