BBH’s regulatory expert talks buy-side challenges

Head of regulatory intelligence at Brown Brothers Harriman Sean Tuffy, discusses regulation and the issues facing the buy-side.

Sean Tuffy is head of regulatory intelligence at Brown Brothers Harriman, and is also known throughout the industry as a leading market commentator and a social media extraordinaire. We caught up with Tuffy at Sibos to discuss buy-side regulations and challenges facing the industry.

Paul Walsh – What is the biggest regulatory challenge that you are seeing within the industry at the moment?

Sean Tuffy- Our business is primarily asset servicing so from our asset manger clients, MiFID II is the biggest event that is happening. 

Then on a global basis, the SEC (Securities Exchange Commission) is taking steps to modernise the regulatory framework for asset managers.

These are indirect issues because most of the regulations are more buy-side focused because if you look at the pattern post-crisis, the initial regulation e.g. Basel, Dodd-Frank were all sell-side focused so the next wave is aimed at buy-side and asset managers. 

For asset managers, once we are at the other side of MiFID it should be slowing down in terms of regulatory environment. 

PW – What is the key focus point for our industry at the moment?

ST – In a macro sense away from regulations, for the financial services industry in Europe, it starts and ends with Brexit.

It is a known unknown, everyone knows Brexit but nobody knows what that means in the short-medium term so this is the biggest issue for everyone in the industry, from banks to asset managers to broker dealers.

People are looking at London and are thinking about what its relationship with Europe will be like after the breakup. 

PW – Will we see volatility once Brexit takes shape? 

ST – Where things get choppy is when it comes to inflection points, so article 50 is the next inflection point when we see markets react and then they will calm back down again.

It wouldn’t surprise me if we would see increased volatility once article 50 is triggered because the clock will have started but no-one will know when it’s going to end. 

I think there will be a lot of speculation about how transparent the negotiations are, so what I think the market would like to see is the government outlining a Brexit manifesto showing goals which would give a slight amount of certainty.