Many years ago, during the mid-2000s, I took a rattletrap bus with holes in the floor to see a glacier perched high on the Sichuan-Tibet border. It covered an entire valley and extended for miles into the hills.
Last week I saw a photo of the same glacier, which was much less impressive. Now it’s just a few hundred meters across and shrinking rapidly.
I think of regulation as glaciers – and regulatory change as a glacial movement.
It is a process that is undeniably powerful yet hard to observe in real-time.
And this makes it a unique communication challenge, one that we frequently need to address in financial communications.
The latest example is T+1 arriving in America. Compared to the current cycle, trades must be settled in one business day in America from today.
Getting here has taken several years. Discussions date back at least as far as the arrival of T+2 in 2017. There’s been a standard process of consultation, draft legislation, more consultation and then the final countdown to implementation.
Using T+1 as an example, here are three ways this type of news presents challenges:
Long time frame – It has taken more than half a decade to get to this point. No one particular day or week really has been ‘crunch time’ for T+1. Rather it is a slow, incremental process that has developed through consultations and government reports over a very long time frame. It’s hard to get journalists to consistently care about this, especially when a regulation remains a year or two away.
Uncertain consequences – I’m old enough to remember Y2K. On January 1, 2000, most of the world’s electronic infrastructure was going to malfunction, causing chaos and the collapse of society. Now, those are stakes. What happens if people aren’t ready for T+1 today? Turns out, not very much. We’ve heard more and more reports that there will be some ‘flexibility’ for firms that aren’t able to meet the requirement on the opening day.
Jargon – The dense text, frequent involvement of attorneys and general prose means that regulations can be difficult to parse to a lay reader. Someone may encourage actually going and reading the regulation, but in reality, this is by the very few. Without a proper ‘translator,’ everything actually involved can seem like minutiae.
But despite these blockers, not writing about regulation isn’t an option for many firms. First of all, they are an unquestioned driver of new business. New technologies and systems must be implemented, and corporations will spend thousands or millions of dollars to get into compliance.
Also points of genuine debate will open up as part of the process – binary decisions that will cause profound impact on entire industries. The move to ban soft dollar sell-side research lead to a reorganization of a whole sector, costing many jobs.
So we have to do something, but the right approach is needed. Regulatory changes are a unique challenge in creating ongoing material that ultimately benefits businesses.
Don’t try to create a sense of panic when there isn’t one. It’s frequently not credible to say that you must act today if implementation is six years away (and getting into compliance will just take a few months). Instead, emphasize benefits towards immediate action for the broader business and strategic advantages. Be sure to listen to concerns raised, rather than only discussing things that are beneficial to your business or service offerings.
Eventually, most regulatory deadlines do actually pass (minus a delay or seven).
Then, regulations come into force and fade into the background. I remember working with someone in the late 2000s who frequently cited Sarbanes-Oxley in examples. Who cares? I would wonder, even though that had been the main topic of conversation following the accounting scandals just a few years before.
But that’s revisionist history from someone too young to really understand. Sarbanes-Oxley continues to have a massive impact on accounting and treasury departments and influences the practices of the world’s very largest companies. Just because things are “working” as intended doesn’t mean they weren’t impactful.
After all, glaciers leave scars on landscapes long after they are gone.
Jon Schubin is a director in London
