Key Takeaways for Buy-Side Firms from 1LoD’s 2020 Surveillance Benchmarking Survey & Report

With regulators globally continuing to root out and punish insider trading, market abuse, and other misconduct - and using enhanced data and analytics techniques to do so - being proactive about identifying and remediating potential issues is no longer just a best practice for firms, but a regulatory and business imperative.

ACA co-sponsored 1LoD’s 2020 Surveillance Benchmarking Survey & Report, which provides insights from experts at 15 of the world’s largest financial institutions on the current state and future of the surveillance function. The report includes commentary from regulators, practitioners, consultants, and technology experts. ACA’s Michael Lehman, Partner and product manager for ACA’s Trade Surveillance technology solution, provides commentary for buy-side firms in section 7.3 of the report, Evolving Regulatory Expectation on Buy Side Surveillance.

We want to share with you some of our key takeaways from the report. We encourage you to read the full report and share it with your colleagues to get a sense for what your peers are doing, what regulators expect, how your firm compares, and what you might need to do to strengthen your firm’s surveillance program.

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Key Takeaways

• Regulators are shifting their enforcement focus to firms who do not have effective controls, or who do not act on the information provided by the monitoring tools.
   
• More than half of those surveyed expect continued team growth but with a shift towards data scientists to keep up with technological advances.
   
• Surveillance spending is expected to prioritize integrated surveillance.
   
• Buying a third-party surveillance solution is seen as the most practical solution, versus building an in-house solution.

Key Takeaways for Buy-Side Firms

• Increasing regulations have made effective surveillance programs a necessity for buy-side firms.
   
• The buy side has been subject to regulatory investigations and fines for surveillance failings just as the sell-side has been.
   
• Regulators expect firms to invest in surveillance technology as they have done.
   
• A major challenge for buy-side firms is how to structure data and format it for use by surveillance tools.
   
• Buy-side firms should assess their specific risks and implement surveillance tools tailored to those risks.

For more insights on challenges related to the buy side, click here for commentary from ACA’s Michael Lehman.

How We Help

We offer a range of trade monitoring and surveillance solutions designed to help your firm effectively, diligently, and proactively manage its trading risk in a way that meets regulatory expectations and industry best practices. To learn more, download our fact sheet.

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About 1LoD and The 2020 Surveillance Benchmarking Survey & Report

1LoD provides the highest quality intelligence to risk and control professionals across the 3 lines of defence in financial institutions globally. It delivers this information via events, benchmarking surveys, special reports and other media. The business combines subject matter experts (former senior risk and control practitioners), highly experienced conference professionals and journalists.

1LoD’s conferences are recognized as the leading events in their field. The 1LoD Summits (London, New York and Asia) were the first-ever independent conferences for the control functions that sit in the 1^st line of defense. They remain the largest and leading events for this sector globally, while 1LoD has now expanded into the 2^nd and 3^rd lines of defense, delivering events for the Surveillance and Audit functions within the banks as well as a dedicated risk and control event for the buyside.

This Surveillance Benchmarking Survey & Report is the most comprehensive insight into the state of the Surveillance function across the industry.

Based on an international benchmarking survey collecting the views of industry leading experts from 15 of the largest financial institutions globally, The 2020 Surveillance Benchmark Report provides a unique insight into the maturity and development of surveillance functions over the last 12 months, as well as predictions for the future. Including in-depth commentary from regulators, practitioners, consultants and technology experts, it is the only report for professionals in the industry.