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Compliance: Groundhog Day

07 March 2011  |  5538 views  |  0

Impossible to open a financial magazine or a blog without coming across an article related to “compliance”. It seems that the regulators have been particularly prolific these past few months. Up to a point that with Basel II for example, bank executives are responsible for the implementation of a secure BCP plan.

However, can we explain this bunch of new rules only with the crisis or recent affairs? Not sure. The way traders are dealing today and the tools they are using has little to do with what was common 5 years ago.

Introducing new medias to trade like IM, which now counts for 70% of pre trade activity, means that finance company have to pay attention to all those exchanges. They need to register them as they were recording traditional voice exchanges done via turrets. It’s the same with emails and mobiles. Also the removal of tap exemption on mobiles enforced recently by FSA is just the acknowledgement of a new trade practice.

And now that videos and social networks are more and more considered as potential tools for trading, we can bet that shortly the regulator will take measures to encompass those new medias and ensure their compliance and traceability. Incidentally, for the videos, recording only voice stream is surely not enough to ensure good compliance since two third of human-communication is non-verbal…and even a greater proportion the more you go South…

But this brings up two interesting consequences: first, those new medias will generate a new format of data which will need to be stored, even compressed, as they may be greedy in terms of megabytes. Secondly, the huge amount of this new generated data will mean the implementation of new analysis tools enabling to retrieve a specific record as easily as possible the day the regulatory authority asks you to do so. In fact, new solutions are becoming available: voice to text transcription, word tagging, and speech analysis, to name only a few. But those analysis tools are still quite heavy to implement and require cautious preliminary studies.

So new media vs compliance: sword and shield?


Thierry Charvet,
Head of Marketing & Strategy, Orange Trading Solutions

TagsRisk & regulation

Comments: (2)

A Finextra member
A Finextra member | 07 March, 2011, 12:45

Good article Thierry,

We find that many financial organisations are still using public IM like MSN and Yahoo! which is worrying because the messages are sent in the clear and not archived centrally.

I think part of the reason for this is that deploying an in house platform that wraps up the various networks and does things like archiving and content filtering is prohibitively expensive. 

Better to look for SaaS or 'cloud' type solutions that cover these requirements and deliver integrated social solutions like enterprise microblogging to speed up knowledge sharing. 

So to answer your 'So new media vs compliance: sword and shield?' new media is good for business AND there are solutions to handle compliance at reasonable prices.


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A Finextra member
A Finextra member | 07 March, 2011, 13:39

Many thanks for your relevant analysis

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