September 12th, 2012
What is the “Regulatory Framework” and what purpose does it serve? US Congress or State legislatures pass legislation, ie laws that provide the legal framework for commerce, although neither write the regulation that guide conduct of participants in US and state commerce. At the Federal level, Congress established and deemed the every day rule-making and oversight by way of these rules to regulatory bodies and the people working for those in the Executive Branch at the Federal and State levels.
Usually through a public Due Process, the regulators promulgate and establish rules known as regulation, which subject financial institutions and other financial enterprises to certain requirements, restrictions, and guidelines to ‘govern’ or regulate their conduct, activities and products/services on the commercial playing field.
Within regulated organizations, an independent function exists known as “Compliance”. It identifies, assesses, advisors on, monitors and reports on financial institutions’ condition and risks. Compliance also is the process of reporting on company cooperation of activities in which it is engaged. If any of these activities are contrary to regulation, these breaches could bring reputational loss that the financial institution may suffer as a result of failing to comply with all the applicable laws, regulations, codes of conduct, and standards of good practice. In cases where compliance does not necessarily always correspond to a specific law/regulation, some oversight bodies as requirements for membership, demand or have a compliance framework. Although again, this compliance framework is often driven by regulations. For example, financial firms have to be compliant with NYSE Exchange rules to record and retain order information regarding exchange-listed securities electronically. NYSE Euronext had the right to request member firms and organizations to submit specific order data in an electronic format upon request.
With regard to oversight on the financial system, in the US alone there are at least a half dozen financial system regulators and supervisors. These are the United States’ Securities and Exchange Commission (“SEC”), Department of Justice (“DOJ”), Financial Industry Regulation Authority (“FINRA”), The Federal Reserve System (the “Fed”), the Office of the Comptroller of the Currency (“OCC”) now also absorbing the Office of Thrift Supervision (“OTS”) which had been the regulator over US and state Savings & Loans, the Commodities Futures Trading Commission (“CFTC”), Federal Housing Finance Agency (“FHFA “) which in 2008 replaced the Office of Federal Housing Enterprise Oversight (“OFHEA”). Other regulators dealing with banking related and insurance exist at the state level. After the Dodd Frank Act passage moreover, a new Insurance regulator exists for the first time at the federal level. One can see by the number of different regulators, that management needs to employ trained professionals to comply with all the federal and state regulation.
Financial companies also need Capital Markets Advisors, a financial consulting firm comprised of skilled, independent consultants. CMA’s highly qualified and experienced professionals provide a full range of regulatory compliance and related risk management services. CMA’s financial regulatory/compliance team coordinates with management to implement these complex challenges, while staying abreast of changing regulatory requirements, expectations and industry practices.
We do not advocate a “one-size fits all” solution. Instead we offer regulatory compliance advice and solutions that are tailored to each client’s individual business needs. We provide often innovative, low-cost approaches to managing and overseeing compliance and risk. We work closely with our global network to provide regulatory advisory services across all geographic locations. With new regulation unfolding every day, CMA helps your company comply with regulation while enabling you to effectively track and monitor your regulatory compliance and risk exposures.
