Managing a financial trading control room involves balancing a wide variety of tasks. To comply with stringent rules and regulations, all deals must be carefully reviewed, the flow of information strictly managed, and an overarching focus on preventing conflicts of interest must be a constant. Without effective processes, a single deal can move slowly through the pipeline—and those delays aren’t beneficial for the firm’s bottom line.
What is a control room?
At the heart of a financial firm, the control room is the command center for compliance activities related to managing sensitive information and avoiding potential conflicts of interest. The control room team is tasked with restricting the flow of material non-public information (MNPI) across the firm and implementing policies, procedures and controls to ensure that MNPI is not misused.
Control room management
Leveraging technology makes conflict management in financial trading control rooms easier and more effective. Compliance control room software enables firms to automate conflict management, removing the need to rely on slow, manual systems that can lead to human error. With control room compliance software, teams can ensure the flow of information is managed effectively and investment banking deals and private transactions can be quickly reviewed and checked for conflicts of interest. By using compliance software, control room managers can more easily manage MNPI and insider lists and expediently research activities.
Utilizing control room software that’s part of an integrated platform delivers an even more robust solution. An integrated platform that leverages a shared data set provides firms with a unified view across multiple areas of compliance, making it possible to manage compliance obligations and generate a consolidated and defensible audit trail via one single system.
Increase accuracy and efficiency with control room software
The right Control Room Software addresses the broad range of issues that can arise from managing financial deals, including:
- Slow deal reviews due to reliance on manual processes
- Deal lifecycle process bottlenecks
- Human error and neglect
- Lost revenue due to damaged reputation
- The need for employee tracking
- Tracking deal statuses, MNPI, wall-crossed members and multiple insider lists
- Poor integration with other tools, such as personal account dealing systems
- Dissatisfaction among control room staff
Keep the information barriers robust
In a busy control room, it's essential to control the information barriers across the firm and keep them strong. The flow of confidential information between private and public-side businesses needs to be effectively managed. At the same time, all deals need to be reviewed to prevent conflicts of interest. Managing many businesses and transaction types when relying on manual processes can quickly lead to severe delays. As a firm grows and offers more services, the risk of conflicts of interest grows too and becomes even more challenging to manage.
Reviewing each deal against multiple required criteria, including other deals, portfolio holdings, employee trading and holdings, and more, can take hours or sometimes days. The challenge of managing information that is held across various systems can lead to human error and dealing with any mistakes can further delay the deal review process. In the UK, Market Abuse Regulations require the tracking of wall-crossed employees and corresponding insider lists but keeping up with these requirements can be difficult.
Read more about Insider List and MNPI Management under MAR.
Inadequate monitoring brings regulatory scrutiny
Managing compliance in the control room is a complex task. If firms fail to effectively meet the challenge, the penalties can be significant. Inadequate monitoring and failure to act will being regulatory scrutiny.
Read more about significant recent regulatory enforcement and how MNPI remains a high-risk area for compliance
MCO’s Know Your Transactions suite provides solutions for identifying risky transactions and unusual behavior across the firm. With MyComplianceOffice, one system can be used to automate conflict management, ensure the responsible management of data and manage the essential processes that must be carried out across the control room. Bottlenecks can be resolved by automating and expediting deal reviews and other tasks, rather than relying on time-intensive and risky manual processes.
Deal Review Management
Managing potential conflicts of interest is essential for compliance when reviewing investment banking deals. MCO’s Deal Review Management solution automates the deal review process, capturing the details of investment banking deals. The software can identify private and public firms, including subsidiaries and exchange-traded securities. When a deal is made public, submitting, reviewing, and approving wall crossings and wall crossbacks is simple.
Deal Review Management can be integrated with other MCO solutions, such as personal trading and outside business activities. This enables holistic view of potential compliance issues across the firm. With MCO, compliance reviewers can easily access potential employee and firm conflicts so that they can be dealt with appropriately. Any disclosures employed within a deal can be defined and communicated to the necessary people using Deal Review Management. The comprehensive solution also provides the essential audit trail of communication between the compliance review and deal teams.
Insider List and MNPI Management
Effective MNPI and insider information management is vital to an effective control room. Financial trading firms must follow regulators' guidelines regarding the sharing of MNPI among corporate insiders. Relying on manual methods to manage insider lists is a time-consuming and error-prone approach.
MCO’s Insider List and MNPI Management solution allows firms to create and maintain insider lists more easily. Lists contain essential details, including names, roles and rights, and assignment rules for accessing inside information. Insider List and MNPI Management utilizes standardized data and enables the creation of a hierarchical database of security listings and company information, which can be cross-referenced. It takes mere minutes to create these lists so that permissions and access can be managed in accordance with regulations and company policy. Insider List and MNPI Management also provides access based on role, including investment and deal team members, compliance professionals and senior executives.
SEC Priorities Focus on MNPI, Insider Trading and Crypto
Part of an integrated compliance solution
MCOs integrated suite enables firms to manage control room and transactional compliance along with employee and third party compliance on a singular solution. The comprehensive MyComplianceOffice platform streamlines compliance oversight, ensuring transparency, efficiency, and adherence to regulatory requirements. With one powerful and consolidated platform, MCO enables organizations to proactively identify and address compliance risks, maintain robust controls, and foster a culture of ethical behavior. MCO also integrates with internal firm systems, including HR and expense systems, to provide an even deeper level of consolidated oversight.
See how Camille and her team addressed their control room compliance challenges with MCO
Unparalleled control
MCO’s Know Your Transactions solution suite allows firms to:
- Automate the entire deal lifecycle review process, including reporting, deal review management, conflict checking, insider list management, MNPI review, wall crossing approvals, and workflow
- Remove the burden of employee tracking
- Review company deals in minutes, compared to hours or days without compliance software
- Receive fast updates on deal statuses from bankers
- Automate MNPI tracking, wall-crossed members and multiple Insider Lists
- Integrate with personal account dealing systems and other key compliance tools
- Improve the conveyance of information to bankers with fast and efficient communication
- Execute more deals thanks to automated, faster processes and bring in more revenue
Ready to learn more? Contact us for a demo today.
