These past years, more and more regulatory measures have been taken to protect customers in their daily banking and investment activities.
The result: even the smallest financial services need to comply with hundreds of new rules and regulations.
Some might say it is a necessary evil as it forces financial institutions to keep a close eye on all types of risks associated with payment and investment transactions.
Mainly because every compliance risk is a potential risk to the core business of a financial player: not only in the form of fines and litigations, but also in the form of an irreparable impact on the company's reputation.
The burden has become too much to handle for most banks, brokerages or exchanges as it is not easy to meet up to the standards of regulators.
Compliance teams need to know which rules are applicable to their business and how to interpret them. In-house IT teams are required to put measures into place to track and monitor sketchy transactions performed by customers as well as by employees. Finally, key players in the company need to allocate sufficient resources to the reporting and evaluation of the entire system so that market manipulation is managed and prevented in the future.
And that's not all, as the world of compliance keeps evolving. Well-established regulations get updated and expanded, new directives are created and existing legal requirements fade out.
Furthermore, the increasing speed of trading can hide market abuse. Automated trading keeps innovating in such a pace that computer algorithms can perform trades by the milli-and even microseconds.
In short, your surveillance system needs to be flexible, thorough and fast. Doing manual checks once a month or developing in-house software solutions just won't cut it anymore.
What to do? Invest in a professional surveillance system: a user-friendly platform that allows your business to automatically adapt to any changes in the field of market and trading compliance.
The benefits are numerous.
Abnormal trading patterns, market manipulation or insider trading are detected in real-time if needed, based upon advanced statistical methods and millions of historical data records. Such a system can easily manage more than 25.000 order book changes per second and will compare across multiple markets, asset classes and instruments. You will even receive an automated alert when a strange pattern is detected amongst the transactions performed on your platform.
This data can then be consulted via a web application tool and is presented in a dashboard using understandable graphs and charts. If needed, you are able to replay the order book so that you know exactly which events lead to (the cancellation of) a trade, which comes in handy during compliance audits.
In addition, when your company's business process, products or services evolve, the surveillance system will grow with you.
In conclusion, any financial player subject to the growing amount of rules and regulations, should look into a compliance surveillance tool. It will help you monitor and respond to market manipulation faster and more efficiently.
At Drebbel, we work together with clients to assess software needs such as compliance monitoring. After 15 years of experience in the sector, we can relate to your business challenges and will translate your specific situation into efficient, scalable and professional software solutions.