A financial services transfer pricing leader discusses some of the regulatory challenges that transfer pricing can trigger.

Effective practice of FSTP involves a keen appreciation of the interaction between three different sets of rules: transfer pricing rules; accounting rules and banking regulations. A financial services transfer pricing manager may be faced with the following:

(a) A transfer pricing doctrinal framework that has evolved for use in other industries;
(b) Whatever transfer pricing guidance that is available may not clearly distinguish between the services and the key product that your company is offering;
(c) A fluid business model with combinations of affiliates and FAR (functions performed, assets employed and risks assumed) varying by each product or even by each transaction;
(d) Overriding government regulation of every activity and aspect of your business; and
(e) A business that is seeking growth in the emerging non-OECD markets where the norms can be quite different from those commonly accepted in the West