When is a deadline not a deadline?

In the world of regulatory change, it used to be so simple - well relatively. When a business was given a date that it need to comply by, well that was pretty much fixed. Ahead of this and in good time it would have the information it needed in order to work out how to comply.

Well, that is how I recall it and certainly when one went to management with the messaage "we need to do X by Y in order to comly with Z" they tended to believe you and then support the necessary work.

I have blogged before about the increased complexity and lack of clarity that is plaguing many regulatory changes these days, but worse than this is the endemic issue of softening dates. By this I mean dates get set by the regulators and for various reasons, legal, political or simple obstinancy, they are held to even when they are increasingly untenable. As a change agent one can only report and work to the dates given, until, far too often to be good, they are then slipped. This could be three months, six months, and I even hear talk of two years in some cases. Prima facie you may think this reflects badly on the regulators, but it makes the life of an in-house regulatory change manager harder - their credibility erodes every time they have to say something like, "well you know yesterday I said we had to have this done by the end of the month/tomorrow/etc, well we now have three/six/twelve months.

The psychology is that increasingly no regulatory dates is believed, especially when the business wants to dedicate a limited set of resources to other business building / revenue generating activities.
Then we start hearing a different language come out. I have heard tell that regulators are looking for "best endeavours", which means different things to different people. In a near regulatory change, ie not pure regulation, but related, I read that that those affected should have "made significant progress by X" and "be substantially complete by Y". Please define significant and and substantial in this context?

There are many people wanting to comply and working hard to do so, but this shifting sand of dates is not helping anyone. I understand that each political and regulatory element is pushing its own interests, sometimes though not always within a common intent, but the result is that no one is satisfied.

Any business faced with this sort of issue within its own change agenda will almost certainly be forced at some point to take stock, prioritise and focus. It feels as if this is what is needed within financial regulation, but can anyone call it? Will anyone be brave enough to step up and highlight the issues? Can the G20 or something similar take stock and rethink? What would it take to make the G20 think again?

I don't mean give up on everything that is proposed. It is not about capitulation, but rather about pragmatism and priorities. There are things that make sense even if others do not.

If this does not happen I see this state of affairs persisting for a long time and in all probability getting worse as new layers of approved regulation are laid up on as yet implemented regulations and so on. On a cycnial level this should keep me in work until I retire, but is hardly part of the legacy I would want hand on to our children!

How good is it to see your children succeed?

On Friday evening I had just collected my car from its annual service and was driving home when my phone rang. I could see it was my daughter, but as I was driving I could not take the call. Instead about ten minutes later I pulled up outside our house to be greeted by Ellen with a beaming smile and performing what can best be described as girly star jumps.

She immediately told me that she had only just received an email offering her a "performing" place on the National Youth Theatre's six week EPIC STAGES course this summer. EPIC STAGES is.......

"A brand new summer course designed to prepare the best young performance and production (performers, technicians, producers and directors) talent for working in the industry."

To says she was happy was an understatement. I have shared before that my daughter has set her sight on being an actor. She has told us, her parents, that she categorically does not want to go to university. This was a little hard for her mother who had those ambitions for her and it also flies against much of the sane and traditional advice given by her teachers, family and friends. She has shown us that this is not a whim and indeed she has some talent (like a singing voice she has kept hidden from us) so our view now is that we will support her on this journey and if she should fail then it will not be for not trying or lack of support. That said theatre and performing is way out of my wife's and my previous experience (even if I am in the middle of a standup comedy course right now).

In this instance her Mum was not around to share the high being away for the weekend on a ladies' golf break. Instead it fell to me to enjoy the moment for both of us. Ellen and I had already planned a cinema trip (something of a tradition when her Mum has a weekend away) to see Iron Man Three. In this instance we preceded the cinema with a visit Pizza Hut with double pepperoni stuffed crust pizza followed, for Ellen, by a cookie dough and ice cream dessert.  Her smile barely left her mouth and she kep saying how good her evening was.

It is for times like this that a parent does all they do. We had seen her mask her hope then her disappointment over drama school auditions. She did get one call back which was good, but no offers in the end. She and we were reconciled to her leaving school, finding some work and looking at ways to build her experience ahead of applying to drama schools again next year.

I hope that in this I have kept the line between supportive and pushy parent, but I am proud of her and will do all I can to help her succeed. It is interesting how much you learn about other people and the connections you did not know you had. I found I have a cousin who knows the founder of the National Youth Music Theatre (a lead we are still following), I work with a guy who has a long history of theatre lighting and knows people working in the West End and just yesterday I learnt that one of our neighbour's daughter works as a casting assistant for a London agency. Oh yes, and the Director of my Comedy course is a theatre director too.

All in all I will try and open doors and if Ellen wishes, help her prepare to step through them, but I believe I will stop short of pushing. If I should overstep the  mark my little diva-to-be will surely tell me.

On Friday I did tell Ellen to enjoy the moment and "bank it" for surely there will be moments in the future when she will need to draw strength from the feeling she gets from the good times. This news does mean that she can embark on her "A" levels, just a  few weeks away with a more positive attitude which I am sure can be nothing but a good thing.

There is of course a long way to go and not guarantee of any success, but this could be a very interesting summer and it is good to see your child succeed!

The day after the night before!

So last night was the first of my standup comedy course and I am still smiling.
The first challenge for some was finding the place as there appear to be four buildings with the same address. It seems that it is Crown Property the tenants can't change that. This meant that the last course members dripped in up to half an hour after the start. The last arrival still thought she was early, having the wrong start time in her head! (Did I describe her as a little scatty later on? Well maybe.)

The group comprised a broad, but in this instance all white spectrum. The ranged from the young looking 18-year old  who was signed up for the course by his mum and could not break the habit of raising his arm when he wanted to speak to me, the older anchor member. In between we had an actor, barista and would be writer. We had an "Uncle Buck" like character and three who really want to make standup comedy a career. The gender balance is nine men and three women.

The course Director, Keith Palmer, is a clearly capable black gentleman - he made the major point of highlighting that he was black, as a way of illustrating both the power of first impressions and the importance of honesty. He has worked with the National Youth Theatre, been a standup around the same time Lenny Henry was on the circuit and is now directing life theatre. He founded The Comedy School in 1998 and uses comedy in a variety of settings, including young people and prisons.
It was readily obvious that he know how to handle an audience (us in this case) and some testing audience members (no names, no packdrill) while using out input to amplify his.

I won't go through the evening blow by blow, but it was a relatively gentle way to see how ready people were to explore new ways of learning and also clarify the importance of self awareness if one is to build a rapport with others and deliver a (damn I have forgotten the word I wanted, but I know it begins with "S") performance.

I confess a little mischief on my part during one of the exercises. Each person had to lead an element with the others copying/echoing it back. A number of people had been very "safe" in their contributions so the door was open. As I said there were nine men, three women and Keith. I was standing next to a lady, but not all the men were or could be, so my "lead" was to kiss the back of the hand of the person beside me - not hard for me, but it did startle the others. To be fair everyone after their inital WTF moment followed suit and in fact the next person too it a little further (enough said), but that was where our line was last night. I did mix things up a little and I cannot promise I won't try and do so again.

More seriously the showcase has been moved by one day so I CAN now attend, previously I had a clash with a theatre outing with my daughter. I sense I am ata  disadvantage over a few others who seem to have a more interesting background and naturally funny demenaour. Jack Dee has already cornered the dour delivery, Dave Allen had the avuncular and John Cleese has done the City Gent. I am not yet sure who I will be in my five minutes of fame/infamy but I am sure that will emerge over the next few weeks.

Keith's assessment is that on average one of our group will become a recognisable name. I have put my three bets in a sealed envelope and it will be interesting to see in a year or so's time if I was even close.

Homework this week is to observe and note funny happenings that we spot as we go about our other lives.

The first day of the rest of my life?

Well tonight I attend the first session of a stand-up comedy course. This has been a long time coming, but now it is here. Do I really expect to turn into a stand-up comedian? No! DO I even expect that I will be any good? Doubtful! But I do have some hopes.

The first is to find the experience interesting and that I may pick up some tips and tricks I can use in my professional career. The illustration I would give is that having been an attendee on a Dale Carnegie course many years ago I then took up the invitation to be a "graduate assistant". In this latter role I learnt a lot of the work that goes on behind the scenes and some of the techniques used to help the whole process flow. As an attendee it just seemed natural and easy, but as a graduate assistant you appreciated the hard work that is required to make it so. I have used some of those ideas in my work since.

In terms of comedy one often hears that comedians that seem so naturally funny, sponstaneous and indeed polished when performing are far less assured or even funny when then are without a script and microphone. I think this course will help me appreciate the support structures behind the performer.

My second is to get better at "timing".....maybe. In group discussions I am aware that the timing of my contributions is not always as smoothly and effectively executed as they might be. This can reduce the impact of my contribution so if I can learn something in that space it will be valuable.

The last is that my perspective on the worl around me may change - indeed I have sensed that already. When one is looking for funny moments or situations, one's awareness and observational powers should be raised. Thise are no bad things, but additionally it is hard to feel down or negative when one is laughing so the more humour one can find in the world, whether it be for subsequent replay as a comedian or not, can only be a positive thing from a personal point of view.

So at 6:15pm this evening I walk into a room with no idea who I will meet, what I will be asked to do or where the journey will take me. My wife and daughter are mortified at the idea of me doing this an specifically the possibility of me standing up and performing at a showcase. I wonder if I can surprise them and maybe win them over a little?

Stay tuned!

I am keeping my OTC diary free for late 2014!!!

When the G20 set out to "sort" OTC derivatives in 2009 the target date to have it all complete was 31 December 2012. Well we know that the water has flowed under that bridge some time ago and while  US politicians might claim some sort of compliance (ar at least knowing how they would comply) most of the world missed the target completely.

Recognising that the original target would be missed, the market looked at what would happen and when. In doing so they had two major complaints; the first was that a lot of clarity was still missing (and indeed still is) and the second was the unco-ordinated and inconsistent way the rules were being put in place by different jurisdictions. As well as making it hard to plan, this raised the cost of compliance for more complex organisations and looked to be creating (unintentionally, I believe) opportunities for regulatory arbitrage.

A few developments in recent weeks have me thinking that the likely new date, and one worth putting a little money on is 31 December 2014.

Why do I say that?

Well two developments and a little experience suggest this date. The first is an increasing number of initiatives now talking about Q1 or early 2014 as their start/target date. This includes clearing under EMIR and the issuance of LEI (Legal Enity Identifier) numbers. This latter piece of infrastructrure is key to "joining" a lot ot the reporting and clearing data together. Right now one can use something like an CICI, as issued in the US, but this is not the end game. LEIs were due to be available by 31 March 2013, but all went very quiet. Now a source with good knowledge advises that they will be available and gain traction in 2014.

In terms of co-ordination I had been hearing that US regulators were wary of pushing mandatory clearing ahead of Europe (ie EMIR) and today I heard that Asia regulators are also not wanting to be early movers and potentially disadvantage their markets and firms.

This sound like good'ish news. If the world can start to link implementation and are currently talking as a group about the first half of 2014, then this sounds like a plan, albeit slightly ad-hoc. That said most of these plans are over-ambitious and will likely slip, but I am pretty sure that the politicians will not want to slip another year number in the date ie to 2015!

So while the market signs now seem to be pointing at the first half od 2014, but experience suggests it is more likely to be second half 2014 and once you slip to the second half you may as well set 31 December 2014.

This does not mean we cannot or should not be doing work now, but rather that the traction and heaving lifting related to this is now looking to me at least as if it will be 2014, with plenty of thinking, planning and preparatory work done in late 2013.

Anyone agree? Disagree?

They don't care and they don't believe (you)!

Last night I attended a reception for Syed Kamall, London MEP and member of the European Economic and Monetary Affairs Committee, the influential body which sets the regulatory framework for financial services.

The event was hosted by Cummings Law and Grant Thornton and had a focus on the Alternative Investment Fund Management Directive (AIFMD), but also looked forward to coming regualtion, eg UCITS V (VI and VII?), AIFMD 2, etc.

Having explained the European process for formulating regulations there were a number of questions from the floor including some I posed. Without going into the specifics my high level takeaways were:-

Most European Politicians

• "Don't care" if it is hard or painful for the industry and participants to comply. The facts that there is a load of other unco-ordinated regulation being placed on the industry from many sources and there is a growing history of slipped regulatory implementation dates is of no concern - they just want it done.
• Are bored with AIFMD - they have done their work and just want to leave it to others to implement - they are now looking at new, more interesting things so there is no appetite to revisit the core of AIFMD
• Saw is was an opportunity for other interest groups in Europe ( I choose my words carefully! ) to stick it to the UK and London. Syed's analogy is that when a bar fight breaks out, you generally don't hit the person who started it, but have a go at the person you have long wanted to hit!
• See European union as about political union and not about unifying the markets into one. The psychological blow that losing and EU member state would be so great that the politicians will do pretty much anything to prevent it!
• Will strongly resist attempts by individual regulators to implement a "lighter touch" on aspects like remuneration. Syed thought that is anyone broke rank it would be to impose tougher, not lighter conditions.
• Don't believe the complaints about the costs involved AND even if they did believe them they don't care

Syed's contention os that what we have is a lot better than the early intentions of certain groups that would wanted to restrict

European investors to investing in
European funds managed by
European fund managers with assets protected by
European depositories

This would have been very forward looking.........not! He also thought that some politicians believed that the business would move within the EU, from London to Paris or Frankfurt, rather than fly the EU entirely. That would seem to be a rather naive expectation.

With this perspective I will admit that what we have in AIFMD does indeed seem better, but it seems that it will not get much better than what we see now. The warning though was that there will be more coming as UCITSX, AIFMDX , etc.

The Banking sector, which is where Syed believes the regulatory focus should be, is much more organised and better resourced to lobby the politicians from early stages. In contrast the fragmented nature of the European hedge fund /alternative investment industry has not helped with AIFMD and unless as an industry it starts resourcing and organising a more effective set of lobbying, they are likely be done over again in the future.

Not very encouraging, but it sounds like this regulatory train will keep a lot of people, starting with the politicians, busy for a long while.

Twice is a coincidence, thrice is a pattern!!

 

I have blogged before about the power of three, but I am reminded today that while something happening twice maybe couse for attention when it happens next it falls to responsible people to respond.

The subject in question is the requirement for and expectations of the new infrastructural services that are required to deliver the regulatory change the politicians have mandated following the financial crash of 2008. With regulators having placed the emphasis on reporting, risk management and transparency there are huge requirements to capture data, store data and transmit data and the often new organisations required to service that need. This all requires new technology creating new links and new business relationships.

Examples are Trade Repositories, Central Clearing Counterparties, information providers, data issuers, etc. I am being slightly circumspect about names given what I am about to say.

All this new infrastructure is being demanded by a collection of unco-ordianted and unsympathetic regulations that frequently impact far beyond their immediate jurisdictional borders.

Item #1: A deadline in April was extended at the last minute. This I understand was because a key part of the infrastructure failed catastrophically when faced with the stress of market participants all demanding service at the same time. While it had not been an easy run up to the deadline, it was only when the full volune of activity hit that the system caved in. I guess in the terminology the "unit tests" had been passed as individual firms had done their preparation. Maybe even a "system test" had been undertaken in the preceding weeks before the deadline as more users tried to work it from end to end, but it was only as many firms reached the proverbial 11th hour that activity peaked and the weakness was exposed. Strike 1!

Item #2: Today as new rules cut in for the OTC market, it would appear that dealing has been curtailed at a number of firms as their systems failed to acquire the necessary data that confirmed they could trade with individual clients. The scuttle is that the website/server delivering data failed. Sounds a bit like Strike 2!

So what /when will we encounter the third instance?

The nearest similar example I can think of was when we created the Euro. I was project managing an Investment Bank's response and recall we had at least two industry-wide rehearsals in the run up to 1 January 1999. This was across Europe and not the whole world and it was a clear single date, but the principle is that we practiced and tested it beforehand. Lo and behold it went with nary a hitch.

I doubt anyone could co-ordinate such a rehearsal for these Dodd Frank / EMIR / etc  deadlines so we have to look for better answers. One approach might be to undertake more, smaller phases of implementation, but the risk there is creating competitive inequalities between those that have had to comply and those that are yet to comply.

The last which I think is a little anti-capitalist, but may be needed at least in part, is to rethink the model that all this infrastructure has to be provided by private enterprise, in competition with each other. Maybe some of it is so important that a supra-governmental agency may be required? This may be the suggestion that cannot be made in the open and would require a number of politicians to start co-operating for the greater good - now there is an idea! - but there are examples where similar efforts have worked, albeit on a smaller, more national level.

Those who are old enough to remember could look back to Taurus and Crest in the UK which may provide some illustrative lessons. I am sure there are other examples.

Any other thoughts?