Traders Magazine spoke with Brian Lynch, President of SteelEye Americas, who won Best in RegTech at the 2023 Markets Choice Awards.
Please tell us about SteelEye and your capabilities.
SteelEye is the first and only fully integrated trade and communications surveillance solution. We empower our clients with the data-driven insights they need to manage compliance risk effectively and efficiently, all from a single platform.
SteelEye’s intelligent alerts proactively detect market manipulation and compliance breaches, while our holistic data model supports intelligent insights and rich, behavioral analytics.
With connectivity to over 140 trade and communications sources, SteelEye is the only solution that can natively combine a broad range of multidimensional data into a single, compliant, secure repository. Our innovative cloud-based technology enables financial firms to boost productivity, lower the total cost of ownership, and gain a competitive edge through data intelligence.
What do you see as the biggest regtech trend to watch in 2023?
The increased use of AI and ML to enhance supervisory oversight is the trend to watch. ChatGPT has thrust this trend into the mainstream, but it was already underway before ChatGPT arrived. Today’s compliance teams are being asked to do more with less, and Machine Learning is an enabler that has the promise to simultaneously streamline and strengthen compliance programs.
Promisingly, SteelEye’s 2023 Annual Compliance Health Check Report found that 69% of financial firms in the US have fully implemented AI/ML capabilities in their compliance processes, and almost unanimously, they are already seeing the benefits.
What are the key RegTech challenges for market participants?
In today’s regulatory landscape, firms are facing many challenges, but arguably the most pressing is data management, including data quality and integration, or the lack thereof. Our Annual Health Check Report revealed that 1-in-5 US firms view enhancing data quality as their biggest compliance priority in 2023. In recent years, the electronification of markets, the fast pace of change in the trading landscape, and the rapid evolution of electronic communications have led to an explosion of data across many systems and platforms.
This has made financial compliance more challenging because, at the heart of all regulatory obligations is the need to bring together, analyze, and store vast amounts of data. Market surveillance is particularly impacted by this data and systems proliferation, which typically creates awkward workflows, increased false positives, and inefficient processes. As a result, it takes longer for firms to bring together the data they need to investigate alerts, and often leads to key risks slipping through the cracks.
With this in mind, the need for a fully integrated surveillance platform like SteelEye’s – which combines communications, trades, orders, news, and market data on a single platform – is more important now than ever.
Is there anything out there that market participants are not paying enough attention to?
The increased enforcement action from North American regulators around unmonitored communications channels should be top of mind. Last year, the SEC and CFTC fined firms nearly $2 billion for unauthorized use of WhatsApp and other messaging platforms, and this is continuing into 2023, as Scotia Capital and HSBC recently received multi-million-dollar fines for similar offenses. While the penalties have served as a wake-up call, and more firms are now monitoring platforms like WhatsApp, the fact that this is happening at all shows that many firms are still taking a reactive approach when it comes to compliance.
Additionally, AI continues to be a hot topic as mentioned before, but there’s still fundamental principles that many firms are forgetting. AI is only as good as the data it’s fed, so firms need a robust, accurate, and complete data set. Additionally, AI models need extensive training and feeding, which requires data and resources. AI can solve a wealth of problems, but only once firms have fixed their data.
What can we expect from SteelEye in the near future?
We are always innovating and investing in the SteelEye platform to make sure it not only solves the problems of today, but also tomorrow. As an example, we recently integrated ChatGPT into our communications surveillance module, which enables firms to digest and analyze the contents of a chat, voice transcript, meeting, or email within seconds to understand if there are compliance or regulatory issues.
We are also expanding the use cases that take advantage of the variety of data that we ingest. Being the only fully integrated surveillance provider, we are uniquely positioned to identify new ways to make the job of compliance easier and more effective.
At the end of the day, everything we do is intended to help our clients stay ahead of regulatory change and their growing compliance requirements.
