Perspectives and Key Themes from Compliance and Legal Professionals

Recently, SIFMA hosted our C&L Annual Seminar. Here we gained insights into top-of-mind topics for compliance and legal professionals from across the financial services industry, including:

• Regulatory Environment: Neither market failures nor direction of Congress precipitated the SEC agenda, with 31 final rules since 2020 and 19 more to be finalized. AI – holds great promise but brings risks; PDA proposal was meant to address these risks, says the SEC. CAT – transactional data objective understood, personal data brings security concerns. Reg BI – Reg BI effective regulation for customer protection, no need for DOL proposal 2.0. Remote work – hybrid work here to stay, FINRA pilot begins this summer.
• AI Perspective: AI is not new, but the speed and (advanced) technology is new. Firms are in different stages of AI use cases, dividing them into low (summarizing meetings) and high (predictive tools) risk. Panelists highlighted considerations for risk management – regulatory, legal, intellectual property – and governance –policies, data, disclosures to avoid AI washing. PDA proposal extremely broad and could significantly impact markets, covering any technology used in investment recommendations. Broad definitions include future people and interactions. Duties for firms around conflicts are to evaluate, determine, & eliminate or neutralize.
• More on Market Themes: Equities – Rule 605 adopted, industry is disappointed there is no template; tick sizes and access caps are expected to be next; best ex remains a top SEC priority; and panelists believe auctions may be encouraged not mandated. Fixed income – many rules could have significant operational and compliance burdens, such as Treasury clearing, and could decrease liquidity.
• Market Touchpoints: This report also includes our pre-conference survey and audience polling results.

Contents

• The Industry Outlook
  • Setting the Scene: Top Compliance & Legal Themes
  • Setting the Scene: Survey Says
• The Regulatory Environment
  • Setting the Scene: Survey Says
  • SEC Rulemaking Agenda
  • Artificial Intelligence (AI)
  • Predictive Data Analytics (PDA)
  • Consolidated Audit Trail (CAT) – FINRA Shares Industry’s Data Concerns
  • Regulation Best Interest (Reg BI)
  • Remote Work
• The Artificial Intelligence (AI) Perspective
  • Setting the Scene: Survey Says
  • What Is AI
  • Use Cases in AI
  • AI Best Practices
    AI Regulatory & Legislative Environment
  • Predictive Data Analytics Proposal
• More on Market Themes
  • Setting the Scene: Survey Says
  • Equity Market Structure
  • Fixed Income Market Structure
  • Issues Impacting Prime Brokers/Hedge Funds

Author

SIFMA Insights
Katie Kolchin, CFA

Related Resources

• Event

  2024 C&L Annual Seminar