reporter’s notebook

riskdesk-dec-16

Surveillance Systems were a hot item in 2016. Expect more heat in 2017. Spain-based Fonetic Solutions this month launched a new version of its compliance and surveillance platform, Fonetic ATR V2. Company materials say that the firm’s automatic trade reconstruction (AT) technology is “capable of automatically processing and linking 100 percent of trading data with its corresponding communications.” And in these closing hours before companies need to be fully compliant with a great basket of MiFID II rules, Fonetic’s timing couldn’t be better. Simon Richards, president of the US unit of Fonetic, tells us that with the new version, “speed is the thing,” as in, it’s a lot faster than the previous incarnation of the system. “Speed is the name of the game in surveillance and trade reconstruction systems,” he says, “additional enhancements include the ability to better follow the timelines of all the trades and the communications, the ability to share the case management, fault detection … lots of new enhancements.” On top of it all, the company also designed a brand-new user interface. Custom searches for certain elements have always been possible, but the new version users now can run ad hoc or user-defined proximity searches. “The new user interface allows you to add on layer after layer after layer of search parameters, words, phrases, prices, times, you name it — it’s almost infinite for proximity searches,” Richards says. New models have been added to reduce alert false positives as well. This is huge, apparently, in the surveillance game. We’ve heard horror stories about whole staffs being hired or outsourced to simply pick through all the gazillion alerts generated by some surveillance systems. “The new anti-fraud models are much faster and accurate, he says, “eliminating a lot of false positive.” This current release is SaaS — software as a service. Then later in 2017 or early 2018, the service will be offered as a cloud-based solution. Heretofore, Fonetic customers were typically large financial firms. Richards says with the new web-based offering from Fonetic, operations with as few as 10 to 20 traders now have a cost-effective surveillance and compliance solution. “This solution will make companies (Dodd-Frank) ‘Title VII- and MiFID II-compliant,” Richards says. “We can essentially cover everybody now, large broker dealers, Large-to-small energy companies, and smaller funds and trade floors,” he says. Ala carte offerings seems to be the trend for surveillance and trade reporting for big and small companies: Cover the regulatory bits you need, across this many seats on the desk and add more (or delete) as you go. Good idea. Cover 10 or 10,000 traders. Ain’t the internet grand?

The Risk Desk, December 21 2016, Vol15 Issue 24