A Customized Compliance Fence Is Worth the Effort and Investment

On April 7, the SEC reportedly briefed Congress on the late March meltdown of family office Archegos Capital and its ongoing ripple effect throughout global markets.

Similar to the aftermath of Long Term Capital Management’s 1998 collapse, it is clear that regulators and policymakers are already asking questions about regulatory surveillance capabilities and what went wrong around Archegos.

Risk Management and Compliance in the Spotlight

The impact of the Archegos implosion underscores the importance of registered entities’ risk management and compliance practices. In particular, firms need to understand the technology controls and monitoring tools at their disposal to identify counterparty, concentration and liquidity risk exposures that may come under scrutiny by regulators.

Regulations already exist, but are firms building out compliance programs to navigate them in a way that meets regulatory expectations while also boosting risk monitoring and the bottom-line?

Taking Strategic Approach to Compliance

As it stands, through existing regulation, firms already have blueprints for the “fences” that they must build to manage for compliance risks. Firms that are being strategic about their compliance requirements tailor their fences to identify counterparty risk, install appropriate controls, and conduct regular maintenance on those fences.

How Patomak Can Help

Patomak regularly works with clients on risk management and compliance matters, including identifying firm-wide compliance control weaknesses or gaps in specific business areas, supervisory procedures and surveillance systems.

We develop a holistic framework that gives a firm’s “fence” the strength to protect against risk and the flexibility to both allow for shifts in regulatory policies and allow the operation to continue to be successful and profitable.