Dissecting Dodd-Frank: People, Processes, and Technology, Oh My!
- Sep 15, 2011
- Nathan Stein
Many organizations have started to contemplate the impact that Dodd-Frank's new swap regulations will have on their business. However, those assessments frequently focus solely on technology. In preparing to comply, it is important to remember that there will also be significant effects on people and processes.
Those non-system impacts are most notable for Swap Dealers and Major Swap Participants. Impacts on people can range widely. New clearing and margining requirements will increase the volume of margining activity for which existing credit personnel are responsible. New responsibilities will also arise from reporting and record keeping requirements that did not exist before Dodd-Frank. The anticipated volume of work resulting from these requirements needs to be assessed to determine if existing staff can absorb them. The alternative is adding to staff and possibly creating new roles to manage the workload. These are less obvious additions when compared to the requirement for a Chief Compliance Officer.
Associated with those new responsibilities are new processes needed to guide the work. As with all work, process documentation is needed to clearly explain what is needed and prevent concentrations of knowledge among the existing team. In many cases, proposed rules explicitly require policies and processes to be documented.
When assessing readiness to comply, it is obviously important to consider requirements implications on people, processes, AND technology. Only then can you have a true understanding of the impact on your business.