Barclays Capital has invested in new software to help it
comply with industry regulations, including the US Sarbanes-Oxley
Act and the Basel 2 Accord.
The investment banking division of Barclays Bank will use four
software modules from UK-based Raft International to help it
identify and manage the risks facing its business and introduce the
necessary controls to meet international market regulations.
One of the modules will allow Barclays to analyse information
stored on a central database for exceptional items, such as
incorrect deals and regulatory fines. Another module will give the
company an overview of the different risks faced by its business
and grade their importance.
Philip Scott, director of operational risk at Barclays Capital,
said the company wanted a best-practice product "that could take us
beyond regulatory compliance", and added, "The Raft Radar provides
us with an integrated product that can be deployed globally."
The deal has been driven by the need to comply with new industry
regulations, which will require a significant investment in IT
systems by firms.
Georgina O’Toole, an analyst at Ovum Holway, said IT investment
by financial firms to comply with regulations would bring wider
benefits.
"Regulation projects such as Sarbanes-Oxley and Basel 2 have a
dual effect. [In addition to helping firms comply with tighter
regulations] they help to better integrate IT systems and enhance
datacentres," O’Toole said.
Forthcoming financial regulations:
New Basel Capital Accord
Commonly known as Basel 2, the accord is due to be implemented
by banks by the end of 2006.
It updates the 1988 accord and aims to improve the stability of
the world’s financial systems by making banks’ assessment of their
own investments and loans more sensitive to credit- and
market-related risks.
It has been billed as the biggest IT challenge for the banking
industry since Y2K. Analyst firm Datamonitor predicts that IT
spending on Basel 2 by European banks will peak at about £700m in
2005.
Banks will have to ensure financial data is timely and accurate
and that it reflects the risks outlined under the accord.
Sarbanes-Oxley
This legislation affects companies listed in the US and their
subsidiaries worldwide. The legislation is due to come into force
in June under a phased implementation. It aims to create greater
financial transparency in the wake of corporate scandals such as
Enron and WorldCom.
The act will have implications for the management, maintenance
and storage of data. Chief executives and chief financial officers
will be required to show proof that that their data and business
processes conform to clearly defined rules.