London, 24 April 2020
Author: Wim Nelen
I was on a call last week with a senior compliance officer. She related a story about how she was using regulation. Until a few weeks ago she had a big stack of printouts on her desk, filled with notes and annotations.
We moved onto discussing the new IFR regulation and the problem of definitions. Article 4(10) of IFR says that derivatives means derivatives as defined in point (29) of Article 2(1) of MiFIR. Article 2(1)(29) of MiFIR states that a derivative is a financial instrument defined in point (44)(c) of Article 4(1) of MiFID II and referred to in Annex I, Section C (4) to (10) thereto. It takes a couple of minutes to get to Article 4 of MiFID II within a pile of printouts. Then you need to find the Annex and start looking at Sections C (4) to (10). They refer to options and a number of other types of derivatives. Are they defined terms as well? Flip back to Article 4(1) of MiFID II and Article 2(1) of MiFIR...
This swirl of regulatory definitions is all too recognisable for anyone who's ever had the joy of reading EU regulatory texts. A day in the life of a regulatory advisor. Some secretly enjoy it but many are openly dissatisfied with this way of working.
We've applied our technology-minds to these regulatory swirls over the last few weeks. As ever, we asked ourselves if we can make it more enjoyable and efficient for people to work with regulation? We came up with a simple solution: show all definitions and rule references as links.
Using regulation is suddenly more like using Wikipedia than Encyclopedia Britannica. You are able to consistently and quickly reach defined terms and move between relevant sections of each document. You are now freed-up to begin the real work of an advisor, untangling the complex implications of a particular question or topic.
But not all terms are defined and not all definitions are universal? We can help with these too...