Keeping Up with Compliance

Earlier today, I spoke to several people from NICE Systems, who took me through their latest developments. One of the topics discussed was “proactive compliance,” the idea that monitoring capabilities should be advanced enough to allow compliance officers to intervene before a regulatory event.
This highlights the way in which traditional roles within a firm—those of the front, middle, and back offices are slowly intertwining and breaking down barriers in ways that weren't possible, or necessary, before. An aspect of NICE's monitoring system is designed specifically with this in mind through its use of intelligent voice record searching. For instance, a compliance officer can set parameters in the search that will look for preponderance of phrases on mergers and acquisitions (M&A) desks. If one desk is working on a deal between two companies, and another desk begins talking about those companies with frequency and in certain ways, the conversation will be flagged as a possible insider trading risk, allowing early intervention if necessary.
Woods and Trees
This kind of technological innovation is changing the way the capital markets work. Often, attention is focused on lightning-fast trading, or cross-asset platforms, or variable risk moderators bolted on to a backbone, but it's easy to forget that there's a lot of advanced work going on around the edges. It's certainly not something that the regulators have missed—the latest iteration of the Markets in Financial Instruments Directive (Mifid) has ramped up mandates for communications monitoring in a big way, and begins to touch on extraneous areas that filter down to the locations of offices. Similar efforts are under way in the US, with the Dodd–Frank Act.
Regulation and mandated monitoring are seen as a burden, but there has been an interesting turn over the last few months where vendors, in particular, outside of the spin associated with new launches, are looking at ways in which reform can be turned into opportunity. Best execution, as an example, need not be onerous but a way to distinguish the performance of a broker in a competitive way, turning reporting into free marketing. NICE's software, as well, allows compliance to work more organically in a business rather than being a foreboding road block that people try to skirt around or avoid.
As always, it comes down to efficiency in managing risk. You can't put up a tent if four people doing it are each working to their own blueprint. You can do it if that blueprint is a component of a larger floor plan, and each part is working in sync.
I'd like to talk to people who work in compliance particularly, about the ways in which technology is changing their job roles within their firms. Please feel free to call me on +44207 316 9811 or e-mail james.rundle@incisivemedia.com.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: https://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Trading Tech
Stakes raised for UK bond, EU derivatives tapes after Ediphy clinches win
The pressure is on for TransFICC, Etrading, Finbourne, and Propellant Digital, who are still vying to provide the UK’s fixed income consolidated tape after Esma awarded the EU’s tape to Ediphy and its partners.
Exchange M&A, US moratorium on AI regs dashed, Citi’s “fat-finger”-killer, and more
The Waters Cooler: Euronext-Athex, SIX-Aquis, Blue Ocean-Eventus, EDM Association, and more in this week’s news roundup.
LSEG officially sunsets Eikon
The exchange operator withdrew the platform from its product lineup this week.
Cloud Wars: Are EU and APAC firms really pining for homegrown options?
Waters Wrap: In the wake of tariffs and regional instability, there’s chatter about non-US firms lessening their dependency on the major hyperscalers. Anthony is not buying it.
Bloomberg, MTS expand portfolio trading to EGBs
The platform providers will follow Tradeweb with the extension of the popular credit protocol.
Doing a deal? Prioritize info security early
Engaging information security teams early in licensing deals can deliver better results and catch potential issues. Neglecting them can cause delays and disruption, writes Devexperts’ Heetesh Rawal in this op-ed.
Google gifts Linux, capital raised for Canton, one less CTP bid, and more
The Waters Cooler: Banks team up for open-source AI controls, S&P injects GenAI into Capital IQ, and Goldman Sachs employees get their own AI assistant in this week’s news roundup.
Waters Wavelength Ep. 323: MarketAxess’s Chowdhury and Burke (plus some Cusip updates)
This week, Riad Chowdhury, head of Asia-Pacific, and Dan Burke, global head of emerging markets at MarketAxess, join to discuss block trading in fixed income. Plus Reb discusses her recent article about Cusip and updates on the class action lawsuit moving through the courts.