Learning & Development in Brokerage Industry - Regulatory Compliance Training

-

 Learning & Development in Brokerage Industry

Learning and development should be designed to make employees competent & confident in their job roles. When it comes to the brokerage industry, it is important to improve the skill set of several integrated professionals such as stock dealers, financial analysts, compliance officers, platform engineers & developers, investment advisors, Derivative specialists, Marketers, HR specialists, etc. 

 

 Regulatory Compliance training 

Regardless of the profession, the very first scope that needs to be developed and continuously improved in the brokerage industry is regulatory compliance. Learning and development on regulatory compliance is more important for the brokerage industry than any other industry due to the sensitivity of the financial system and world economy. HR should emphasize that sustainability and the goodwill of the company can be affected by failure to adhere and would result in a ripple effect on the financial system. According to Deloitte, below indicates the process that legislation becomes a regulation.

Legislation vs. regulation

The introduction of a bill marks the beginning of the legislative process which may lead to statutory changes. After a bill is signed into law, agencies decide how it will be enacted, and it becomes regulation.

(Reference: Deloitte, 27th Apr 2017)

The HR departments of brokerage companies educate employees on regulatory compliance at several stages such as induction, role compliance training, online learning modules, continuous professional development (CPD) programs, and Performance evaluations.


Regulatory and compliance training at Induction.

It is observable that brokerage companies emphasize scandals on regulatory breaches and the severe reprimands that have been caused due to compliance breaches. These scandals will help new joiners understand the importance of the regulatory framework and how to deal with professional dilemmas. Below are a few links directed to classical examples that brokerage & finance industry HR take to educate new joiners.

  •  Rajaratnam’s insider dealing scandal. 

(Reference, YouTube, 09th Feb 2015) 

 ·       Video explanation of how employees opened millions of fake accounts to reach targets.


(Reference, YouTube, 2016) 

 ·       Manipulation of the London Interbank Offered Rate (Libor)


(Reference: YouTube, 10th July 2012) 


In addition to emphasizing the scandals of breaching regulatory compliances, some broker companies include regulatory requirements as a part of their HR code of conduct. Through studying the industry market leaders like Robinhood Finance have set their code of conduct which helps their employees to have confidence in the regulatory framework and have an understanding of the “Dos and Don’ts”. Below are several extracts from Robinhood's code of conduct which emphasized their code of conduct and regulatory relationship.

Violating laws, our Code, or our policies, or encouraging others to do so, would.
expose Robinhood to liability and put our corporate standing at risk. If an ethics,
compliance, or regulatory concern arises, it’s essential –and expected – that you
report it so it can be addressed. Violations of laws or regulations may result in legal.
proceedings and penalties including, in some circumstances, criminal prosecution.

(Reference: q4cdn, N/A)
 

·        We uphold market integrity and never tolerate fraudulent behavior.

·        We select reputable business partners.

·        We keep accurate records.

·        We seek quality execution on every order.

·        We combat money laundering.

·        We promote fair competition and trade.

·        We take action against bribery and corruption.

·        We abide by economic and trade sanctions.

·        We abide by tax obligations.

(Reference: q4cdn, N/A)



Another hot topic that most brokerage and finance companies take into consideration from the moment of employment begins is “Speak up culture”. HR department assures that employees are aware of the escalation points and channels to escalate. A Giant in the finance industry HSBC uses the “HSBC confidential” portal as an escalation channel.

If our people feel unable to use any of these speak-up routes, they can use our global whistleblowing channel, HSBC Confidential. This channel enables employees past and present to raise concerns about actions and behaviors that go against our values, break the law, or breach regulations or policies.
(Reference: HSBC, 23rd June 2023)


Role-specific compliance training.

Brokerage companies conduct on-the-job regulatory training using checklists, Statements of procedures (SOP), and Job Aid Matrix (JAM). All these documents are comprehensively made to avoid regulatory breaches and to identify gray areas. 

Brokers/Dealers have been educated to protect their dealing licenses. Furthermore, they have been educated on the exchange regulations. Regulators vary from the Exchange Domicile country. Therefore employees are educated based on the jurisdiction that which they operate.  

  • United States (USA): U.S. Securities and Exchange Commission (SEC)
  • United Kingdom (UK): Financial Conduct Authority (FCA)
  • Dubai (United Arab Emirates): Dubai Financial Services Authority (DFSA)
  • Singapore: Monetary Authority of Singapore (MAS)
  • South Africa: Financial Sector Conduct Authority (FSCA)
  • Hong Kong: Securities and Futures Commission (SFC)

Anti Money Laundering training. (AML)

In most instances, the compliance department and HR department collaboratively put efforts into educating employees on AML requirements. According to SEC USA ongoing AML employee training should happen to adhere to SRO rule requirements. Furthermore, customer due diligence should be in place. (Reference: sec, 12th May 2017). Therefore to fulfill rule requirements HR compliance departments need to work collaboratively for the annual review. 

Furthermore, the HR department & compliance should regularly update employees on the US sanction countries in order to identify the source of finance under customer due diligence and KYC. 


What do you think? Do you believe that educating about regulatory & compliance requirements is essential to building trust in the brokerage industry? Widely in finance institutions? Feel free to add your thoughts in the comment section.


References

(No date) Code of conduct - s28.q4cdn.com. Available at: https://s28.q4cdn.com/948876185/files/doc_downloads/governance/RH_-_Code_of_Conduct_05_06_2021_V3.pdf (Accessed: 18 November 2023).

Dannemiller, D., DeWitt, J.L. and Gajjaria, A. (2017) Building regulatory-ready organizations, Deloitte Insights. Available at: https://www2.deloitte.com/us/en/insights/industry/financial-services/regulatory-and-compliance-risk-investment-management-firms.html (Accessed: 16 November 2023).

Other (2017) SEC Emblem. Available at: https://www.sec.gov/about/offices/ocie/amlsourcetool (Accessed: 19 November 2023).

Raj Rajaratnam | american greed (2015) YouTube. Available at: https://www.youtube.com/watch?v=i1C1FLlICXs (Accessed: 19 November 2023).

Speaking up: HSBC Holdings plc (2023) HSBC. Available at: https://www.hsbc.com/who-we-are/our-people-and-communities/inclusion/speaking-up (Accessed: 19 November 2023).

The libor scandal: Three things to know (2012) YouTube. Available at: https://www.youtube.com/watch?v=BYoejdKkKpM (Accessed: 18 November 2023).

Wells Fargo Scandal explained (2016) YouTube. Available at: https://www.youtube.com/watch?v=6d9SIYntIlE (Accessed: 18 November 2023). 







 


Comments

  1. Madusha Dilrukshi HettiarachchiNovember 19, 2023 at 10:57 PM

    In case lack of senior stakeholders' support L&D fails to achieve the strategic goal of the organization. Communication between line managers and learners themselves is crucial. Of course, an L&D strategy that is in line with the organizational and corporate objectives should be considered below.
    Responsibility for leaners
    Individuals are the only ones who can acquire new information and decide how to use it in their work. However, the organization must define the goal (or purpose) of education. To facilitate learning, it must make time and resource investments.
    Role of line managers
    Since line managers act as the guardians for each person's learning and development, they must receive support for their personal growth to better develop others. The development of people is a crucial part of any manager's job. CIPD (2023)

    ReplyDelete
    Replies
    1. Hashanka Gunasekara - HR360November 20, 2023 at 11:53 AM

      Thanks for the comment! Agreed on the emphasized fact. Without senior's support and guidance, it would be difficult to survive in fast pacing industry like brokerage industry. Seniors should not hesitate to share the experience on adhering to regulatory framework. Supportive culture should be in placed in brokerage firms to learn about ethics and regulatory framework. Line managers should be approachable, and employees should feel free to report any unusual behavior proactively.

      Delete
  2. Chanika Janani FernandoNovember 20, 2023 at 8:15 PM

    Good explanation provided, In my opinion employees must receive sufficient knowledge from AML training to be able to spot red flags and suspicious activity. Workers need to understand that it is legally required of them to identify and report suspicious activity.

    ReplyDelete
    Replies
    1. Hashanka Gunasekara - HR360December 20, 2023 at 3:56 AM

      thank you, Chanika, for your input! Correct since the brokerage and finance companies dealing with others` assets (Investors Cash and assets) they have obligation to safeguard the investors` assets and act upon best interest of the investors. Therefore, raise their concern on malpractices, AML and ransomware is a must.

      Delete
  3. DILRANKASUNNovember 24, 2023 at 9:26 PM

    Fantastic read, Hashanka! Your insights on regulatory compliance are spot on. I'm curious, have you considered delving deeper into case studies or practical scenarios to illustrate the impact of compliance breaches? It could add an extra layer of depth to your already excellent content. Keep up the great work!

    ReplyDelete
    Replies
    1. Hashanka Gunasekara - HR360December 20, 2023 at 3:58 AM

      Thank you Supun! Agreed, therefore I have included few scandals on regulatory compliance breaches. Hope you find it interesting.

      Delete
  4. P S Jeramy Hashan - E196542November 30, 2023 at 6:26 AM

    Grate research on this hashanka you went very depth on this subject its really useful information to us education wise and professional wise as well keep it up

    ReplyDelete
    Replies
    1. Hashanka Gunasekara - HR360December 20, 2023 at 4:00 AM

      Thanks for the compliment, Jeramy! Hope you had insightful article.

      Delete
  5. ShankaviDecember 13, 2023 at 12:14 AM

    I wanted to thank you Hashanka for writing such an insightful blog post on learning and development in the brokerage industry, with a particular focus on regulatory compliance training. I recently finished reading it.
    I like how your post explores the difficulties that professionals in the brokerage business encounter, particularly when attempting to navigate the intricate regulatory environment. The recommendation to use technology such as SOP and JAM for more interactive and effective training aligns with the demands of adaptive learning approaches in the contemporary digital world.

    ReplyDelete
    Replies
    1. Hashanka Gunasekara - HR360December 20, 2023 at 4:03 AM

      Thanks for your thoughts! I have tried to share my experience gathered while working in the industry via this article. Happy to see it useful for others.

      Delete
  6. Lojanbabu NiroshanaDecember 19, 2023 at 7:22 AM

    Your comprehensive exploration underscores the critical importance of regulatory and compliance education in the brokerage industry, where the financial stability of the system is at stake. The incorporation of real-world examples, codes of conduct, and a "Speak Up" culture adds practicality to the approach. Indeed, educating about regulatory and compliance requirements is vital for building trust, not only in the brokerage industry but across the broader financial institutions. It establishes a foundation of integrity and responsible conduct. Well-articulated and insightful analysis!

    ReplyDelete
    Replies
    1. Hashanka Gunasekara - HR360December 20, 2023 at 4:06 AM

      Thanks, Niroshana! Appreciate your input on other industries as well. Agreed on the fact that the integrity and code of conduct plays a key role in other industries as well.

      Delete

Post a Comment

Popular posts from this blog

HR Contribution to Education on sustainability in Finance & Brokerage industry

-
Image
H uman Resources department holds a vital role in building employee awareness on E nvironmental, S ocial & G overnance framework. The ESG framework help organizations to be sustainable. especially it assists to thrive dynamic industries such as brokerage & finance.  Investing in environmentally friendly products is a trend that can be observed throughout the brokerage industry.  HR need to collaborate with various departments and educate employees on the Zero Carbon stocks in order to employees become competence on new trends in order to facilitate customer requirements. In addition to that HR need to emphasize how the brokerage firm drive towards zero Carbon emission category by enhancing the values. Refer below video from HSBC on how they have taken ESG factors to their money market products.  Refer below points from CIPD on sustainable HR practices. Long-term orientation: Workforce planning; assessing needs of future employees. Care of employees: Health, s...
Read more

L&D - Product and Market Training in The Brokerage Industry.

-
Image
Product and market training is a vital aspect of the brokerage industry since employees need to have a good understanding of complex financial products and markets to perform business-as-usual (BAU) activities. Therefore, most brokerage companies regularly arrange product and market training for their employees to give an understanding of the complex finance instruments and the product portfolio. The human resources department needs to synergize with other departments and needs to identify special training needs in other departments. Based on the training needs identified the HR department needs to construct a tailored training plan. Subject Matter Experts play a vital role by giving their input towards training requirements.  Some Brokerage companies maintain their own university to keep employees up to date on the financial industry.  A university that maintains in company`s intranet gives easy access for employees to learn more about organization and industry trends. Refer ...
Read more

L&D - Importance of Cyber Security Training.

-
Image
As technology continuously advances, the requirement to safeguard from cyber threats also increases rapidly. An analysis from CIPD emphasizes the importance of cyber security. Refer to facts and figures from the analysis below.  A KPMG study showed that a third of all UAE organizations suffered cyber security breaches in 2015 and Oxford Economics reported that the average large business loses £120m (US$156m) when it is hit by a hacking attack. (Reference: CIPD, 19 th Jul 2017) Another important aspect is training employees who do not come from an IT background. Regardless of the employees’ IT knowledge, every employee in the brokerage firm is exposed to cyber security threats. Therefore, HR has a duty to protect employees without IT knowledge by educating them on cyber security protocols. In addition to above mentioned duty, HR needs to ensure brokerage companies employ the right candidate to mitigate cyber security risks. (Reference: CIPD, 19 th Jul 2017) Refer below v...
Read more