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Embracing The Challenge Of Change

Monday, 6 November 2017

Political instability and ever-evolving legislation made ‘uncertainty’ the watchword of the day at the Equiniti Share Registration Conference 2017. Steve Banfield, Industry Director, Equiniti discusses.

We may have just experienced a year of unprecedented upheaval but speakers and attendees alike believe it may take some time for the dust to settle. 

This view was however tempered with positivity as many believe that the upcoming challenges offer an opportunity to step back, take stock and introduce fundamental improvements to existing complex processes and practices. Technology is central to this, widely seen as the key to solving such complexity. Based on insights from the conference, which took place on September 26, we examine what the upcoming challenges are and how the industry might best turn them into opportunities.

Three key challenges

  1. The MiFID II minefield

With more data required to be captured in advance of trading activity, individual transactions having to be reported to the regulators and an increase in the amount of information supplied to investors, MiFID II has the potential to increase both costs and complexity for all industry stakeholders, companies, service providers and investors alike.

These new requirements will result in firms having to securely hold an increased amount of personal information in order to provide these regulated services, something that will have to be considered and managed in line with the Global Data Protections Regulations that will impact in May of 2018 and introduce more restrictions on the use of that data and enhanced data subject protections.

  1. Designing GDPR game plans

Indeed, the General Data Protection Regulation (GDPR) raises questions about all aspects of data management. Building on previous laws, it now applies to every organisation holding personal data about EU citizens, covers digital identities and increases the subject’s rights – such as having to opt-in to marketing and having the right to be forgotten. In practice permanently deleting all instances of a subjects data on request or once it is no longer deemed required.

  1. Contending with the Corporate Governance Review

In each of the three areas covered in the government’s recent paper;  Executive Pay, Employee Engagement and increased governance of Private Companies – several significant measures are being introduced that businesses must urgently address.

This includes the need for companies to publish the CEO Pay Ratio, update the Public Register when 20% of shareholders oppose pay packages, organise votes on pay policy and thoroughly engage the remuneration committee, shareholders, and employees, and that’s just the start.

Creating order

For all three of these key challenges, technology has a key part to play in mitigating the impact of the required changes whilst at the same time improving the customer journey.  Regulation can be a huge challenge but also an opportunity once it is broken down, with technology playing a big role in the solution.

 Two key opportunities

Steve Banfield 800pix w Steve Banfield, Industry Director, Equiniti

1. Maintain momentum 

Opening the presentation I, Steve Banfield, discussed:

“While the UK clearly wants to continue to be in a position to conduct business with Europe, we should not lose sight of the fact that BREXIT provides an opportunity to develop laws, regulations and best practices in the best interest of UK business”, and the overarching consensus appears to be that all of today’s challenges – not just Brexit – also offer opportunities. An example of this is the potential to identify digital solutions where paper currently exists, something which the UK Government is also committed to, as demonstrated through its strategy to develop a world-leading digital UK economy that works for everyone. 

Mark Bullen, Equiniti’s Managing Director of Share Registration described how Equiniti has embraced this challenge by designing a digital solution for delivering the increased amount of investor information required under MiFID II.   “Rather than sitting back and accepting more paper as a solution to the regulation Equiniti prefers to be at the vanguard of industry efficiency solutions and prepared to challenge the status quo.  As such we are the only registrar to have developed a digital solution in the interests of our client base and their investors”.

  1. Blockchain boom?

With such a focus on digitisation and technology, interest in blockchain is also skyrocketing*, although we are only now starting to see how the technology may impact the industry, according to the panel of experts assembled to talk on the topic.

*Fig 1: Proportion of searches for Blockchain over the last five years, according to Google Trends

Whilst it was debated that blockchain might not be the disruptive change expected, becoming more pervasive so gradually it is likely that people probably will not even notice it happening, the blockchain panellists all agreed that the technology has cross-industry applications and it will require collaborations between start-ups and established companies to help harness its full potential.

Having had a chance to listen to the debate almost 14% of the audience thought blockchain would impact the industry within 2 years, just over 36% opted for delivery within 3-5 years whilst 50% still consider its impact to be over 5 years away.  Whilst it is indeed difficult to pinpoint an exact timeframe for blockchain to make its mark, Equiniti continues to work with and develop the innovative technologies that may drive the future of our industry.

Equiniti will be working throughout the remainder of 2017 and beyond as we continue to develop industry leading solutions and please keep a look out over the coming weeks for additional articles on both blockchain and upcoming regulation. 

As always, should you wish to discuss any topics as a result of our conference please speak to your Relationship Manager.