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Want to be Compliant? Act Like a Regulator

When it comes to compliance, financial sector firms have never had it so tough. Starting with the financial crisis in 2008, a growing number of laws have been passed worldwide to crack down on insider trading and rate rigging.

So rapid have been the increase in regulations over recent years, many firms are unsure of how to act. Like deer caught in headlights, some firms have frozen in the face of the challenge and as a result risk huge fines from non-compliance. For all firms, one of the most important operational questions they can ask today is how they can best ready their organizations for our new age of stringent regulatory oversight.

One answer to this question has been provided by Vanguard Group. As reported in Compliance Reporter, the US-based investment management company is significantly expanding its compliance function’s data analytics capabilities in order to mimic those of the regulators. Recently, regulators have themselves been investing heavily in data analytics capabilities to help them identify cases of market abuse faster and more accurately.

Indeed, regulators are encouraging firms to invest this area. Recently, Chyhe Becker, the acting director of The SEC’s Division of Economic and Risk Analysis, recommended compliance officers look at the data themselves and see if they can pick up on the red flags the regulator looks for. Data analytics and market surveillance are therefore fast becoming essential components of firms’ compliance toolkits.

However, there’s a significant cost associated with large in-house data projects. Not all organizations have the resources or the inclination to increase their headcount or invest in expensive market surveillance and data analytics platforms. Additionally, there are only so many data scientists and compliance experts to go around. With an increasing number of firms looking for data talent, many will soon find themselves facing skills gaps within their organizations.

Fortunately, the rise of so-called ‘RegTech’ services is helping solve these challenges. By making data and compliance capabilities available via the cloud as subscription services, providers including RIMES are helping firms scale-up their data and market surveillance capabilities without accruing unacceptable costs. The approach removes or greatly mitigates the need for increased headcount and means that firms do not need to waste money on expensive capital investments. By embracing such services, organizations will be able to mirror the trend-spotting analytical capabilities of the regulators and stay on the right side of legislation.

 RegFocus℠ Market Surveillance is the single solution to the regulatory challenges brought about by current market manipulation and insider trading legislation and designed for both the sell-side and the buy-side”. Read more here or contact us.


The content provided in these articles is intended solely for general information purposes, and is provided with the understanding that the authors and publishers are not herein engaged in rendering regulatory or other professional advice or services. Consequently, any use of this information should be done only in consultation with qualified legal counsel. The information in these articles was posted with reasonable care and attention. However, it is possible that some information in these articles is incomplete, incorrect, or inapplicable to particular circumstances or conditions. We do not accept liability for direct or indirect losses resulting from using, relying or acting upon information in these articles.


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