He may be on his way out the door, but UK Financial Services Authority (FSA) chief exec Hector Sants seems determined to deliver a few parting shots to ensure that financial services firms tackle their risk management failures. In order to boost its success in this endeavour, the regulator will be hiring another 460 staff members and will be looking for those with industry experience of dealing with internal risk management systems within the financial institutions it wants to police.
In order to assist the European financial services community in its attempts to improve liquidity risk management, the Committee of European Banking Supervisors (CEBS) has published a new consultation paper on how to go about producing an effective allocation mechanism for liquidity costs, benefits and risks, CP36. The recommendations are aimed at providing firms with a framework upon which to build internal pricing mechanisms to price liquidity risk and to align liquidity risk management culture across their organisation via suitable incentives, which are likely to include significant data gathering and technology requirements.
The UK Financial Services Authority (FSA) has this week been forced to back down somewhat in its aggressive approach to introducing further changes to its liquidity risk regime in light of the current economic climate. As promised last year, the regulator has assessed the state of the market and decided not to push ahead with the quantitative aspects of its regime, namely the controls around liquid asset buffers.
Following the relocation of its head office from Luxembourg to London last year (see 
As noted by A-Team Insight last month (see 
The Committee of European Banking Supervisors (CEBS) has produced a new set of high level risk management guidelines that stress the need for quantitative risk models to be balanced by a “qualitative approach” and for risk management systems to be revamped to take into account enterprise-wide risk exposure. In order to facilitate a qualitative approach, firms need to invest in their data feeds and systems in order to “explicitly” address macroeconomic environment trends and identify their potential impact on exposures and portfolios.
Next month, industry practitioners will have four opportunities to provide feedback to the Committee of European Banking Supervisors (CEBS) on its risk related proposals, including those around concentration risk and stress testing. The regulatory body has organised four separate hearings at its London premises to garner feedback on a number of its recent consultation papers, all of which involve technology and systems considerations.
There may be troubles ahead for the UK Financial Services Authority (FSA) with the impending departure of current CEO Hector Sants in the summer, but, in the meantime, the regulator has pledged to support the data vendor community in adapting to the new regulatory order. To this end, the regulator is strengthening its efforts around its independent software vendor (ISV) discussion group, which aims to provide vendors with a forum in which to air their issues.
As part of its endeavour to establish itself as a clearing counterparty (CCP) in the OTC derivatives market, CME Group has this month selected two pricing solutions to support its CCP’s credit default swap (CDS) pricing and intraday risk management services: CMA’s DataVision and Fitch Solutions’ CDS Pricing Service. Anna Mazzone, vice president of product management and marketing at CMA, explains to A-Team Insight how DataVision will support CME Group’s OTC CDS Clearing service.
BNY Mellon Asset Servicing has invested in its client and regulatory reporting systems as a result of valuation and regulatory changes such as FAS 157 and FAS 132R-1, explains Chris Richmond, managing director of global product accounting for the fund administrator, to A-Team Insight. This has involved a significant investment in automating the upload of non-standard pricing sources and the scrubbing of same security prices from multiple sources, he elaborates.
The Division of Market Oversight of the Commodity Futures Trading Commission (CFTC) has criticised futures exchange ICE Futures US for its failings with regards to its compliance systems. In its recently published rule enforcement on the matter, the CFTC division claims that ICE staff cuts and a lack of investment in compliance automation meant that the exchange was unable to adequately comply with core principles relating to audit trail, trade practice surveillance, disciplinary and dispute resolution programmes.
Sydney-based risk management technology and consulting solution vendor Razor Risk Technologies has added a new face to its Australian team in the form of ex-Westpac risk exec John Goodacre, who joins as programme director. The vendor has also promoted current senior risk consultant for the Americas region, Franklin Robinson, to the position of unit president for the region.
As part of its drive to compel financial services firms to provide more transparency into their data, the Financial Services Authority (FSA) has confirmed this week that it will require UK firms to publish information on how they handle complaints. According to the regulator, this will help people see how firms are performing in this area and to drive up complaints handling standards across the industry. It will also pose another data challenge for firms already facing new requirements around risk data reporting and single customer view (SCV) reforms (see 
The UK Financial Services Authority (FSA) has indicated that is "disappointed" by the "unclear articulation" of firms’ risk appetites in the Internal Capital Adequacy Assessment Process (ICAAP) submissions it has received from investment firms so far. The regulator indicates that these firms should bear a number of factors in mind when preparing for their next submissions, including providing the right level of risk related data in order to the FSA to be able to accurately judge their risk management capabilities.
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Following the publication by five US regulatory agencies of a joint policy statement on principles of funding and liquidity risk management in July last year, 22 financial industry representatives have commented on the proposals. The regulators have this month published these responses to the statement, which adds new requirements for market participants based on the Basel Committee on Banking Supervision’s (BCBS) September 2008 principles.
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