Dodd Frank Implementation & Compliance

In the year 2010, the senators Chris Dodd and Barney Frank presented a bill and it was finally signed by the United States President Barack Obama. Known as the Dodd Frank Wall Street Reform and Consumer Protection Act, it came into force as a law after the president signed it. The law was particularly designed with recent financial tragedies in mind. Memories of the financial market chaos from 2008 are still fresh in the minds of investors and consumers in the United States and several other countries in the world.

The 'Dodd Frank Wall Street Reform and Consumer Protection Act' deals with a large number of issues that surfaced during 2008. The law has been designed to increase the level and intensity of regulation on a large number of federal financial regulatory agencies, commercial entities such as public companies and even financial firms and companies.

Not many people are aware of the fact that the Dodd Frank Wall Street Reform and Consumer Protection Act cannot be implemented in a well-defined manner. Like any other act, it has a series of rules but their implementation is not so easy. Putting various rules of the act into place can be a challenging task. Various stakeholders affected by the new legislation are trying their best to find a way to start with Dodd Frank implementation. Once the implementation of the legislation is done, these parties implement Dodd Frank compliance as well.

According to financial market experts, Dodd Frank implementation will not be easy for all organizations. In fact, the process can be quite challenging and expensive for a number of organizations. Financial experts have warned that hedge funds will have a tough with Dodd Frank implementation. That's mostly because hedge funds will need to file additional reporting documents as well as audits now. The total compliance cost for hedge funds will be higher compared to other organizations.

Only some small size hedge funds and family offices may have exceptions in this case. There are not many exceptions though. Some organizations will also have additional compliance costs in order to implement the Dodd Frank bill.

Most of the additional expenses incurred by organizations are many-sided. They may also include various disclosures. Sometimes organizations use derivatives in order to hedge specific balances and they will need to include disclosures during Dodd Frank compliance. At the same time, organizations will be providing additional disclosures concerning the salary of employees and executives. Also, several consumer protection reforms have already been implemented in the United States. This includes the development a completely new consumer protection agency. In other words, organizations will now have to bear extra expenses to have Dodd-Frank compliance as far as the new consumer protection reforms are concerned.

The 'Dodd Frank Wall Street Reform and Consumer Protection Act' has some rules that are going to limit some specific Wall Street commercial entities from proprietary trading. These limitations will also escalate compliance costs of organizations. At the moment, some of the rules concerning proprietary trading have not been defined completely. These rules will come into play in the near future as pointed out by subsequent versions of bill.

In order to ensure smooth Dodd Frank implementation, several agencies have been instructed to provide assistance in the crucial process of formulating rules. For a large number of aspects in the bill, complete compliance cannot be expected anytime soon. It is not possible to estimate the complete impact various regulations will have on the financial markets at this stage. Final outcomes will be clear only when regulations produce an effect. However, it is certain that all parties will have to bear extra compliance and reporting expenses along with an increased financial regulation.