"Cut-and-Paste in Many Different Jurisdictions": Challenges in Retail Trading Regulation

<p>During the Finance Magnates London Summit 2023, a panel
discussion entitled: "Tightening Grip? Retail Trading Regulation in
2024" was conducted, moderated by Remonda Kirketerp-Møller, the Founder
&amp; CEO at Muinmos with key participants including Matt Smith, the CEO at SteelEye, Alexander Culley, the CEO at C&amp;G Regulatory Solutions, and Matthew Smith, the Group CEO at Ec Markets. The dialogue covered diverse aspects of
retail trading regulations, focusing on the UK, offshore jurisdictions, and
global perspectives.</p><p>Market
Integrity and Financial Crime Prevention</p><p>Smith
of SteelEye emphasized the significance of preventing market manipulation and
financial crime. Culley discussed his consultancy's role in aiding financial
firms with compliance, while Smith from Ec Markets expressed his views on dream
regulations.</p><p>The
panel concurred on this note: "We know that trade is global, but
regulation is local. One-way regulators try to deal with this is by cooperating,
and unfortunately, we're also seeing cut and paste in many different
jurisdictions."</p><p>The
panel examined the assertiveness of the <a href="https://www.financemagnates.com/tag/the-financial-conduct-authority-fca/" target="_blank" rel="follow">Financial Conduct Authority (FCA)</a> in
the UK, addressing topics like the new consumer duty and changes post-Brexit.
The FCA's increased scrutiny and intrusive measures, including shorter notice
periods for audits, were highlighted.</p><p>Culley
remarked: "I think this whole thing about post-<a href="https://www.financemagnates.com/tag/brexit/" target="_blank" rel="follow">Brexit</a> with the UK
potentially liberalizing to try and attract business. I think actually our
experience, certainly as consultants in the last couple of years, has been
quite different. If anything, the FCA has been more assertive, more intrusive
than it's ever been. You know, since I've actually been working compliance, I
think back sort of 10 years ago, you would get maybe a month's notice before
a visit. Now, some of our clients, they're getting 24 hours’ notice before a
call."</p><p>Relocation
to Offshore Jurisdictions: Branding, Regulatory Credibility, and Challenges</p><p>The
conversation shifted to financial firms relocating to offshore jurisdictions
and the associated challenges, including brand reputation and regulatory
credibility. The emergence of Dubai as a financial hub was also discussed.</p><p>The
panel delved into the challenges posed by varying regulatory approaches in
different jurisdictions. The use of offshore locations to attract businesses,
the role of reverse solicitation, and potential shifts in regulatory attitudes
were explored.</p><p><a href="https://www.financemagnates.com/tag/dubai/">Dubai's</a> growth as a
financial hub and the associated regulatory framework were discussed, along
with challenges faced by firms operating in both the UK and Europe.</p><p>Insights
were shared on strategies adopted by financial firms to navigate regulatory
changes, emphasizing local licenses, consumer protection measures, and
compliance with evolving rules.</p><p>The
discussion concluded with reflections on the dynamic and complex nature of <a href="https://www.financemagnates.com/tag/retail-trading/">retail trading</a>
regulations, highlighting challenges and strategic considerations for firms
operating in various jurisdictions.</p><p>Later
in the conversation, concerns were raised about offshore jurisdictions, with a
focus on the regulatory environment in places like St. Vincent, Mauritius, and
Seychelles. Questions were posed about the legitimacy of operating from such
jurisdictions and the potential for regulatory changes.</p><p>Smith
of Ec Markets said: "I'm not saying you're making one that offshore brokers are more susceptible to bankruptcy than onshore <a href="https://www.financemagnates.com/tag/brokers/">brokers</a>. [I'm just wondering] and obviously, a smaller broker is going to have a struggle to build
up a sufficient pot of money to be able to pay people out in compensation."</p><p>Smith
of Ec Markets expressed concerns about the regulatory approach of some offshore
locations, emphasizing the need for businesses to have a genuine presence in
the jurisdictions where they operate. The discussion hinted at a potential
shift in regulators' attitudes, with an increased focus on businesses proving
the legitimacy of their operations.</p><p>He added: “In 2010, the [FSA] Seychelles had
2 Securities dealers, in 2016 it had 13 and in 2022 it had 130, and I think in 2023 we're up to 160.”</p><p>In
response to the concerns about the offshore setup, Smith of Ec Markets,
suggested that regulators are questioning the legitimacy of businesses
operating from certain jurisdictions. He mentioned discussions with the FCA on
this issue, pointing out that regulators are increasingly interested in where
and how institutions are operating. </p><p>The
conversation also touched on the regulatory challenges faced by businesses in
offshore jurisdictions, drawing parallels with past issues in locations like
Cyprus. The fear was expressed that <a href="https://www.financemagnates.com/tag/regulators/">regulators</a> might
demand businesses to demonstrate a genuine license or permission from the
jurisdiction where they operate, indicating a potential tightening of
regulations.</p><p>Evolution
of AI: Applications and Challenges in Finance</p><p>In
the latter part of the discussion, there was a transition to the topic of <a href="https://www.financemagnates.com/tag/ai/">artificial intelligence (AI)</a>
and automation in the financial industry. Smith of <a href="https://www.financemagnates.com/tag/steeleye/">SteelEye</a>, expressed
his fascination with the subject and discussed the role of generative AI in
regulatory compliance. He shared anecdotes about the use of AI, emphasizing the
importance of intelligent and meaningful deployment.</p><p>Smith
of SteelEye briefly touched on the evolving nature of AI and its applications,
encouraging the audience to embrace it while using it intelligently. He
discussed the use of generative language models and the challenges of prompt
engineering to get the desired answers. </p><p>He said: “I remember when I was
young, using a calculator in an exam was taboo; you could not do it. Well,
actually, why would you remove that tool from the human to get the answer as
fast as possible? If I find out you used <a href="https://www.financemagnates.com/tag/chatgpt/">ChatGPT</a>, okay. If
you gave me a [wrong] answer because you've asked the wrong question in the wrong
way, then I'm going to give you a zero."</p><p>The conversation on AI
concluded with Smith's (SteelEye) advice for the audience to educate
themselves, learn how to use AI intelligently, and embrace it as a tool for
positive change. He highlighted the role of AI in regulating markets and
encouraged responsible use. </p><p>The
panelists also addressed questions about AI going wrong, with Smith of SteelEye
sharing humorous examples. The discussion concluded with insights into the
regulatory focus on AI, with Culley mentioning a recent discussion paper by the
FCA and Bank of England. The potential framework of accountability principles
and concerns about financial crime and biases in AI were highlighted.</p><p>In
summary, the <a href="https://www.financemagnates.com/tag/finance-magnates-london-summit/">Finance
Magnates London Summit</a> 2023 panel discussion covered a wide range of
topics, from retail trading regulations and challenges in offshore
jurisdictions to the evolving landscape of AI in the financial industry. The
insights provided by the panelists shed light on the complexities and
opportunities within the financial regulatory space.</p>

This article was written by Tareq Sikder at www.financemagnates.com.