Arun Arunachalam & Yogesh S, TCS Financial Solutions
Since the financial crisis of 2008, largely driven by the need to make the industry safer as well as to reduce operating costs – two things have gone on an overdrive: Regulations and Standards. Regulations are driven by the need to reduce risks for the various stakeholders across the spectrum, including institutions and investors. Standardization, on the other hand, while linked closely to operational risk, is always about a business case at the end of the day, in terms of the cost take outs from the organization either in technology or operations.
While regulators establish the local rules of the game, some headway is being made in terms of global regulatory collaboration in the areas of ‘Too Big to Fail’ for the banks, or for instance, Basel III. Standards, however, are a different ball game altogether. Standards start from the other side and their reach and impact is global. They allow for local flexibilities in the form of details and fine print, and offer significant leeway during the actual implementation within organizations.
Standards are established by hard global consensus unlike regulations which are more a topical assessment of risk locally. While their aspirations are global, global standards seem more of an oxymoron or rather a distant reality. National priorities or legal/fiscal frameworks will always take preferences about dimensions, which standards aim to streamline. So what you will end up with are global frameworks or templates with regional or local nuances. At least, that’s the way industry working groups on business processes and harmonization are established.
Hence, it is inevitable that global and regional nuances co-exist which in some way improves the levels of adoption to a greater extent compared to what it would have been if it were a single global template.
This white paper examines the adoption of regulatory standards in Corporate Action post the financial crisis of 2008.