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Windfall Rewards of Transparency Requirements of Financial Reform
Tuesday, April 05 2011 | 12:50 PM
NEWOAK CAPITAL LLC
|While the financial industry lobbyists, political parties, and regulators are still debating the exact form of implementation of Dodd-Frank Reform laws, the financial industry is gradually waking up and comprehending the enormous scope of the infrastructure required for the timely and accurate collection, processing and analysis required to meet the reporting and compliance requirements under the new laws.
For example, just the derivatives and securities lending collateral management would require very large new investments in processes, systems, and personnel. On its face the cost of new systems and processes may appear to put further pressure on profitability on top of the higher capital requirements.
However we would argue that the push for the additional transparency will bring about better internal visibility across business and functional units and better attribution of risk-reward for various business lines and activities.
Long term this should provide a more timely measurement of risks and reward opportunities and lead to a more proactive management that should improve profitability.
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