Tuesday October 04, 2022

7 Critical Trade Surveillance Alerts

Financial services and trading have many moving parts that must all be in sync to succeed. Monitoring every transaction is more important than ever as trading volumes increase and become more complex. Wealth management firms and advisors must not only keep track of data in order to provide outstanding service and results to their clients, but also to ensure compliance. Automated trade surveillance adds another set of eyes to alert advisors and highlight areas of concern or suspicious activity before they become more serious and costly compliance issues. An integrated surveillance system is crucial because risk management is a moving target.
Trade surveillance is essential to protect clients and firms from fraud and unethical trading. A trade surveillance system integrated monitors a wide range of data and conditions, which can lead to hundreds of alerts per day. However, it focuses on seven key alerts.
1. Trades
Although trading is tightly regulated, it can be difficult for traders to spot patterns in suspicious or unethical activity without an automated data system. Trade surveillance tracks trades and keeps advisors informed by an audit trail. Alerts can also be used to flag suspicious trading patterns, abnormalities, or complications.
2. Licenses and appointments
Brokers and financial professionals must have the appropriate licenses and appointments for carriers. These items must be tracked and renewed promptly to ensure smooth trading and compensation. Financial institutions should ensure that their producers are properly licensed to avoid compliance issues.
3. Data Changes
Compliance is about ensuring that customer data is up-to-date and in compliance with regulations and trading requirements. An integrated trade surveillance system will alert you if any data has been modified, such as the amount and rate of trades, or if it is necessary to update all accounts.
Data changes can also affect suitability and track whether the account or trades meet clients’ risk tolerance and investment goals. This is especially true if their data or life stages change.
4. Addresses
Advisors will be notified if there is an issue with a trade’s address, including if it is missing, incomplete or inconsistent across all forms. Financial firms can spot fraud and abuse by insiders by scanning addresses to find addresses that match advisor locations or home addresses.
5. Orders
A comprehensive trade surveillance system monitors an advisor’s order books closely to ensure that every order is in compliance. It organizes complicated orders and ensures that buyers and sellers comply with regulations and meet matching criteria.
6. Accounts
Account activity is monitored to detect account exceptions, such as large account balance fluctuations, high and low activity accounts and excessive turnover rates. Advisors can use these alerts to check in on clients and verify that there has been no fraud.
7. Sales
An account with unusual sales or more activity than usual will be flagged by a trade surveillance system. Advisors can also receive alerts if sales occur before major news or market changes are announced. This could indicate insider trading. The comprehensive contact, account, and transaction data base can be used to improve customer service by notifying producers about life events (e.g. Birthdays, anniversaries, monitoring excessive cash relative to investment goals, and understanding household structures.
Although trading can be a lucrative business opportunity for clients, advisors, and firms, it is often fraught with high-risk and strict regulations. An automated trade surveillance system can help you stay on top of compliance issues and provide excellent service. You will spend less time manually sorting through data or potential issues and more time making deals and growing your company.

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