Compliance technology and data analytics firm SteelEye made a splash last week with the launch of its new Auto-Trade Reconstruction technology, which reduces the time it takes for a firm to reconstruct a trade from days to seconds.
Under MiFID II, MAR, Dodd-Frank and other global regulations, authorised firms can be asked by the regulator at any point to reproduce the records that relate to a trade or client order, or a number of trades and orders over a particular time frame. This requires them to bring together all the transaction/order details, conversations, emails, meeting minutes and more to ‘reconstruct’ the scenario. However, with datasets spread across siloed platforms, meeting the typical deadline of 72 hours is a significant challenge for most firms.
The new platform combines artificial intelligence, machine learning, and advanced data relationships to streamline and automate trade reconstructions. The goal, beyond efficiency and automation, is both to reduce the risk of regulatory scrutiny and also – vital in these days of SMCR and accountability – the risk of personal liability for senior managers.
“The requirement to reconstruct all the conditions surrounding a trade or order requires firms to identify, locate and bring together a wide range of information, quickly. With many firms professing that such a request would take them over two weeks to complete, this has been an area bringing a lot of worry and stress to compliance teams,” explains Matt Storey, Chief Product Officer at SteelEye. “With our auto-trade reconstruction this is now completely automated.”
The reconstruction system works by reviewing any given scenario or piece of data and bringing together all information that is deemed to be relevant, such as related communications or transactions, as well as independent pricing. By accepting or rejecting these ‘suggestions’ the system learns as it goes along, becoming better at reconstructing each scenario. This means that firms can immediately dive into a trade or order and automatically see all the related phone calls, meetings, WhatsApp messages, as well as finding out information about the trade/order itself.
These records can be added to an existing case or used to create a new case, and subsequently exported. SteelEye also feeds in external market data and news to enable clients to monitor suspicious trading volumes, using data from sources such as social media Twitter feeds.