2024 Nasdaq Compliance Survey Reveals Top Compliance Challenges and Investment Priorities

Nasdaq’s Global Survey Highlights AI, Cloud, and Data Quality as Key Drivers in Compliance Evolution

The financial services sector is navigating an increasingly complex regulatory and operational landscape, as highlighted in Nasdaq’s ninth Annual Global Compliance Survey. The survey, conducted among 94 compliance professionals from the sell-side, buy-side, and financial market infrastructure sectors, underscores a notable shift in compliance strategies driven by advancements in technology and data integration.

Technological Transformation in Compliance

With heightened regulatory scrutiny and the persistent challenge of financial crime, firms are leveraging technologies like artificial intelligence (AI) and cloud computing to stay ahead. A significant 35% of survey respondents expect AI to drive the most substantial changes in compliance processes over the next year—a stark increase from 9% last year and 0% the year before.

This pivot reflects a move away from basic workflow automation to more sophisticated, data-driven approaches. Firms are investing in tools to integrate disparate data sources, enhance cross-product surveillance, and improve data quality. These advancements aim to address ongoing challenges like false positives in automated systems, which, according to nearly 90% of respondents, remain a major issue. “False positives drain resources and delay critical decision-making,” noted Ed Probst, Senior Vice President of Regulatory Technology at Nasdaq. “The promise of AI lies in its ability to refine alert systems and prioritize genuine threats.”

Data-Centric Strategies and Workforce Evolution

Organizations are also redirecting investments to strengthen data management and analytical capabilities. Over the next two years, 12% of firms plan to hire data scientists, and 13% intend to bolster their teams with additional support staff. This shift highlights the growing importance of advanced data analytics in maintaining robust compliance systems.

However, the survey reveals a need for a more cohesive approach to integrating AI and analytics strategies. “The rapid deployment of algorithms must align with broader data management frameworks to deliver meaningful insights,” commented an industry expert.

The trend is mirrored across financial organizations, where investments in data infrastructure and predictive analytics are becoming integral to both risk management and operational efficiency.

The Expanding Role of Compliance Teams

Surveillance and compliance teams continue to play a strategic role in corporate decision-making. More than three-quarters of respondents agreed that these functions maintain a “seat at the table,” reflecting their critical role in fostering ethical business practices and safeguarding reputational integrity.

Despite a slowing growth rate in regulatory spending, over 40% of firms reported increased compliance budgets this year. The allocation of funds increasingly favors advanced analytics over traditional monitoring tools, indicating a strategic pivot towards future-proof compliance infrastructures.

Looking Ahead

Nasdaq’s findings underscore the importance of technology-driven solutions in tackling the evolving challenges of compliance. As firms navigate this dynamic environment, investments in data quality, AI, and skilled talent will be pivotal in building agile and resilient compliance frameworks.

“Compliance is no longer just about adhering to rules,” added Probst. “It’s about leveraging technology to anticipate and adapt to risks in a rapidly changing world.”

This shift signals a broader transformation within the financial services industry, where the integration of advanced technology with strategic governance is becoming a cornerstone of effective compliance.

Regnology Acquires VERMEG’s Agile Division, Expanding Global Leadership in Regulatory Reporting

Regnology has acquired Agile, the regulatory reporting division of VERMEG, in a move that underscores the growing trend of consolidation in the RegTech industry. This strategic acquisition strengthens Regnology’s capabilities in delivering end-to-end regulatory reporting solutions, while enabling VERMEG to focus on its core strengths in Collateral Management and Insurance.

Agile, a SaaS-based platform originally part of VERMEG’s Lombard Risk portfolio, serves over 150 banks worldwide across key regions, including the UK, Europe, North America, and Asia Pacific. Known for its modular, scalable solutions that cover the entire regulatory reporting process—from data ingestion to report submission—Agile will now be integrated into Regnology’s platform. This combination will enhance Regnology’s ability to address the increasing demands for automation, granular data management, and efficient regulatory compliance.

For VERMEG, the divestment aligns with a strategy to consolidate its leadership in Collateral Management and Insurance. “By joining forces with Regnology, Agile gains access to a broader platform and new opportunities for growth,” said Badreddine Ouali, Founder and Co-CEO of VERMEG. “This allows us to concentrate on delivering exceptional value in our core areas, ensuring long-term success for both companies and their teams.”

Building a Global Footprint in Regulatory Reporting

The acquisition also bolsters Regnology’s global presence, complementing its recent purchase of CG3-1, a firm known for its regulatory calculations in the U.S. broker-dealer market. The move is expected to enhance Regnology’s offerings for broker-dealers by integrating expertise in regulatory capital, customer reserve, and portfolio margin requirements.

Together, these moves enable Regnology to serve a wider range of financial institutions—from Tier 1 banks to community banks—and strengthen its reach in Asia Pacific, with clients in Hong Kong, Singapore, and Australia including a number of regulators.

“This marks a pivotal moment for Regnology,” said Rob Mackay, CEO of Regnology. “Our expanded footprint allows us to connect regulators and financial institutions worldwide, transforming legacy reporting processes into scalable, efficient networks. By investing in technology and talent, we aim to help industry stakeholders navigate the complex regulatory landscape with confidence.”

Nordic Capital, a key investor in Regnology, highlighted the strategic significance of the acquisition. “This milestone reflects the need for forward-looking solutions that prioritize efficiency and stability,” a spokesperson noted, adding that the deal advances Regnology’s position as a global leader in regulatory reporting.

ACA Group Expands Broker-Dealer Compliance Support with FINOP Consulting Acquisition

In a strategic move to deepen its support for broker-dealer clients, ACA Group has acquired FINOP Consulting, an outsourcing firm specializing in financial and operational compliance for broker-dealers. Led by industry veteran and FINOP founder Dan Beaton, the acquisition enables ACA to expand its capacity in financial operations (FinOps) services, particularly for clients needing precise alignment with SEC and FINRA requirements in areas such as recordkeeping, accounting, and reporting. 

This acquisition feeds into ACA’s broader compliance platform, ACA Signature, which delivers scalable support for financial operations. By acting as a licensed Series 27 and Series 28 principal, ACA provides expertise in maintaining accurate records, preparing financial filings, and ensuring overall regulatory compliance. 

Patrick Olson, CEO at ACA Group, views this move as critical for broker-dealers facing increasing regulatory demands: “This acquisition allows us to provide a more complete solution to broker-dealers, who are under immense pressure to maintain compliance in a rapidly evolving regulatory landscape”.  

Beaton, now ACA’s Director, echoes this sentiment, noting, “Our collaboration with ACA means broker-dealers gain access to comprehensive GRC services at a time when regulatory pressures are only growing. Together, we’re equipped to navigate these complexities for our clients.” 

ACA’s FinOps offerings provide broker-dealers with key benefits, including the ability to stay compliant with evolving regulations, allowing them to focus on core business objectives without the burden of daily regulatory tasks. Additionally, by outsourcing, firms can reduce full-time employee (FTE) costs. ACA’s use of advanced financial tools further supports clients by optimizing reporting processes and ensuring data accuracy. 

This latest acquisition continues ACA’s tradition of evolving to meet industry needs. Specific financial terms were not disclosed.

DTCC’s Enhanced VaR Calculator for Potential Cross-Margin Reductions

The Depository Trust & Clearing Corporation (DTCC) has updated its Value at Risk (VaR) calculator to include cross-margining and repo transaction functionalities, aimed at improving firms’ risk management capabilities ahead of expanded U.S. Treasury clearing requirements expected in 2025 and 2026. These enhancements, introduced through the Fixed Income Clearing Corporation’s (FICC) Government Securities Division (GSD), offer users more nuanced tools for evaluating margin requirements and cross-margining benefits. 

The enhanced calculator allows users to gauge potential cross-margin reductions at FICC based on sample portfolios that include both GSD cash positions and CME Group futures. According to Tim Hulse, Managing Director of Financial Risk & Governance at DTCC, these updates are part of a broader effort to “support greater transparency for market participants,” aligning with DTCC’s focus on enhancing understanding and management of margin obligations in a rapidly evolving market. 

This development comes as FICC’s GSD experiences record volumes, clearing an average of $8.8 trillion daily as of October 2024. The new capabilities are seen as a valuable tool for firms navigating this high-volume environment, allowing for optimized capital efficiency through consolidated margin management and reducing potential excess liquidity needs. 

The cross-margining functionality, specifically, empowers firms to explore margin savings across combined GSD and futures positions, presenting an opportunity for capital efficiencies that may mitigate the need for liquidation in volatile markets. These tools thus provide market participants with an accessible means to assess and respond to risk and margin requirements, in preparation for the anticipated regulatory changes. 

As Laura Klimpel, Managing Director, Head of DTCC’s Fixed Income and Financing Solutions, notes, “FICC continues to evolve with the markets to support industry needs.” This expansion of the VaR calculator underscores DTCC’s commitment to delivering tools that not only bolster transparency but also support firms’ operational readiness for future market and regulatory shifts. 

Arcesium Adds Regulatory Reporting Automation to Opterra Platform

Data management service provider Arcesium has launched a regulatory reporting extension to its Opterra data lifecycle management platform.

The New York-based company said the new tooling enables clients to utilise data they already have to automate the collection and presentation of information required for compliance processes.

The extension was created to meet growing demand for ever-more granular data from regulators. Arcesium said clients will now be able to automate disclosure processes using their data on trades, positions, P&Ls and accounts, saving time and resources.

“COOs and compliance leaders are expressing an urgent need to modernise their reporting processes, save time and reduce costs,” said Neil Visnapuu, product owner for regulatory reporting at Arcesium. “This solution empowers them to do precisely that. By auto-populating reports and completing disclosures… managers can release significant resources currently tied up in gathering data from fragmented sources. This streamlined way of working also empowers them to quickly adapt to any future regulatory demands”.

Regnology Acquires CG3-1

Specialized reporting solutions provider Regnology has acquired CG3-1, a firm known for its regulatory calculations in the U.S. broker-dealer market. The move is expected to enhance Regnology’s offerings for broker-dealers by integrating expertise in regulatory capital, customer reserve, and portfolio margin requirements.

Founded in 2018, CG3-1 has established itself among U.S. broker-dealers seeking compliance with regulations like SEA 15c3-1 (Net Capital Requirements), SEA 15c3-3 (Customer Protection) , and FINRA Rule 4210 (Margin Requirements). The acquisition offers CG3-1 the opportunity to expand its services by leveraging Regnology’s extensive regulatory reporting capabilities. This includes developing end-to-end reporting solutions with automated data sourcing and enhancing client experience through improved workflow efficiency.

Rob Mackay, CEO of Regnology, commented on the acquisition: “Combining Regnology’s platform with CG3-1’s tools allows us to better serve the North American market with robust regulatory reporting solutions.”

Charles Greiner III, President of CG3-1, added, “Joining forces with Regnology provides significant value for our existing clients. The integration offers enterprise-grade business continuity and security, enabling us to expand our offerings under SEA Rule 15c3-1 and 15c3-3.”

Both companies are collaborating to integrate CG3-1’s solutions into Regnology’s portfolio, aiming to provide a more seamless experience for clients navigating complex regulatory requirements.

Combating Deepfakes: LSEG Introduces Advanced Identity Verification

As fraud techniques become more advanced, organizations worldwide are grappling with the challenge of securing financial transactions and verifying identities effectively. In response, London Stock Exchange group (LSEG) Risk Intelligence has introduced two new solutions aimed at strengthening defences against sophisticated fraud: Global Account Verification (GAV) and Document and Biometric Verification (DBV).

Payment fraud remains a significant concern, with UK Finance reporting losses of £213.7 million in the UK during the first half of 20241. In an effort to combat this, regulatory bodies in the UK and the EU are implementing new rules for reimbursing victims of Authorized Push Payment (APP) fraud. Starting January 2025, all payment service providers within the EU are required to offer 24/7 instant payments, and by October 2025, mandatory checks of account names and IBAN numbers will be in place for Eurozone providers2.

Global Account Verification: Enhancing Payment Security

GAV is designed to tackle APP fraud by enabling real-time verification of bank accounts and ownership across an initial 22 countries. The system cross-references account information to provide a “match,” “close match,” or “no match,” allowing organizations to confirm that payments reach the intended recipients. LSEG Risk Intelligence plans to expand GAV’s coverage to include 80% of G20 countries in the near future3.

The rise of synthetic media and deepfakes has made identity verification more challenging. DBV combines facial recognition, document screening, and liveness detection using advanced AI and deep learning technologies. This solution supports over 16,000 identity documents from more than 220 countries, in over 140 languages and typesets, facilitating secure and scalable identity verification processes.

Integration and Operational Efficiency

Both GAV and DBV are available via API, enabling seamless integration into existing systems and workflows. This is crucial for organizations aiming to enhance security measures without disrupting operational efficiency.

“Fraudsters are constantly innovating and operating with greater sophistication than ever before,” says Ramesh Menon, Group Director of Product Management for Digital Identity & Fraud at LSEG Risk Intelligence. “As bad actors exploit vulnerabilities across client and vendor workflows, investing in robust, data-driven solutions is essential to mitigate global payments and identity risks.”

By introducing these new tools, LSEG Risk Intelligence aims to assist multinational corporations, financial institutions, and fintech companies in defending against fraud while complying with evolving regulatory obligations.

GLEIF – Finbridge Partnership Streamlines ID Verification for FinTechs

In a move to enhance trust and efficiency within the financial services industry, the Global Legal Entity Identifier Foundation (GLEIF) and Finbridge Global are collaborating to streamline the identity verification process for FinTech companies. This partnership aims to facilitate smoother collaborations between financial institutions, investors, and FinTech providers by utilizing a standardized identification system.

Finbridge Global operates a platform that allows financial institutions and investors to search, compare, and assess FinTech companies worldwide at the product level, simplifying the due diligence process. By integrating the Legal Entity Identifier (LEI) system into its platform, Finbridge Global plans to verify the identities of listed FinTech providers, promoting greater transparency, security, and accountability. Through a partnership with LEI Worldwide, the platform will also offer LEI issuance and management services to FinTechs.

An LEI is a unique 20-character code standardized by the International Organization for Standardization (ISO) and assigned to legal entities. Each LEI corresponds to a verified company identity record in the Global LEI Index, an open, globally recognized database accessible to everyone. With over 2.7 million LEIs issued globally, the system addresses challenges in verifying counterparties in a fragmented global marketplace.

For FinTech providers, obtaining an LEI enhances credibility and demonstrates a commitment to transparency, enabling quicker and more efficient connections with potential partners. Financial institutions and investors benefit from streamlined due diligence and procurement processes, as the LEI provides clear digital identification of potential FinTech partners. LEI data can also help map corporate structures and relationships, offering insights into the interconnections between entities and allowing for more accurate risk assessments of organizations operating internationally.

“Integrating the LEI into the Finbridge Global platform addresses the challenge of meeting stringent due diligence requirements,” says Alexandre Kech, CEO of GLEIF. He notes that this integration sets a new standard of trust, accelerating Know Your Customer (KYC) and Know Your Business (KYB) processes and acting as a catalyst for broader FinTech adoption worldwide.

Barbara Gottardi, CEO and founder of Finbridge Global, emphasizes the importance of tackling identity verification and fraud in the financial industry. “By embedding LEIs into our platform, we offer a frictionless and instant means of verifying FinTech companies’ identities while preserving data privacy and confidentiality,” she explains. Gottardi views this step as pivotal in creating a unified, globally recognized identity management system that accelerates the establishment of new partnerships and elevates industry standards.

This collaboration reflects a broader trend toward adopting standardized identity verification methods to enhance trust and efficiency in financial services. As the FinTech sector continues to expand, such initiatives are critical in fostering secure and effective collaborations across the global financial ecosystem.

ISDA Ops by Validus: Streamlining ATE and CSA Threshold Complexity

Validus Risk Management recently launched ISDA Ops, an advanced platform that simplifies the complex task of managing ISDA Additional Termination Events (ATEs) and Credit Support Annex (CSA) thresholds. By automating calculations and real-time monitoring, ISDA Ops addresses the intricate challenges financial institutions face with customized terms and vast data volumes, enhancing efficiency and reducing operational risk. 

The management and monitoring of complex ISDA ATEs and CSA thresholds present significant challenges owing to the intricate nature of the agreements and the sheer volume of data that needs to be tracked and analysed in real time. 

• Complexity of Customized Terms: ATEs allow parties to specify a nearly unlimited range of events that can trigger the termination of an ISDA Master Agreement. These can include credit-related defaults, significant declines in a fund’s net asset value (NAV), or incorrect tax representations. The highly customizable nature of these terms results in a complex mix of structured and unstructured data making standardization difficult and requiring bespoke solutions for monitoring each agreement. 

• Volume of Data Across Multiple Counterparties: Financial institutions often manage thousands of trading lines across numerous counterparties, each with their own specific ATEs and CSA Thresholds. Keeping track of these varied terms manually is not only time-consuming but also prone to errors, increasing operational risk. 

• Real-Time Monitoring Requirements: The dynamic nature of ISDA markets necessitates real-time monitoring of ATEs and CSA thresholds. Delays in identifying breaches or potential collateral calls can lead to undetected exposures and financial losses. 

• Complex Calculations for Collateral Management: CSA Thresholds determine the level of unsecured exposure tolerated before collateral is required. Calculating these thresholds accurately involves complex computations that factor in live market data, exposure levels, and specific contractual terms. 

• Regulatory Compliance and Risk Management: Regulatory frameworks demand stringent risk management practices, including the effective monitoring of counterparty risk and collateral adequacy. Failure to comply can result in regulatory penalties and reputational damage. 

ISDA Ops addresses these issues by providing an intelligent and scalable approach to constructing ATE and CSA Threshold conditions. The platform allows users to analyse and test conditions using live and forecasted data, enabling real-time, proactive decision-making. 

“Managing ISDA ATEs and CSA Thresholds has been a complex task for risk management teams,” said Alain Smith, Head of Client Engagement at Validus Risk Management. “ISDA Ops provides a clear, consolidated view of the data, helping users identify potential breaches and model future risks more effectively,” he said. 

Key features of ISDA Ops include: 

• Automated Tracking and Calculation: Automatically calculates and tracks ISDA ATEs and CSA Thresholds across all counterparties, streamlining risk management processes. 

• Real-Time Risk Management: Enables proactive decision-making by identifying potential collateral calls early, improving management of counterparty and liquidity risks. 

• Enhanced Reporting: Offers intelligent reporting tools that simplify tracking and updating ISDA terms, increasing transparency. 

• Scenario Analytics: Allows users to simulate potential future scenarios using live and forecasted data, proactively addressing potential risks. 

ISDA Ops integrates with Validus’s Horizon platform, including RiskView for hedging monitoring and reporting, TradeView for front-office hedging, and PortfolioView for portfolio-level risk management. This integration enables CSA Thresholds to be updated and monitored within RiskView and incorporates PortfolioView data for condition testing. 

Validus plans to deliver further enhancements to ISDA Ops before the end of the year, incorporating generative AI to efficiently parse complex language and improve data retrieval. Earlier in June, the company announced upgrades to TradeView, enabling automation of pre-trade checks. 

Bitnomial Exchange Implements Eventus Trade Surveillance

Bitnomial Exchange is implementing the Validus solution from trade surveillance and financial risk solutions provider, Eventus. The digital asset derivatives exchange has been collaborating with Eventus since 2021 to integrate order and execution flow for two major futures commission merchant (FCM) clients on the exchange. The decision to fully deploy Validus followed a comprehensive review of Bitnomial’s internal surveillance tools alongside external solutions. 

The move reflects the exchange’s commitment to robust oversight and maintaining and strengthening compliance and market integrity during a period of significant growth by expansion into new products and increasing trading volumes. 

“Integrating Eventus’s advanced surveillance technology with our proprietary systems reinforces our dedication to compliance and transparency,” said Michael Dunn, President of Bitnomial Exchange. “As we continue to grow, it’s crucial that we provide a secure and efficient trading environment for our clients.” 

Eventus CEO Travis Schwab noted the synergy between the two firms. “Bitnomial’s rapid expansion highlights the need for scalable surveillance solutions,” he said. “Our expertise in digital assets and regulatory compliance positions us well to support their evolving needs and uphold the integrity of their markets.” 

In the first half of 2024, Bitnomial reported over $130 million in notional value traded, marking a 1,081% increase from the same period in 2023. Founded in 2014, the Chicago-based exchange offers physically settled Bitcoin futures and options, providing a regulated platform for institutional and professional traders in cryptocurrency derivatives. Recent developments include the introduction of Hashrate futures in partnership with Luxor, targeting Bitcoin miners, and the Commodity Futures Trading Commission’s approval of Bitnomial’s clearinghouse late last year. By enhancing its surveillance infrastructure with Validus, Bitnomial aims to support its expansion while maintaining high standards of market oversight and client trust.