With the increased challenges for financial Control Rooms, global regulators continue to pressure firms concerning the flow of confidential information. To manage the flow on confidential information and implement an effective risk control, firms are expected to continue working on the modernization of regulatory, legal and compliance risk management programs. These modern programmes in addition to effective technology can ensure that material non-public information (MNPI) is only available to staff as and when required and does not leak to other parties.
The regulatory focus has been on conflicts of interest that can arise from deals, outside business interest, personal account trading, among others. In recent cases, regulators such as the UK FCA, Swedish FSA and US SEC found groups manipulating trades and sharing confidential information on client trade orders to their benefit.
- FCA seeks to fine and ban CEO for Market Abuse
- Swedbank under investigation for Market Abuse
- SEC Finds Deficiencies in Disclosing Conflicts of Interest and MNPI
These more recent cases highlight regulators enforcement and faster investigations to market manipulation. As a result, firms are expected to manage conflicts of interest fairly among all parts involved in the deal cycle and regulators will use their enforcement power and act against firms that are breaching rules.
Preventing Conflicts of Interest
To achieve Compliance, firms need to review the firms' current Control Room operations and what are the regulatory expectations and best practices for different areas of business and across multiple jurisdictions. Overall, the focus of such regulations is to ensure the flow of information is managed effectively and investment banking deals and private transactions are being quickly reviewed and checked for conflicts of interest.
Control Room function includes the obligation to identify and manage conflicts of interest, whether through mitigation or elimination at a minimum exposure. Control Room obligations also require the implementation of wall crossing process with systems and controls in place to fortify compliance obligations, including roles and responsibilities, policies and procedures, training and guidance designed and enforced to identify and manage such conflicts.
Furthermore, regulators have been emphasizing the importance of designing and implementing systems for the approval and monitoring of employee personal trading. Systems and procedures around PAD allow firms to review employees trading activity against restricted lists and insider trading rules, reducing conflicts of interest and mitigating risks of misconduct.
Systems and Controls in the Financial Control Room
The Control Room is challenged to meet applicable laws, regulations, and monitoring expectations in a sustainable, proactive, and cost-effective way. The key element of the Control Room is to identify relevant information and share it within a cross-functional surveillance unit. The right data capture can help build cases for the identification of conflicts of interest and drive better effectiveness across Compliance and Risk teams. When teams work on a unique platform is easier to be sure that data is not stale or being wrongly captured.
Most currently available surveillance solutions are unilateral offerings, focused on one area. Our Control Room Software is an integrated solution for managing deal-related conflicts. MyComplianceOffice can improve your firms' process when onboarding new business, clearing conflicts of interest, and meeting compliance rules and regulations around Control Room Compliance.
We recently won the Wealth Management 2020 Industry Awards with our Control Room Solution as the Best Technology Provider for Compliance.
Watch our Control Room Video to learn more about MyComplianceOffice Control Room Solution.