The Dodd-Frank Wall Street Reform and Consumer Protection Act mandates -- among other things -- central clearing and exchange trading for standard OTC products. Exchanges, clearing houses, swaps dealers, hedge funds, banks and investors are now focused on determining how these products will be created, traded, cleared, and risk managed -- ultimately changing the trading landscape as well as who profits from it.

Sweeping changes within the Act will have major impact on the financial services sector. The Lincoln Amendment of Dodd-Frank will force banks to push out their extremely profitable swaps divisions into separate subsidiaries, while the Volcker Rule will require banks to eliminate or spin off their proprietary trading desks. Lastly, the Office of Financial Research will require greater transparency of financial products, and Systemic Risk Regulation will give the US Treasury the ability to tackle problem banks.

Regulations, whether we agree with them or not, are established in order to mitigate risk and protect investors. In the case of Dodd-Frank, the purpose is to propose systemic risk measures inherent in the trading of OTC derivatives and onto the failure of large financial services organizations, as we had seen with the collapse of Lehman Brothers -- two factors that nearly toppled our financial system.

As a result of these new pressures facing financial services firms, IT departments will have to re-order their priorities. Even as budgets are slashed, spending on new technology will be still be required in the areas of risk management, regulation, compliance, data management, reporting and analytics. There are a multitude of providers ready, willing and able to provide solutions to meet these new demands. The most efficient and cost effective way to take on the unprecedented requirements of Dodd-Frank is to take advantage of cloud-like services within a shared infrastructure. Firms can access a host of solutions once only available piece by piece, or, as a suite of products for purchase.

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