Complexities Make Boards Worry

The emerging popularity of complex financial instruments is of major concern to financial institutions, as they'll be forced to respond to this increased demand via new products, revamped infrastructure and, perhaps most importantly, regulatory compliance, according to a new PricewaterhouseCoopers (New York) survey. Of the 300 board members responding, 97 percent agreed that the level of due diligence and understanding of sophisticated financial instruments being used in the market should be a major concern for boards.

Three-quarters of the survey participants believe that the increasing use of complex financial products such as equity and credit derivatives will be the next major focus for industry regulators and should be prioritized accordingly within financial institutions. But focusing on compliance-related issues shouldn't be much of a change for board members, as 73 percent report spending less time on strategic business issues than on regulatory matters. <<<