Simplifying Financial Regulation Complexity

In an excellent presentation, Executive Director Financial Stability of the Bank of England, Andrew Haldane, pleas and argues to simplify financial regulation.

It turns out that the growing number of regulation rules and principles (e.g. Basel III) has an adverse effect on taming the crisis.

Also the traditional Merton-Markowitz approach, that assumes a known probability distribution for future market risk and enables portfolio risk to be calculated and thereby priced and hedged, offers no help to solve the current crisis.

Haldane states that "More simple regulation based on 'Optimal choice under uncertainty' is necessarily. Haldane concludes:


"Modern finance is complex, perhaps too complex. Regulation of modern finance is complex, almost certainly too complex. That configuration spells trouble.

As you do not fight fire with fire, you do not fight complexity with complexity. Because complexity generates uncertainty, not risk, it requires a regulatory response grounded in simplicity, not complexity.


Delivering that would require an about-turn from the regulatory community from the path followed for the better part of the past 50 years. If a once-in-a-lifetime crisis is not able to deliver that change, it is not clear what will.


To ask today’s regulators to save us from tomorrow’s crisis using yesterday’s toolbox is to ask a border collie to catch a frisbee by first applying Newton’s Law of Gravity."


The Dog and the Frisbee
Haldane's (2012) presentation called 'Ensuring Long-Term Financial Stability', or more popular 'The dog and the frisbee', is a breakthrough in managing, modeling and controlling Risk and financial future results.
It's a MUST-read for board members in the financial industry.

Symetrics
Our team at Symetrics agrees with Haldane's approach. Just like in financial regulation, we need to simplify our risk models, risk frameworks and risk appetite defining process. How? Try us!
Or just take a look at our website: www.symetrics.eu.

Links:
- BOE Presentation Andrew Haldane

Compliance Check Test

Most often and at a basic level, compliance is perceived and defined as 'regulatory compliance'.

If we comply (act in accordance) with federal or local or local authorities and their requirements, making sure that our company is following all the necessary rules and regulations, we seem done.

Compliance Plus...​

However, the regulatory compliance level is only a start. 

It's simply not enough to be 'Supervisory Compliant'. Compliance is more! Much more.....

Let's find out what Compliance Plus represents...

Compliance, a Competitive Tool​
In practice, compliance can be a distinctive competitive tool​. Being ahead of regulatory compliance, means that a company defines its own compliance level that not only includes regulatory compliance, but also its own professional compliance level, based on its own specific risk structure. 

Compliance, Part of Risk Management
Moreover, one compliance level higher, compliance also embeds the risk of future change of regulations rules and the not-yet-defined compliance rules of future products and investment strategies that are necessary for a sustainable successful development of your company.

So regulatory compliance is also a substantial part of risk management. That's why Symetrics has also included it an option in the SyMath risk model approach. 

Compliance Check

To check if your company is compliant at a Compliance Plus Level, simply 

Take the 'Compliance Check' Test 

at Symetrics. It takes only two minutes to take this test, as all compliance check boxes are already 'checked' in advance. So if you like 'unticking boxes' instead of 'ticking boxes', here's a splendid opportunity.

Announcement SyMath Demo Model Launch

Symetrics' first Investment Decision Support Demo Model SyMath®, will be launched end of June 2013.

SyMath®
SyMath® is Symetrics' high tech powerful investment decision support software that easily captures crises, nonlinearity, systemic risk and fat tail risks. It helps you to grasp risk-return and to guide your investment portfolio through uncertain economic times.

If you're interested to take part in a free user-test of this model, please contact Martijn van Eck, at +31 6 525 68 775.

More information about SyMath at: Symetrics-SyMath®