Benefits of enhanced collaboration between front-office & compliance

In my previous article, I discussed why trading and compliance functions traditionally have been out of step with one another and how increased collaboration between these two teams - where trading desks can access the data collected and stored by compliance – can enable firms to solve two operational challenges with one solution. In this article, I look at the benefits firms can achieve by enabling data-sharing between trading and compliance.

Short-term analysis using near real-time data has become vital for firms to quickly adapt and adjust to changing market conditions. However, to achieve this they need tools and technology that can quickly capture, normalise, and analyse a wealth of data from different sources and make it usable. Compliance solutions are already built to do this so that firms can meet their obligations for record keeping, reporting and market oversight - so why not kill two birds with one stone and invest in one platform that can solve both problems. The benefits of such an approach include:

Giving your traders more real-time performance data
The data captured and stored for compliance purposes spans far and wide and includes orders, trades, communications, market sources, CRM information and much more. Depending on the regulation at hand, this data is often ingested, validated and normalised in real-time. By leveraging this data feed, trading desks can quickly get answers to what their traders are doing; where they are trading; who they are communicating with; alongside any changes over time – because this is often what compliance are looking at as well (but with a different agenda).

This near real-time feed of can enable firms to quickly identify trends and flag unwanted behaviour. For example, this can allow firms to easily find out how close/far away each trader is from the market or best execution price.

5 steps to great compliance data governance

Make compliance a part of your profit centre
Compliance teams can often feel out of sorts or like they are permanently sitting on the unpopular table. By leveraging the data already collected and stored for compliance and making this available to teams that struggle to access this kind of information, compliance teams get to take a more active role in driving performance and have a more positive impact on profit centres.

Sometimes simple things are overlooked
Individual and team performance can often be influenced by simple factors that are easy to miss, which is why the use of near-real time trading data is so important. However, trade and order data in isolation is not always sufficient to analyse performance. Quite often, this data needs to be overlaid with communications or CRM data to gain the necessary context to understand the drivers of positive or negative performance – data often held within compliance systems. To give an example, a client recently noticed a drop in performance of two traders. To get to bottom of the poor results, they decided to query their compliance data. This enabled them to ascertain that the change was triggered when two traders were separated during an office relocation. It turned out that by sitting next to each other, these two traders were collaborating, sharing ideas, and encouraging each other. Only by sharing data between trading and compliance were these trends identified and addressed.


Looking ahead

As the financial sector is continuously challenged to operate more efficiently, automation and modern technology are becoming increasing important. Real-time access to data is and will remain imperative for traders to ensure a competitive edge. The benefits mentioned in this article can be realised when traders have access to the wealth of data stored by RegTech and compliance. However, to achieve this firms need to invest in technologies that are grounded in data and automation, and not all compliance systems are built for this kind of collaboration.

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At SteelEye, our data-centric compliance platform can provide valuable insight into what your traders are doing and how they are doing it. We ingest trading, communications, news, market data and more, and offer intelligent analytics tools that tell you everything you need to know about your trading performance.

  • Measure the relative performance of your traders, the executions achieved and deviation from the best price/time

  • Highlight working patterns of your traders

  • Set automated alerts and reports to capture signals, data and trends that are important to you

These are some of the insights we can provide in a near-real time basis, powered by a complete set of Refinitiv on-exchange market data and extensive multi-asset coverage for non-listed products. Plus, we also offer post-trade TCA in addition to our regulatory compliance solutions for reporting, oversight, record keeping and more. To explore these themes in more detail, please book a demo.


Why compliance and trading should be closer aligned








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