Sibos 2014: Four Ways Treasurers Can Influence Regulators

Organise and lead:

Michael R. King, assistant professor of finance and Bank of Montreal faculty fellow, Ivey Business School, Western University, advocates putting together a team consisting of a senior manager and frontline staff, and meeting with other like-minded organisations, with the goal of getting in front of regulators. “You then have to provide input during different phases,” he said. “You have to have a senior person who is responsible for managing regulation, who is able to follow the agenda, and manage the team across organisations.”

Right now, it’s primarily been the banks that have been doing this, but King sees an opportunity for treasurers to do the same. “Treasurers are perhaps the most influential bodies in terms of what central banks are worried about. Treasurers make decisions on investment, jobs and ultimately economic growth,” he said. “But they don’t necessarily have a voice in these discussions. It tends to be directly between the regulators and the regulated, which are the banks. So corporate treasurers have to work together to communicate their point of view and identify issues that make their business more difficult and more expensive.”

Educate the regulator

There are inevitably points in the rule-making process where regulations are proposed; seize this comment period as a time to educate regulators. “There will be proposals that come out that are open for consultation, and at that point, they’ll want to speak to industry experts like yourself,” King said. “As you see in the case of the liquidity coverage ratio, the rules actually did not get implemented until 2013. And in response to input from the industry, they were revised.”

Make your thoughts public:

Andrei Kirilenko, professor of the practice of finance, MIT Sloan School of Management, cautioned against holding private meetings. “Regulators have to react to information that is on the public record,” he said. “It gets on the public record in a very precise way. Your private meeting with the chairman of a regulatory agency is not on public record; it’s just a private meeting. It has to be done in a context of roundtables, conferences—something that gets it in the public record. Once it’s in the public record, the regulator will consider it.”

Don’t just write a letter

Letters are an easy way to voice your concerns, but they’re also easy to dismiss and forget. “Letters are a useful starting point; they put it on the record,” King said. “But the better answer is forming forums between corporate treasurers and some regulatory agencies—having workshops with the rule makers to explain what is going on and educate them in the same way that other parties are doing.”


Related reading