Transaction reporting clampdown is likely to create jobs

Commerzbank's 595k fine from the FSA for falling short of accurate reporting standards is the latest example of how a barrage of regulatory requirements are affecting financial services firms. As a result, banks are going to be forced to stock up on regulatory expertise in the near future.

The FSA is taking a new muscular approach to detecting market abuse. Commerzbank breached transaction reporting requirements set out by the regulator to incur the fine, and this is the latest in a series of monetary penalties. Credit Suisse, Instinet Europe and market-maker Getco were also forced to shell out a combined 4.2m for failing to provide accurate transaction reports earlier this month.

The FSA analyses this data as one of the early stages of detecting market abuse. Transaction reports are largely automated, so it's likely that any firm falling short of the regulator's requirements will initially largely look to invest in technology, rather than people.

"In the immediate aftermath of these cases, banks will have to employ investigative teams to analyse what went wrong, as well as technical expertise to examine where the systems are failing," says Selwyn Blair-Ford, head of regulatory policy at risk and regulatory reporting provider, FRSGlobal .

More pressing, he suggests, is the wave of regulation facing financial services firms, including Basel III, capital stress testing requirements, a new liquidity regime and the Capital Requirements Directive (CRD) 4. This will all have significant implications for recruitment in the coming months.

"This is a huge amount of work that has been sucked in, and firms haven't applied joined up thinking to these problems yet," he says. "Banks will need people who can understand data from a trading and risk point of view, and can present it in a well-analysed format for senior managers and board members who can then appease regulatory requirements. These people will come at a premium."

Essentially, firms will be looking for teams of regulatory accountants, compliance professionals and risk managers, but preferably people with an understanding of all of these issues, says Blair-Ford.

PJ Di Giammarino, CEO of financial services regulatory think-tank JWG, adds: "You're talking about huge amounts of siloed data in a wide variety of businesses that needs to satisfy very specific regulatory requirements. People with hybrid business and technology skills that have an understanding of how to pull the right data together in the right way will be very much in demand."