1. G20 regulatory reform: a helicopter view
EDM Works/A-Team Event
16 January 2014
PJ Di Giammarino, CEO, JWG
Alec Gibson, Analyst, JWG

2. Making sense of FS regulation since 2006
Publishing
news and
comment
Delivering
products
We create heat maps and
holistically catalogue financial
regulation into a single platform
Supporting
membership
We mirror the consolidated
‘regulatory radar’ back to the
community
We shape and define the operational
requirements via research, opinion and
advisory services
© JWG 2014
Confidential
2

3. Executive summary
►
The 2014 the regulatory implementation agenda is bigger
than ever
►
Market upheaval in response to 300,000 pages of reform in
progress
►
Holistic perspectives are needed to make sense of the
change to policies, contracts, procedures and databases
►
Data professionals need to prioritise, align and analyse
impacts across a holistic set of multiple and conflicting
regulations
►
We are launching new products and services to help you
know your regulatory data
© JWG 2014
Confidential
3

4. We are at the beginning of the middle…
The regulatory overload continues
unabated
The data management challenge
►
7,000+ pages a month =
many ‘deltas’
►
Complicated stakeholder
map with shifting priorities
►
‘Gold standards’ by
paragraph/geography
►
600,000
No single view of ‘what
good looks like’
►
‘Compliant product’ costs
more, delivers less
550,000
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2009
2010
2011
2012
2013
2014
2015
2016
Note: Includes JWG estimates for 450k pages by summer 2015.
Assumptions: JWG forecasted trend line is accurate and assumes
page count increases by topic are consistent across regions
Is this an opportunity for data professionals?
© JWG 2014
Confidential
4

5. ... but we are far from done
16
No. regulations 2012-2016 according to
policy change drivers
14
12
10
8
6
4
2
0
Preserve Data
Security
Systemic risk
mitigation
Consumer
protection
Preserve market
integrity
Prevent Financial Transparency and
Crime
oversight
Shortfall in certain areas to be made up in next round of rulemaking?
© JWG 2014
Confidential
www.JWG-IT.eu
5

6. Alignment across regulatory areas is essential
Fin. crime
Chapter 1: Harmonised policy
Chapter 2: Fractured rulemaking
Chapter 3: Fragmentation and implementation drift
AMLD IV
Final regs released
Comes into force
FATCA
Final regs released
Comes into force
AIFMD
Risk
Transposition deadline
Solvency II
Original due date
FSB RRPs for insurers
G20 policy deadline
Capital/liquidity requirements
Current due date
Fed issues capital reqs
CRR finalised
All reqs in force (2019)
EBA issues RTS
Trading/post-trade
TR reporting begins
EMIR
Draft tech standards
Entry into force
Registration begins
MiFID II/MiFIR
Implementation starts
MiFID II finalised
Dodd-Frank
Financial Transaction Tax
Policy-setting
EU FTT proposal
Original due date
Regulation
Implementation
EDTF reporting comes in
Structural
Risk data
BCBS risk data CP
Ringfencing
Volcker endorsed
UK ICB established
RRPs
Vickers endorsed
Final RDA Principles
FS Bill commences
RDA compliance deadline
Volcker (earliest)
Behind schedule
Vickers impl. (2019)
HMT/EU RRPs for FMIs
FSB key attributes
FSB final CP
FDIC deadline
IOSCO RRPs for FMIs
Bail-in available
G20 deadline
2009
Expected date
2010
2011
2012
2013
2014
2015
2016
Source: JWG analysis of 20+ sources of regulatory information as at January 2014
© JWG 2014
Confidential
www.JWG-IT.eu
6

7. Detail is required
2014 regulatory customer identity challenges
►
New regulations require
new sources and definitions
for customer data that are
not aligned
►
Each regulatory initiative
defines slightly different
classification lenses
►
New holistic operating
models become possible
►
Operating models can be
global
►
Non proprietary – the case
for sharing is strong as it
benefits both regulator and
firms
►
Allows for common
customer face for
regulatory purposes
Domestic PEPs
Client classification:
FC/NFC versus MSP/SD
versus R/P/EC
MiFID II
Sector
codes
(NACE, SIC,
etc.)
Large
exposures
Client ID
© JWG 2014
Trading
OTC
Bribery
Act
(EMIR/
DoddFrank)
Market
Abuse
(MAD II)
Cyber
security
CRD IV/
AMLD IV
Financial
crime
Bank
Account
Directive
(BAD)
Beneficial
ownership
Funds
Transfer
Regulation
Tax
(FATCA)
‘Look
through’
data
Profiling
Risk
Legal
Entity
Identifier
(LEI)
Infrastructure
and reporting
Data
protection
regulation
Confidential
www.JWG-IT.eu
7

8. Understanding linkages is critical
Regulation
Counterparty data
Impact
Architectural
Process
EMIR/AIFMD
Entity classification
(FC/NFC/NFC+); fund
status/classification (AIF or not)
Link between KYC and trading
desks; must bridge LOBs/silos
Requires legally binding
client self-certification and
outreach
CRD IV
EMIR classification + exemptions
Link between KYC and risk;
reconciliation versus
centralisation?
Exemptions require
information in addition to
that of the EMIR process
(above)
MiFID II
Client suitability (retail,
professional, eligible
counterparty)
Requires alignment across the
front-office (trading, sales,
customer management)
Requires iterative client
assessments; revisit
agreements and client
literature
FATCA
FATCA entity classifications
(FFI/NFFE, etc.) + GIIN
Link between KYC and tax
functions
Requires self-certification or
GIIN verification
AMLD IV
Client risk weighting (high risk,
low risk)
Increased demand on KYC and
commercial customer data
sources
High risk customers may
require immediate cessation
of transactions
Dodd-Frank
Counterparty/end user
classification (MSP, SD), no CRD
IV-style exemptions
Link between KYC and trading
desks; must bridge LOBs/silos
Requires client selfcertification
© JWG 2014
Confidential
www.JWG-IT.eu
8

9. Achieving alignment across firms is possible
Regulatory lenses
►
Business
structure
►
Transaction
Distribution
channel
►
Risk
management
►
Party
Customers
►
Management lenses
Location
►
RegData continents
Monitoring
►
Control
Operational
model
Agreement
Asset
Product
Event
Location
Internal
organisation
Ledger
Promotion
Work with regulators in progress
© JWG 2014
Confidential
www.JWG-IT.eu
9

10. However, we need a new approach
Firms’ approaches to MiFID implementation in 2007
% work to do
Imperative
Firms with
significant work to
do %
Customer or
regulator
risks
1
Best execution
85%
C/R
2
Client classification
75%
C/R
3
Transaction reporting
70%
4
Record keeping
64%
C/R
5
Prod/service info. to clients
64%
C/R
6
Order handling
63%
C/R
7
Client reporting
63%
C/R
62%
What happened?
R
C/R
8
Suitability &
appropriateness
9
Price disclosure
58%
C
10
Trade reporting
55%
C
11
Outsourcing
49%
Client assets
48%
R
13
Firm governance
48%
R
37%
Med
High
►
10%
Requirements
vague
Minimalist
approach
►
Few surviving
practice groups
Reaction to fines
►
54%
15%
►
►
36%
62%
Timeframes
►
23%
R
12
Low
A ‘foundation’
for new
requirements?
R
14
Source: JWG-IT / Thomson Financial survey, JWG-IT research & analysis
Conflicts of interest
44%
55%
49%
40%
7%
5%
Source: JWG’s ‘Who’s ready for MiFID‘ analysis report, 2007
© JWG 2014
Confidential
www.JWG-IT.eu
10

11. A holistic view is required for your TOM
►Transactional
Regulatory
state
volumes, asset
thresholds, authorisations
►Will move both up and
down over time
►Information not always
publicly available
►Qualitative judgments
Legal
framework
Regulatory
Data Target
Operating
Model
with
subjective criteria
►e.g., definitions, qualifying
criteria, self-certifications
►Can overlap depending on
context
►Rarely consistent between
jurisdictions
►Not always consistent within
jurisdictions
►Objective assessments based
Reference
data
© JWG 2014
Confidential
on
unique criteria
►e.g., sector codes, identifiers
►Multiple codes for the same
purpose
►May require cross-mapping with
one another
www.JWG-IT.eu
11

12. How JWG can help
►
Training in
collaboration with ►
EDM Works
Workshop covering G20 regulations, analysis
framework and Road Map production
Full continuous eLearning support and peer
networking sessions
CDMG
membership
RegTech
© JWG 2014
► The Customer Data Management Group
(CDMG) is a special interest group to
improve customer data management in
financial services
► RegTechFS is a innovative regulatory news
platform hosted by JWG
► 3500 users signed up to JWG weekly alerts
Confidential
www.JWG-IT.eu
12

13. Know your Regulatory Data training
►
Know the four key areas of
regulatory reform
►
Align business and regulatory
roadmaps
►
Articulate cogent plans to your
customers, suppliers and regulators
►
Leverage community of expert
practitioners
►
Know how to remain current with an
ever moving set of regulatory and
business requirements as ‘BAU’
Sign-up now!
© JWG 2014
Confidential
www.JWG-IT.eu
13

14. CDMG meetings 2013
Date
Title
No. Attendees
No. Firms
Host
26 November
CDMG meeting: A CXO’s survival guide to MiFID II
19
6
Gherkin
17 October
Interim identifiers and the LEI: Implementing a common
ID
13
5
Deutsche Bank
8 August
Effective CRD IV, EMIR and RDA counterparty
management (Firm only)
16
7
Prudential
Regulation
Authority (PRA)
3 June
EMIR CCID Steering committee meeting
24
15
Bird & Bird
23 May
KYC operations impact assessment: Mobilising now for
KYC certainty in 2014? (Firm only)
12
5
Bird & Bird
22 May
EMIR CCID project workshop 2 (Firm only)
32
18
Bird & Bird
15 May
EMIR CCID project workshop 1 (Firm only)
26
18
Bird & Bird
25 April
4th Anti-Money Laundering Directive (AMLD IV): impact
assessment
10
4
Citi
28 March
CDMG Conference call: 4th Anti-Money Laundering
Directive (AMLD IV)
11
6
Call
21 March
Getting FATCA classification right
11
7
Nomura
28 February
FATCA, guidance or hindrance?
17
7
Call
10 January
CDMG The Obligation to Centrally Clear: EMIR
classification requirements
12
6
RBS
Total of 12 meetings
203
Participants
28 Firms
4 Regulators
5 Trade
associations
7 Different hosts
© JWG 2014
Confidential
14

15. CDMG H1 2014 research focus
2014
January
February
EU OTC and ETD reporting
March
April
June
21 January
UPIs and UTIs – methods and approaches for EU OTC and ETD reporting
TR standards/3rd party service models
KYR
May
Asian OTC reporting regimes
18 February- TR standards and 3rd party service
models for trade reporting and retrieval
20 March- Asian OTC reporting
regimes equivalency and EU CCPs
Market data
29-30 April 2014 FIMA Market Data
10 April- Asset segregation models
and CCP choices
US and UK CASS deltas
Repo, securities lending, look through
KYP
Collateral
15 May- Knowing your
risk asset data
Risk data and reporting for assets
Ratings, HQLA, RDA
12 June - The future
asset tracking model
Market infrastructure, utilities
Risk data and reporting?
KYF
30 January
22 January Bank of England RegData presentation
ECB workshop on optimising data
standards
EMIR/CFTC extraterritoriality
14-15 May 2014 Compliance, London
Conference
CDMG meeting
© JWG 2014
Client classification?
Confidential
15

16. Thank you
JWG Group Ltd: admin@jwg-it.eu
www.jwg-it.eu
Join the RegTechFS discussion
www.regtechfs.com
Customer Data Management Group
www.The-CDMG.org
@jwg_group
© JWG 2014
+44 (0)20 7870 8004
Confidential
/jwg-group-ltd
www.JWG-IT.eu
16