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Bloomberg Vault Plays Role in Social Media Compliance

Financial service firms are rolling out social media strategies for archiving and surveillance with Bloomberg Vault.

Bloomberg Vault, Bloomberg's cloud-based enterprise information management service, released a case study on financial services firm Hilliard Lyons' attempt to improve social media archiving and compliance by leveraging Vault's hosted solution.

Many firms have found itself in Hilliard Lyons' position: A towering volume of communications and a data management system struggling to meet increasingly vigilant regulation requirements.

"The new requirements from the CFTC set an expectation of a 72 hour turnaround time to reconstruct records for trade," explains Harald Collet, global business manager for Bloomberg Vault in an interview. "And so, you have this perfect storm ahead that's affecting our clients, and that is more and more data, more and more regulation and more and more fragmentation of the data across different data types."

Gmail, Skype, Salesforce Chatter, Yammer, LinkedIn messages, tweets, Facebook chats, voice -- whatever content type an employee used to communicate with clients -- are subject to regulatory reporting. Typically, legacy repositories are not well suited to taking in this kind of data, he explains.

There are really only a few options. The first is to do nothing, essentially archiving more data into uncontrolled data repositories and hoping for the best when the SEC comes knocking. Another is to improve an existing system - something Hilliard Lyons tried and failed to do. According to the case study, many attempts were made to implement lexicons and retention rules with the old system "but it was so challenging we just stopped."

[Outgrowing Your Data Centers? Look to the Cloud for Relief .]

The other approach is to enlist the help of an information management service, which is what Hilliard Lyons ultimately did with Bloomberg Vault.

"Hilliard becomes a case study for a firm with just over 1,000 employees, on what happens when you hold on to this data for a long time. And so for them, you could see the scenario was one where the storage cost was getting out of control. They were having issues managing the different data feeds and they wanted to consolidate with one vendor that could support the newer use cases, including social media."

The Social Media Component

To improve the accessibility of social media, Collet explains that communications captured and stored in Bloomberg Vault can be searched and retrieved all together to create an accurate picture of what happened at any given time in your organization.

"The ability for their legal and compliance is then to search e-mails, instant messages, Bloomberg communications and other third party messaging tools that staff might be using while in the office, as well as social media in a single compliance console to see analytics on all the communications and where you can easily export them and review them. These are the typical use cases," he adds.

The Vault also provide the surveillance and monitoring to protect against things like inappropriate investment advice, guarantees, gift entertainments, other kinds of things that managers want to look out for. "These all come prepackaged as part of Bloomberg Vault," he says "That's one of the things where we've applied our domain expertise in financial services."

It's worth noting that Bloomberg itself has a large social network, and is well practiced in the capture all those interactions.

Big Questions & Challenges

The complex enterprise archiving challenge of different types of data, notably voice and social media, are sparking an interesting conversation about social media strategies in financial service. "I would say this is very much the hot topic." Many people in financial services are getting together to figure out how to open up the social channels. "What's the effective way of using it? What are the kinds of internal challenges? How do you have the business, legal, IT, compliance working together to make sure that firms benefit while protecting themselves?"

For one, how do you open up channels for business (ex: Facebook, LinkedIn) while protecting the firm from a social risk event? Say a client uses a chat to interact with a customer to generate business - how does the company make sure it is conducted in a way that complies with regulatory mandates?

"You could have employees that unwittingly would run afoul of SEC or FINRA requirements related to how you communicate with your clients… What you want is to have it be a monitored channel that has a curated communication feed going out to your clients. And that's what the social media platforms that are out there allow."

Rollouts

Bloomberg has seen most of their large clients roll out larger social media pilots this year. "Some firms have been early adopters but I'd really say now we're reaching the full scale deployment."

In the case of Hilliard Lyons, the firm transitioned to the Vault in October, 2012 but is still in the early stages of its social media strategy. According to the case study, "We’ve developed an interface to any communications or postings on social media sites and we have a bridge that will feed over to Bloomberg for archiving and surveillance."

Collet concludes, "Hilliard is one of those firms that want to open up social channels to reach their clients and to generate business and position the firm to engage social media outlets, but doing it in a way that complies with regulatory mandates. That's really what we've been partnering with them on setting-up and what we think is a big focus for other Bloomberg Vault clients right now." Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio

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IvySchmerken
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IvySchmerken,
User Rank: Author
9/27/2013 | 8:42:51 PM
re: Bloomberg Vault Plays Role in Social Media Compliance
It's also emails between traders and clients that can cross boundaries. What if there's a pricing dispute on a complex OTC instrument? These monitoring systems are able to pinpoint the key words in emails or conversations, which might not be the core competence of the compliance officer.
Becca L
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Becca L,
User Rank: Author
9/27/2013 | 6:04:53 PM
re: Bloomberg Vault Plays Role in Social Media Compliance
I really like that companies are using social media as a way to conduct business, it seems more personable. Yet Bloomberg's solutions, and others of its kind, are really necessary to police the networks and make sure employees are within compliance. Imagine chatting a client and saying this trade is a guaranteed winner - a total no-no!
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
9/27/2013 | 1:43:15 PM
re: Bloomberg Vault Plays Role in Social Media Compliance
The strict requirements for e-discovery from regulators is definitely a strain on financial firms. 72 hours to supply the data to reconstruct a trade? That is a tight turnaround, especially for larger firms with 1000s of trades per day.
IvySchmerken
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IvySchmerken,
User Rank: Author
9/26/2013 | 10:44:57 PM
re: Bloomberg Vault Plays Role in Social Media Compliance
Firms are adopting social media to communicate with customers but as this case study illustrates, the regulatory/compliance requirements can be daunting. You can see why Hillard Lyons turned to Bloomberg Vault as a single provider to provide the monitoring, surveillance and analytics required by FINRA and the SEC.
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