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David Woolcock 20-Mar-2020 16:50:47 5 min read

Home Alone


It is unprecedented in Financial Markets (at least in my memory!) to have so many people working from home globally. We have previously seen localised examples such as on Wall Street after the tragic event of 9/11, but nothing on this global scale. As firms dust off the business continuity plans, some are hitting problems such as systems not allowing remote trading. This requires a tweaking of rule books and system settings. For those deploying a unified, modular platform, the task is somewhat easier when suddenly so many core staff are working from home as any system changes can be made once, and once only. 

Regulatory oversight continues, of course, but just as  we are all having to adapt,  our National Competent Authorities (NCAs) are also adjusting to the new landscape. In the UK, the FCA has always allowed some flexibility in their principle-led regulatory approach. With regard to what firms are experiencing during the pandemic, they “welcome firms taking initiatives going beyond usual business practices to support their customers. When doing so, firms should notify us so we can consider the impacts and offer support as appropriate.”  See FCA information for firms on Coronavirus.

As further stated by the FCA “Firms should take all reasonable steps to meet the regulatory obligations which are in place to protect their consumers and maintain market integrity.” Equally, over some other issues such as recording calls, some flexibility is offered to those who have not yet implemented a solution for home working. Although the FCA expects firms to continue to record calls, they accept that some scenarios may emerge where that is not possible. In these circumstances, firms should make them aware of the situation and look to mitigate the risks. These measures should include enhanced monitoring, or retrospective review once the situation has been resolved. 

Equally, the FCA recognises that some may experience difficulties in submitting their regulatory data, in which case it is expected that appropriate records are maintained and data should be submitted as soon as possible, after informing the regulator of the problem. Also, firms “should continue to take all steps to prevent market abuse risks. This could include enhanced monitoring, or retrospective reviews. We will continue to monitor for market abuse and, if necessary, take action.” 

In Europe, ESMA continues to monitor the situation and has welcomed the measures taken by some NCA’s for curbs on short selling. On the 11th of March, they issued a statement that called for “all financial market participants, including infrastructures, should be ready to apply their contingency plans, including the deployment of business continuity measures, to ensure operational continuity in line with regulatory obligations.” Of a more practical measure, it is a relief that ESMA has announced a delay to phase 1 of SFTR reporting from April 2020 to July 2020. It had been surprising to see ESMA select the April date as it clashed with the Easter holidays – see my previous blog.

Banks are also lobbying NCAs, in particular concerning regulations that have their roots in the Global Financial Crisis (GFC), with lobbying focussing on capital and liquidity. With a host of upcoming regulatory change coming through banks are looking for some forbearance with regard to changes to the Basel Capital and Risk regulations. Also, some are looking for a delay to the LIBOR transition due to the effects of the pandemic on planning and dealing with the outstanding legacy contracts with maturities post 2021. 

With continuing volatility in markets and a host of policy responses, we are experiencing unique times for the global financial system. So farmarket infrastructures have held up well in the circumstances and systems are certainly being tested. We will have some interesting debriefs once we get back to more normal times. In the meantime, for those of us Home Alone my colleague Kathryn Ellis has written a practical blog with a concept that intrigued me – a virtual coffee break! You can find it here.



David Woolcock

David Woolcock is an independent consultant and Director, Business Consulting at Eurobase. In addition, David is Chair of the Committee for Professionalism at ACI – The Financial Markets Association as well as Vice-Chairing the ACI FX Committee. He is also a member of the Market Practitioners Group for the Bank of International Settlement's FXWG that wrote the FX Global Code.