What to look for in Trade Surveillance Software?
By Carmen Lelli, Sales Associate
For most people, the word "surveillance" brings to mind FBI agents, undercover police, or private investigators watching someone suspected of crimes like fraud, drug trafficking, or theft. To us compliance professionals in the financial industry, however, the word “Surveillance” means monitoring trading activity looking for violations of the industry rules and regulations, that although not necessarily criminal in nature, can cause fines and reputational damage. So, what do firms want from a surveillance system? Here are some key questions they should ask:
Appropriate Surveillance Topics Covered
Depending on a firm’s lines of business, it is important that all needed surveillance models are covered within a surveillance system. Having all the bases covered would provide the firm with the means of detecting all exceptions across the firm, and ensure that all issues are caught, reviewed, addressed, and resolved. For instance, a retail broker dealer may have surveillance models in place to monitor commissions. When a new account is opened, AML checks are done to ensure that the individual on the account is not listed on the OFAC SDN (Specially Designated Nationals) list. Later on, that individual’s name can possibly end up on that list, so it would be prudent for the broker dealer to have AML and OFAC models in place.
Accuracy in detection logic
It’s very important that a surveillance platform is up to date and accurate in its ability to evaluate data and determine if activity breaches any of the requirements of industry regulations. Otherwise, exceptions may never be generated, and potential violations will never be detected.
Little or no false positives
False positives in surveillance can be a huge issue. It hinders the ability of compliance personnel to work through and find the real violations of industry rules and regulations. This can cause violations to go undetected and addressed for days or longer in some cases, while during that time frame, more violations are piling up. And if not detected and found in a timely manner, this can cause a firm to suffer a larger than necessary fine from the regulators. When found and stopped quickly, the firm would be able to document that the issue was found and resolved. Ultimately avoiding any serious regulatory implications.
User-friendly Case Management
A case management module, makes it possible for a firm to document and show regulators, when needed, that exceptions generated which are potential violations of industry regulations were detected, addressed, resolved, who was responsible for the resolution, as well as who was responsible for the potential violation if it was not technical in nature. A case management module that is easy to navigate and understand is very desirable.
AI Enhanced Analysis
An Artificial Intelligence enhanced analysis of a surveillance system’s processes and alerts is useful to the user because it recaps everything that has taken place within the surveillance system, as it relates to the processing of a firm’s data. It provides a high-level summary of activity, process errors, and alerts.
The Aerial View Trade Surveillance System provides all of the above and more!
Aerial View offers the ability for a firm to limit or eliminate false positives, by allowing the user firm to customize parameters within the surveillance models. Parameters can also be fine-tuned to capture instances that may be of interest to compliance personnel, while at the same time limit or eliminate instances that are of no interest, or that are not real potential issues that would otherwise need to be addressed. This provides an environment where compliance personnel can focus on the activities that matter the most to the organization.
Aerial View also offers over 80+ surveillance models that facilitate a wide range of coverage for the firm, which includes but is not limited to, AML and OFAC , Insider Trading, Low, High or No Commission alerts. This is over and above the usual Spoofing and Layering, Momentum Ignition, Marking the Close, Trades Outside the NBBO and other common surveillance models. This provides the firm with the ability to thoroughly cover its business lines and ensure adherence to industry Rules and Regulations.
Additionally, the platform offers the user an incredible dashboard, where alerts can be accessed and viewed in multiple ways. One click is all that is needed for the user to see specific alerts for a specific underlying security. This feature makes it much easier for the user to create a case in the case management module, which ultimately will be assigned to a specific person for investigation, review, and resolution.
About Aerial View: Aerial View is a New York-based regulatory compliance technology company delivering next-generation trade surveillance to broker dealers, asset managers, hedge funds, and mutual funds. The platform combines 30+ expert-calibrated surveillance models, AI-driven analysis, and an aviation-inspired Primary Display that consolidates essential information into a single view. Book a demo to see the platform we are bringing to the market.