Regtech Evolution in
Buy-Side Compliance

Regtech Evolution in
Buy-Side Compliance

Executive Summary

When the magnitude of global events and a sudden shift to home working environments unfolded in early 2020, financial firms found their compliance systems and practices under a spotlight. With every weakness unforgivingly exposed by the combination of remote working upheaval, record market volatility and a general atmosphere of chaos, the importance of regtech to market infrastructure became clear.

Likewise, speculation has been intense about the long-term effects of the past year’s revelatory experiences. Potential changes to regulatory requirements, communications technology usage and monitoring practices, and surveillance technology adoption trends are all key discussion points in the risk and compliance world.

Buy-side firms tend to be proactive in promoting compliance culture and managing compliance policies, but they are more reluctant when it comes to expanding compliance budgets (in the absence of imminent regulatory drivers). Nonetheless, increases in key compliance risk factors during the work-from-home (WFH) transition made a compelling case for investment in compliance infrastructure, particularly in relation to communications monitoring and surveillance efforts.

As 2021 proceeds, market participants will make progress with regtech adoption strategies. Despite significant budget increases, compliance officers will be carefully optimizing budgets by evaluating investments in compliance technology and personnel. And fortifying weak infrastructure areas related to the highest risk factors, including those recently elevated by COVID-19 conditions, will be a key challenge for buy-side compliance officers to tackle in the coming 12 to 24 months.

Last year RIMES partnered with Greenwich Associates to conduct a market study with the goal of quantifying some of the impacts to compliance and conduct risk felt so strongly across the industry, particularly in regards to trade surveillance and communications monitoring on the buyside.

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