What Dodd-Frank Means for Recordkeeping Requirements

With 2013 well underway, many burdensome compliance regulations will have to be implemented and addressed by financial institutions – specifically, Title VII of the Dodd Frank Act which deals with the recordkeeping requirements for Trading Floors. 

According to the American Action Forum, the Commodity Futures Trading Commission (CFTC) swap data recordkeeping requirement is going to produce 19.2 million paperwork hours for compliance teams to handle. To put that into perspective, that is approximately 36,920 hours per week. Breaking this down a little further, it is clear that the additional workload would be overwhelming for any firm to handle.  

Susan F. Axelrod, Executive Vice President of Member Regulation Sales Practice at FINRA has warned firms by stating, “It is imperative that firms maintain proactive and robust compliance systems,” and “As firms consider their costs, decision makers may be tempted to consider cuts in the compliance area…cutting too much now will likely cost more in the future.”

The average base salary according the National Regulatory Services (NRS) compensation study for compliance personnel is $85,000, and the cost of employing enough personnel to meet the hourly demand is way beyond the budget of any company’s compliance department. 

Thus, firms will seek to meet these increased demands by looking to technology for help, at the same time that regulatory agencies push for the implementation of effective compliance management systems (CMS).

Forward-looking financial institutions must plan for the long term to determine and address the impact that regulatory change will have on their business model. Without a high quality, comprehensive CMS in place, serious violations of Federal financial law are bound to occur. Additionally, with a deficient CMS, a financial institution may not be able to proactively detect its own violations.

A proactive approach to compliance and risk management is key to keeping costs down and preventing penalties. NICE’s financial crime and compliance solutions, for example, provide institutions the investigation and operational tools necessary to monitor all trading floor communications and identify early signs of potential insider trading or market abuse.

To prevent a breakdown in compliance, financial institutions must take proactive steps in adopting appropriate policies and ensuring legal compliance.

To learn more about NICE’s Compliance solutions, join us at Interactions 2013, the industry’s leading customer conference


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