Energy Trading Week London marked a true return to live events with two jam-packed days of discussion, debate and networking. With over 800 people in attendance, including traders, compliance teams and regulatory boards there was a palpable sense of eagerness to learn and willingness to share in the challenges in which firms are currently experiencing.
From Wednesday’s RegTech Roundtable, which featured Group CEO, Oliver Blower, some key learns and interesting insights were ascertained which further highlights the pain points and worries which organisations are experiencing across the board when it comes to ensuring regulatory compliance.
Here are just a few:
1. When it comes to surveillance a more proactive approach is key.
Some of the main measures in place within participants organisations included spot checks for voice communications, email communications and SMS. While this level of surveillance meets the necessary requirements of regulators it was widely accepted that more should be done by way of proactive surveillance.
Considering the Energy trading sector was not mandated to monitor and report trade communications until 2015 this may explain why monitoring and surveillance efforts are less mature in comparison to financial markets. Yet “there is tremendous benefit to proactive compliance” according to CEO, Oliver Blower as through proactive surveillance firms should be able to detect issues before the point of escalation.
The current age of hybrid work environments has brought about a paradigm shift in open outcry trading. With WhatsApp now the de facto communication channel globally, a proactive approach to surveilling such a channel not only provides firms with the assurance of regulatory compliance but also encourages traders to communicate with confidence to clients over a platform of convenience to both parties.
2. The benefits of RegTech far exceed regulatory compliance
This verdict was unanimous amongst participants – Yes, there are many benefits to utilising RegTech for more than just regulatory compliance! For instance, one company that used communications surveillance over fears regarding how they as a company were talking to their clients.
What’s more, many were of the opinion that traders were now more open to communication monitoring as there was greater acceptance of the technology as a tool to protect. Communication surveillance is not to be viewed as an impediment to trade, but as a safety net for traders to prove innocence or that no wrongdoing occurred.
The holy grail is in the context! Communication surveillance can give context around difficult scenarios that arise. Linking communications to trades would provide multidimensional context to better understand a number of complex scenarios like spoofing or layering when sometimes proving misconduct is not so cut and dry.
3. Firms must set-up surveillance measures when it comes to WhatsApp
It has been a turbulent few days for financial institutions, with news breaking that Wall Street banks are to pay $1.8bn over messaging violations following the SECs ramped up measures to clamp down on non-compliance across instant messaging services such as WhatsApp. With increased regulatory pressures energy firms are against the clock when providing the relevant trade communications to auditors.
Against the backdrop of the recent SEC fines for “widespread” and “longstanding” failures in record-keeping practices” across encrypted messaging services – the issue of surveilling WhatsApp was to the fore of participant’s minds. A show of hands reflected that around 10% were capturing WhatsApp communications.
The audience were asked to consider how comfortable they would be should the company they are trading with be asked to provide communications involving one of their own traders. The possibility of being left on the backfoot leaves firms opened to increased risk and manual effort.
With firms increasingly against the clock, proactive surveillance measures should be a priority for compliance teams with benefits far extending past the second line of defense.
The need for intuitive RegTech solutions that automate and streamline these processes for firms was clear from discussion and with regulatory boards turning their attention evermore towards energy firms now is the time to discover a solution which is right for your firm.
Get in contact with us today to discover how our solutions can help your firm on its journey to proactive surveillance across all channels of communication.
If you found this interesting, you might also like:
- What you need to know about communications surveillance in energy trading
- Which device is better for your firm: Corporate owned or BYOD?
- The positive impact of adopting WhatsApp as a compliant channel for business