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The dawn of the compliance officer

Monday 4 April 2011 - by Wolfgang Fabisch

 Wolfgang Fabisch, ceo of compliance firm b-next, says that compliance officers in financial firms will play an increasingly key role due to growing regulatory demands.

It has become evident that the SEC and the FSA are the leading regulators in terms of enforcement.

This has resulted in a number of recent high profile cases being reported in the media, but what appears to be unclear is how effective a deterrent this has been. Are the regulators doing a better job?

Do the large fines reflect greater efficiency on the part of the regulator or an increase in illegal activity in the market? Interesting a debate as it may be, the past is irrelevant.

We now have to focus on the future of the financial markets.

The damage that market abuse could do to a firm's reputation and P&L is becoming increasingly recognised by firms and the pressure from the regulators to comply with anti-market abuse laws has become a key discussion point at board level.


Both are vital, and it is now essential to build tools which enable financial institutions to follow the relevant regulatory guidelines; and those guidelines which impact the image, the brand, the market share, the customer base and/or the P&L, are of enormous relevance.

The regulatory guidance now available, and the clear descriptions of scenarios deemed "market abuse", should thus be of great benefit in the trading rooms of banks, where decisions with great consequences must be made rapidly.

Some of these have been operationalised for a decade or more, such as prevention of the illegal use of insider information for trading. That the recognition - and even more importantly, the proactive prevention - of these abuses may remain problematic even today is underscored by recent headlines.

The relentless growth of regulatory requirements will mean that staff involved with regulatory compliance will require higher professional qualifications, better tools, more powerful technology, and they will have more organisational authority, and - as a consequence of all this - they will be better compensated. The role of the compliance officer will necessarily change from watchdog to actively involved business manager.


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