Redefining the Role of Compliance Officers

Within the capital markets, regulations are increasing – and so are compliance-related fines. But alongside growing industry standards, broker dealers are also facing pressure to adopt evolving technology, which can open up the door to new vulnerabilities. Between more stringent regulations and emerging technology adoption, today’s broker dealers can’t afford to shirk on compliance.

The need for top-tier compliance highlights the importance of the Chief Compliance Officer (CCO) role, and many broker dealers are prioritizing compliance hiring. This increased focus bodes well for those interested in a compliance career. But in addition to growing more central to firm operations, compliance roles are also becoming more challenging.

With the industry-wide focus on firm culture and technology adoption, today’s compliance officers must be prepared for a redefined role. While CCOs occupied a siloed role in the past, their position is now much more visible. Today’s CCOs need to serve as arbiters of a firm-wide compliance culture, ensuring compliance with FINRA cultural reviews. In addition, successful CCOs must be prepared to handle the cyber risks that emerge as a result of evolving fintech adoption. The increased expectations of CCOs mean that firms need to hold prospects to a higher standard. Here are some of the traits that today’s CCOs should have:

• Great collaboration and communication skills: Because the CCO is no longer a siloed role, firms need to select compliance leaders who are prepared to work with other facets of a firm’s leadership — such as data and innovation officers — and serve in an instructive role for the rest of the firm. That means bringing CCOs on board who are open to collaboration and capable of teaching the basics of compliance to a firm’s employees.

• An open approach to technology: For broker dealers, evolving technology adoption opens the door to new compliance vulnerabilities. But because these tech advancements are essential for broker dealers to retain the competitive edge, firms need to hire CCOs who are well-versed in compliance and surveillance technology, and therefore able to use technology to tackle the risks it poses.

Technology and heightened industry regulations are re-defining the job description of the compliance officer. Firms should keep that in mind when identifying compliance talent, selecting workers who are collaborative, communicative and tech-savvy. But the responsibility of firm leaders doesn’t stop there. Because CCOs face a formidable challenge, firm CEOs should also be prepared to throw more support behind the individuals who handle compliance.