Bond dealers RegTech spending tops $20 billion

New report finds RegTech spend will bring about compliance checks and improve tools for sales traders.

Fixed income dealers are now spending up to $20 billion on regulatory technology (RegTech) a year, according to research.

Greenwich Associates’ latest report reflected how banks in the US and Europe are using technology to comply with impending regulations like MiFID II, which is forcing dealers to upgrade legacy systems.

Kevin McPartland, head of Greenwich Associates market structure and technology research, explained the technology should not only bring about new compliance checks, but also improve sales-trader tools.

“A tight coupling of the two is the most efficient path forward and MiFID II, with all of the headaches, is presenting an opportunity to move in a better direction technologically,” he said.

Furthermore, the report found that regarding the adoption of the tools and technology, older sales traders are in fact getting more value than their younger peers.

“We expected that traders on the desk with less experience – the millennial generation – would be the most frequent users of the technology,” McPartland added. “We were surprised to learn that the opposite was true; those gaining the most value from sales trading tools are the most senior traders.”

The report – which polled 46 sell-side fixed income traders – also found 94% said they are now spending more time speaking with compliance, with heads of desks also being kept from clients.  

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