How to adapt to changing regulations in the financial markets worldwide?

How to adapt to changing regulations

in the financial markets worldwide

Projective’s approach to Global Regulatory Change

The times,they are a-changin’...

Regulatory changes in the market

“We meet in the midst of a critical transition from crisis to recovery to turn the page on an era of irresponsibility and to adopt a set of policies, regulations and reforms to meet the needs of the 21st century global economy”

(G20 leader statement, Pittsburgh, 2009)

2009: G20 SUMMIT PITTSBURGH

Clear commitments to further strengthen the international Financial Regulatory system

Regulatory change impacts:

1. Markets New market structures and tighter rules

2. Financial institutions New bank structures and new capital and liquidity rules

3. Tax Treatment Newglobalstandardtoincreasetaxtransparencyandfighttaxinvasion

2009: G20 SUMMIT PITTSBURGH

Regulatory changes in the market

Regulatory changes in the market

1 NEW MARKET STRUCTURES AND TIGHTER RULES

Regulatory changes in the market

AIM: � Improvetransparencyinthederivativesmarkets

� Mitigate systemic risk

� Protect against market abuse

¨ Establish regulationforfinancialinstrumentsandproductsto improvetransparencyandreducerisk

1 NEW MARKET STRUCTURES AND TIGHTER RULES

Regulatory changes in the market

RegulatingOTCderivativemarkets:

Dodd Frank Act - Title VII

European Market Infrastructure Regulation (EMIR)

Asia, Latin America, Middle East ¨ Drafting and implementing own legislation

A LOT OF REGULATION HAS BEEN PUT IN PLACE SO FAR

Regulatory changes in the market

2 NEW BANK STRUCTURES AND CAPITAL LIQUIDITY RULES

Regulatory changes in the market

AIM: � Improveboththequantityandqualityofbankcapital

� Discourageexcessiveleverage

� Reduceincentivesforbankstotakeexcessiverisks

¨ Structural reforms designed to address new regulations to protect customers and taxpayers

¨ Strengthen bank capital requirements and increase bank liquidity reservestodrivedownsystemicrisk

2 NEW BANK STRUCTURES AND CAPITAL LIQUIDITY RULES

Regulatory changes in the market

Dodd Frank Act Art Commission

Dodd Frank Act Volcker Rule:prohibitingtradingandinvestmentsincertainprivateequity funds and hedge funds

Independent Commission on Banking

UK Banking Reform: ring-fencing of retail banking

Liikanen Commission:advisingonseparationofhighrisktrading,toughercapitalrequirements,strongerbankgovernance

Commission Proposal on Banking Structural Reform

Basel Committee on Banking Supervision: stronger bank capital requirements, increasedbankliquidityreserves

“Basel III”comprehensivesetofreformmeasures,developedtostrengthentheregulation,supervisionandriskmanagementofthebankingsector.

COMMISSIONS WERE PUT IN PLACE AND MEASURES WERE TAKEN

Regulatory changes in the market

3 NEW GLOBAL TAX STANDARDS

Regulatory changes in the market

AIM: � Increase tax transparancy

� Fighttaxevasion

¨ Exchange of information between tax authorities and requests to financialinstitutionsto cooperate to address tax avoidance

3 NEW GLOBAL TAX STANDARDS

Regulatory changes in the market

Foreign Account Tax Compliance Act (FATCA)

PreventUSindividualsandentitiesfromusingcompaniesandfinancialstructureoutsidetheUStoavoidUStaxation

Crown Dependencies and Overseas Territories Regulations

Automatic tax information exchange agreements

Standard for Automatic Exchange of Financial Account Information in Tax Matters

Detailed account information and annual exchange

Financial Transaction Tax (FTT)

Enhancedcooperationbetween11EUmemberstatesintheareaoffinancial transaction tax

FIGHT TAX EVASION AND GAIN MORE INSIGHT

Regulatory changes in the market

OUTLOOK ON REGULATORY COMPLIANCE

1 Structural Reformof the Banking Sector 2 Restructuring the Rest

of the Financial System 3 Capital and LiquidityNext Phase

10

9

8

7

6

5

4

ExtraterritorialRegulatory Change

Competition

IndividualAccountability

Customer CompliancePu�ing Customers First

OperationalRisk

The BankingUnion

Wholesale ConductRisk

TOP 10 REGULATORY CHANGES FOR 2014

Managing regulatory change

Sounds great! How do we manage this?

Managing regulatory change

Effectively Managing Regulatory Change

through a defined lifecycle

Managing regulatory change

APPROACH TO REGULATORY CHANGERegulatory Change Lifecycle

Managing regulatory change

1 PERFORM A DETAILED REGULATORY ANALYSIS AND DESIGN

Managing regulatory change

¨ Identify the regulations that are impacting you as a business

¨ Follow the regulatory process

¨ Align with the global political agenda especiallyoftheUSandEUwithacloseeyeonAsia

BUILD A REGULATORY ROADMAP

Managing regulatory change

APPROACH TO REGULATORY CHANGERegulatory Change Lifecycle - Regulatory Analysis and Design

Managing regulatory change

APPROACH TO REGULATORY CHANGERegulatory Change Lifecycle - Regulatory Analysis and Design

Managing regulatory change

¨ Lookforoverlapinkeyareasoftheregulations

¨ Don’t look at impacts independently

¨ Ensureamorecost-effectiveimplementation

AVOID ‘DIGGING UP THE ROAD’ MULTIPLE TIMES IDENTIFY CROSS DEPENDENCIES

Managing regulatory change

APPROACH TO REGULATORY CHANGERegulatory Change Lifecycle - Regulatory Analysis and Design

Managing regulatory change

¨ Ensurecompliancebyfocusingonoverarchingregulatorythemes

¨ Groupindividualregulationinspecificthemes

¨ Structure teams so that the subject matter experts are always focusing on their particular area of expertise

¨ Look at the outlook of this analysis to decide on how to structure your Regulatory Change programs

APPLY A THEMATIC APPROACH

Managing regulatory change

2 NOW IMPLEMENT REGULATORY

Managing regulatory change

¨ Deep Dive Detailedimpactassessment,overlayregulationwithbusinessmodels

¨ Implementation plan Triggering next stage in the implementation lifecycle

ExampleOTCreformimplementationEUEMIR,USDFTitleVIIandotherjurisdictions

IMPLEMENT REGULATORY CHANGE

Managing regulatory change

¨ Execution compliance and business strategy Changes of operating models, creation of new operating models, business processes and IT changes

IMPLEMENT REGULATORY CHANGE

Managing regulatory change

3 ENSURE THAT YOU REMAIN COMPLIANT POST IMPLEMENTATION

Managing regulatory change

¨ Management of controlled transitions fromregulatoryimplementationactivitiesinBAU

¨ Ongoing compliance monitoring and assurance

COMPLIANCE SUSTAINABILITY

CONTINUOUSSTAFF

TRAINING

CONTROLLEDTRANSITION

INTO BAU

REGULATORYCONTROL

AND SUPPORT

ASSURANCEFRAMEWORK

Projective’s expertise in this

It looks good, but can I get some help?

Projective’s expertise in this

How Projective can help you with the overall management

regulatory change

Projective’s expertise in this

“Projective is the leading independent provider of programme and project management services to the financial services institutions across Europe”

¨ Work with you to build your regulatory roadmap and determine the impacts on your current change programs

¨ Assistyoutodefinethebestholistic,thematicapproachtowardsregulatorychange

¨ Helpyouprioritizeyournewregulatorychangeinitiativesandsubsequentplanningand budgeting

¨ Workwithyoutodeliverregulatorychange-Implementaneffective,riskbasedchange program

¨ Ensure a regulatory control framework is in place post implementation to ensure regulatory compliance

PROJECTIVE’S SERVICES FOR YOU

For more info, visit www.projective.biz