Communication Key to Regulatory Influence, Gaining Better Support from Rule Makers

The answer to both of those questions is communication, according to panelists at the Toronto Financial Information and Technology Summit 2016.

Allie Harris, who is involved in the data governance and analytics space at Bank of Montreal (BMO), said there needs to be more inter-regulatory communication.

"Have the conversation," Harris said. "They're all looking for the same thing from the same people. How do they go about that intelligently?"

Tim Lind, global head of financial regulation solutions at Thomson Reuters, agreed with Harris and criticized the current processes in place.

"Comment letters don't work," Lind said. "If that's the main mechanism by which regulators obtain feedback on the efficacy of any proposed legislation, it doesn't work."

"Help drive the bus instead of taking it on the chin after it's been formulated and you have no choice but to react to it," Lida Preyma, BMO

Lind said regulators need to fully understand the implications of the laws they are considering implementing.

How does a new regulation take liquidity out of the marketplace? How does it impair an investment manager's ability to buy and sell corporate debt? These are just some examples Lind provided of things that need to be considered by regulators.

"That's the type of communication and understanding of how capital markets work, how market structure works, that regulators are going to need to be able to understand effective policy," Lind said.

Power in Numbers

Harris, Lind and Sydney Hassal, associate director of global capital markets banking at Scotiabank, all agreed that participation in member organizations is the best way a firm can impact regulatory evolution.

"Being involved in member organizations is the way to respond to regulators," BMO's Harris said. "Those are the places where business and regulatory meet."

Lind agreed, adding that his firm has representation in Brussels and Washington. He said Thomson Reuters always looks to help regulators better understand the complex nuances of the industry, such as how a collateralized mortgage obligation works, and what underlying cash flow is.

Hassal said legal memoranda are also heavily relied upon.

"Their interpretation and how they manage those and how they work those is really, really critical to influencing how regulation is driven and interpreted," Hassal said.

Lida Preyma, director of global anti-money laundering (AML) compliance and AMLRO designate for BMO Capital Markets, said it comes down to getting involved in the process.

"So what I'm hearing again is communication. Getting there, get your seat at the table," said Preyma, who moderated the panel. "Help drive the bus instead of taking it on the chin after it's been formulated and you have no choice but to react to it."