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Emerging technologies such as artificial intelligence and cloud are driving compliance and operational strategies for capital markets firms – and it’s equally important for firms to invest in people, i.e. the data scientists and related specialists who make it all work.
Those were key highlights of the Nasdaq 2024 Global Compliance Survey, which collated responses from 94 compliance professionals within capital markets.
Now in its ninth year, the annual survey provides insights on the ever-evolving surveillance and compliance landscape, through the eyes of surveillance and compliance professionals – high-level decision-makers as well as those directly managing processes. The aim is to provide valuable insights while also serving as a guide for navigating change in this critical business area.
This year’s survey was conducted between May and July 2024 and covered a broad cross-section of the industry globally, prominently including sell-side firms (28%), corporate-retail banks (17.2%), and market infrastructure providers (16.1%).
The survey showed that protecting a company’s brand and managing reputational risk continues to be the most important function of compliance, with 32.8% of respondents saying so. “The consistent emphasis on managing reputational risk underlines just how critical reputation is to an organization’s overall success,” the report stated. Second was complying with regulatory reporting requirements – a new field in the ninth annual compliance survey – which garnered 23.9%.
Broadly speaking, change agents in compliance departments are twofold: increased regulatory scrutiny that is forcing firms to improve processes, and technological advances such as AI that are enabling firms to clear the higher regulatory bar. The survey indicated firms are increasingly adopting a forward-looking approach that helps them stay ahead of regulatory demands while managing an ever-expanding array of data sources.
Capital markets firms are continuing to deploy “healthy” investment into compliance operations, with surveillance technology, communications monitoring, and additional compliance staff cited as key areas. Regarding hiring, the survey showed priorities are shifting from bolstering operational support and administrative processes, more toward data science and technology expertise.
“Firms are increasingly investing in the underlying data infrastructure that is essential for managing, integrating and analyzing data efficiently and effectively,” the report stated. “And there is now more emphasis on advanced technology capabilities, including the use of sophisticated tools and systems for real-time monitoring and predictive analytics.”
Going forward, one-third of survey respondents said understanding and implementing technology capabilities was their biggest compliance-related concern for the coming year. Granularly, firms are looking to technology to reduce false positives, better handle huge data volumes, and improve cross-product monitoring capabilities.
“The evolving compliance landscape underscores the critical role of technology in modern financial firms. As regulations become more intricate and data-centric, the ability to understand, implement, and leverage technological advancements is paramount for effective compliance,” the survey concluded. “By prioritizing technological integration and innovation, financial firms can better position themselves to tackle the dynamic compliance landscape, ensuring resilience and compliance in an increasingly complex regulatory environment.”
Click here to access the full Nasdaq 2024 Global Compliance Survey.
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