Compliance

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Where Are We Now? The Era of Trade Surveillance Automation

"For the first time compliance and surveillance people are demanding access to data instead of running away in fear from it."

A metaphor for early trade surveillance
'This is what was really happening in the surveillance industry. Despite preventative measures and despite all the detection capability being produced, people were still going right around those barriers. They were getting things done in the fastest way.' -- Bill Nosal, head of strategic product management, SMARTS, NASDAQ OMX
"This is what was really happening in the surveillance industry. Despite preventative measures and despite all the detection capability being produced, people were still going right around those barriers. They were getting things done in the fastest way." -- Bill Nosal, head of strategic product management, SMARTS, NASDAQ OMX

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Becca L
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Becca L,
User Rank: Author
6/30/2014 | 10:46:24 AM
Re: Compliance officer or Data Scientist?
That does make sense. And as long as they're logging it, that kind of data can be cycled back in to find the most effective routes of uncovering fraudulant behavior. Feeding the automated compliance machine!
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
6/30/2014 | 7:11:59 AM
Re: Compliance officer or Data Scientist?
Fair point. I would hope that most banks have automated logs that detail when a compliance officer looks into emails, or opens data somewhere in a bank. That is really the only way to monitor the compliance officers to make sure they aren't accessing data for reasons other than compliance.
Becca L
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Becca L,
User Rank: Author
6/29/2014 | 6:55:34 PM
Re: Compliance officer or Data Scientist?
With all that access to data, I wonder who is monitoring Compliance? That may seem silly, but insider risk is the biggest concern for these institutions, and who poses more risk than the people who can pull up and reqeust files with few questions asked?
IvySchmerken
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IvySchmerken,
User Rank: Author
6/29/2014 | 6:46:18 PM
Re: Compliance officer or Data Scientist?
Speaking of data, compliance officers have more data available to them than ever before. Not only can they request market data from exchanges, but they can screen emails, voice calls and videos. Some banks are also analyzing sensor data from the security cards that employees use to enter and exit doors in their firms.
IvySchmerken
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IvySchmerken,
User Rank: Author
6/29/2014 | 6:43:24 PM
Re: Compliance officer or Data Scientist?
Universities can train data scientists but compliance officers need to learn the securities industry and pass a number of exams. I think a career in compliance will most likely continue to post-graduate training. It does seem to be an in-demand career given the current wave of regulations.
Becca L
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Becca L,
User Rank: Author
6/29/2014 | 3:50:30 PM
Re: Compliance officer or Data Scientist?
Not only do they need to find patterns and use complex tools, they have to be able to see what additional data can improve their research - truly playing the role of detective! The industry is already seeing this happen. Nasdaq OMX reports an increase in one-off requests for market data from compliance teams, something they had never really seen even a year ago.
Becca L
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Becca L,
User Rank: Author
6/29/2014 | 3:45:06 PM
Re: Compliance officer or Data Scientist?
It is funny that universities are busy churning out the data scientists of tomorrow while financial service firms are pacing on the sidelines eagerly awaiting the right talent. In a years time, should they just be looking at their compliance teams instead?  It does seem compliance is the gateway job experience for the industry's most in-demand employee!
IvySchmerken
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IvySchmerken,
User Rank: Author
6/25/2014 | 11:24:11 AM
Re: Compliance officer or Data Scientist?
I agree. Compliance is becoming a more data-oriented, quantitative discipline. In the past, compliance officers had a legal background. Will the future compliance officer be a data scientist and a lawyer? I can see a new degree emerging that combines both disciplines. Or, is the job becoming so risk-metrics-based and reporting oriented, that legal expertise is going to be less necessary going foward?
 

 
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
6/25/2014 | 10:35:36 AM
Re: Compliance officer or Data Scientist?
The tools and analytical search capabilities will require experts with more of a data science background, as opposed to previous years where compliance experts were in demand. The amount of data, and the complexity/variety of data requires data experts who can use the newer analytical tools to find patterns and speed up compliance processes.
IvySchmerken
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IvySchmerken,
User Rank: Author
6/16/2014 | 9:43:50 AM
Compliance officer or Data Scientist?
The world of compliance is now flooded with data.The old way of screening for key words has not worked and compliance officers are being overwhelmed by the number of alerts they set.  Compliance officers are also going to need to analyze voice communications to check who the trader was speaking to at the time of trade. It all suggests that the skill set of the compliance officer is changing from being a lawyer to more of a  data scientist. It was interesting that Bill Nosal of Nasdaq OMX SMARTS said that financial firms are hiring people without a compliance background.
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