Sell-side to invest in risk management amid regulatory challenges and risk events

Rick Steves

35% of senior market risk executives surveyed expect their firms to increase headcount while 86% are planning to deploy new systems to support their changing approach.

BTC, ETH, BNB, ADA, XRP, DOGE, DOT, UNI: Monthly crypto crash is the new thing?

The sell-side is increasing headcount and investing in market risk to meet new regulatory and operational challenges, according to a study conducted by Acuiti and commissioned by KRM22.

Acuiti surveyed top market risk executives across the sell-side and found that half of the respondents increased staffing levels over the last 18 months with 7% reporting a significant increase.

Sell-side to deal with Fundamental Review of the Trading Book (FRTB)

Greater automation and nearer real-time views of risk exposures have also become attractive assets for the sell-side amid the ongoing implementation of the Fundamental Review of the Trading Book (FRTB).

2022 is likely to see a significant change in risk management across the sell-side, with only 14% of respondents expecting to maintain the same approach to market risk management over the next 12 months. In the opposite way, 41% of participants said they plan a significant overhaul.

Loss prevention and the anticipation of a major risk event are driving change as well as regulatory pressure reflecting the introduction of FRTB.

Sell-side firms will be investing in both headcount and technology in market risk over the next 12 months, according to Acuiti, which has spoken to senior market risk executives, with 35% expecting to increase headcount while 86% are planning to deploy new systems to support their changing approach.

Dave Zurkowski, Head of Market Risk at KRM22, said: “For the last 10 years firms have channeled investment into Compliance functions to address increased regulation following the Financial Crisis. More recently, with major events such as the COVID-19 pandemic, firms are recognising the need to shift some of this focus toward Market Risk, moving away from legacy platforms and disparate processes.

“Firms are seeking to deploy technology solutions that perform during times of high stress and bring together risk metrics across business units, providing insights that ultimately improve the customer experience. KRM22 is addressing these challenges through our Global Risk Platform, bringing together data from across the firm to enable better, more informed decision making across the organisation.”

Will Mitting, managing director of Acuiti, said: “Expectations of volatility throughout 2022 are high as multiple factors from international politics to localised inflation in major markets raise the prospect of major shocks to equity and fixed income markets.

“Following a period that has seen several high-profile defaults and unprecedented market volatility, market risk has shot up the agenda for the sell-side. This was shown in the KRM22 Capital Markets Risk Sentiment Index, released in Q4 2021, which found that market risk was the highest priority for banks and the second highest priority overall.”

Read this next

Retail FX

XPRTcoin Review 2022 – Is XPRTcoin Scam or Legit?

Read our XPRTcoin review today to learn all you need to know about XPRTcoin before signing up with the broker (xprtcoin.com) – by FinanceFeeds.

Retail FX

Financial services domains blocked by Consob rise to 708

In yet another episode in a long-running campaign, the Italian financial regulator, Consob, once again blocked access to a number of investment websites, including those holding licenses in other jurisdictions.

Digital Assets

Binance upgrades Bahrain license to offer full-suite of crypto services

The Central Bank of Bahrain (CBB) has granted Binance its Category 4 license as a fully-fledged crypto-asset service provider (CASP).

Digital Assets

BitMEX spot exchange hits $24 million in daily volume

The newly-launched spot market of crypto exchange BitMEX reported a record of $24 million in 24-hour trade activity on May 25.

Retail FX

Financial Commission certifies offering of trade copier 4X Solutions

The Financial Commission, an independent self-regulatory compliance specialist for the financial services industry, has certified the trading technology offered by trade copier 4X Solutions.

Industry News, Inside View

LIVE from Devexperts webinar for brokers on Fractional Trading

Finance Feeds is providing live coverage of the event that aims to help brokers discover fractional shares as a key tool for a successful brokerage business in today’s trading industry.

Industry News, Retail FX

ASIC celebrates retail ban on binary options as 68% of wholesale clients lose money

In the 13 months before the ban, between 74% and 77% of active retail clients lost money trading binary options. The product intervention order does not apply to wholesale clients.

Crypto Insider

Investing in crypto: how to stay away from weak players

The main reason behind the hacks of crypto exchanges is weak key management. For example, all 4 hacks that took place in 2021 were caused by the ability of hackers to obtain access to hot wallets. 

Retail FX

Vantage launches swap-free gold XAUUSD trades for all clients until end of July

“As the greenback continues to strengthen, we want to support traders who remain bullish on gold or seek short term trading opportunities amid the volatility”

<