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Compliance

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Higher Demand for Market Data in Compliance Investigations

An emerging trend of risk-and-compliance officers requesting specific blocks of market data suggests new opportunity for information providers.

Brennan Carley, Global Head of the Transactions and Platform businesses at Thomson Reuters, says people are increasingly using products created for alpha-generating purposes in risk and compliance investigations. What started as one-off requests for small and specific batches of data have picked up in frequency across clients.

For example, inquiries are coming in from compliance teams for weekly tick data. "They are looking for data around a few suspicious quotes and trades," he explained at the SIFMA conference last week. "They don't want five years of tick data, they'll just want that one week."

As Bill Nosal, head of strategic product management for the Smarts Group at Nasdaq OMX, recently explained at the Wall Street & Technology Analytics Edge event, risk-and-compliance teams have shifted from a culture of running away from data to one that is chasing after it. The role of risk and compliance officers has become more investigative and more proactive in detecting signs of illicit trading activity.

"A lot are one-off requests, case by case, but it's starting to look like a pattern." says Carley. "Now, how do we package this in a way that's useful? Right now it's sporadic. And we already have a compliance business, so how do we incorporate this into their products? How do we add our market data into compliance tools?"

Integrated compliance in underlying workflows
In a few short years, technologies have rapidly advanced trade surveillance from after-the-fact rule enforcement to real-time oversight; including dashboards to monitor the trading environment as it happens.

Soon, predicts Carley, firms will be integrating compliance into the trader workflow to a point that, if a trader goes to a execute a trade that seems suspicious, a red flag will come up and the trader will be asked to justify the intent. "It's certainly better than running an end-of-day report," he says, "It's all a matter of integrating compliance into systems and process to prevent problems."

Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio

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