During 2012, STRATE Supervision (the independent operational unit that supervises Strate’s CSD Participants) hosted its second supervision and compliance conference. The aim of the conference was to educate and highlight the various compliance developments and current issues within the securities industry. The key theme of the conference held during 2012 focused on the impact of the 2008 financial crisis and how functions such as risk management are essential in detecting, managing, and in some instances, preventing the financial collapse of entities and/or financial markets.
In light of the success of the 2012 conference, STRATE Supervision will be hosting its third conference on 12 November 2014 at the Wanderers Club. In keeping with the risk management theme, and specifically the need to develop mechanisms for greater levels of transparency, the 2014 conference will focus on the topics of Client Due Diligence and Know Your Client. In the Securities industry, the CPSS-IOSCO Principle 19 has drawn attention to these concepts in a much wider realm than simply banking and cash processing. Principle 19 states that, “An FMI should, to the extent practicably, understand, and manage the risk to it arising from tiered participation arrangements.”
The issue of transparency is not a novel concept when it comes to Securities transactions and custodial functions. More importantly, the call for higher levels of transparency is often hindered by the use of the omnibus account structures. Whilst more and more regulators globally are paying special attention to, for example Principle 19, the Wolfsberg principles, FINCEN under the US Treasury and many other guidelines, often regulated entities do not fully understand the impact of the risks an entity can be exposed to by not just its direct Clients but by the Clients of those Clients. As such, the crucial question being asked now is “Do you know who your Clients’ Clients are?”
For more information about the 2014 conference please contact Natalie Modley at nataliem@strate.co.za or +2711 759-5392.
