Achieving Recording System Assurance with Automated Recording Checks 11 January 2018
Welcome - Today s speakers Tom McNeila Product Marketing NICE Financial Markets Compliance Tom.McNeila@nice.com Steve Logan Product Management Director NICE Financial Markets Compliance Steven.Logan@nice.com For more information on today s topic please also visit: www.holisticsurveillance.com
NICE Financial Markets Compliance Our Mission To protect financial institutions by enabling regulatory trade compliance through automation and intelligence. Our Portfolio ENTERPRISE RISK CASE MANAGEMENT Consolidates and correlates all data to provide a centralized, holistic view of risk, workflow management and investigation support. COMMUNICATION COMPLIANCE FINANCIAL MARKETS COMPLIANCE HOLISTIC SURVEILLANCE Compliance Recording Compliance Assurance Communication Surveillance Market Surveillance Trade Reconstruction Behavioral Analytics Sales Practices & Suitability AGGREGATE & ANALYZE 3
Changing Regulations 4
Top Global Regulations Impacting Communications Code of Conduct Global Guidance for FX Dodd-Frank United States Legislation for Swaps Record Keeping (Recording) Trade Reconstruction MiFID II European Directive Surveillance in Place to Detect Market Abuse Record Keeping (Recording) Trade Reconstruction Refers to MAR European Directive Detecting Market Abuse Detect and Prove Intent Even if Unsuccessful 2010 January 2018 2016 5
MIFID II In force since 3 January 2018 Monitor all Voice Communications internal & external inbound & outbound pre- & post trade front- & back-office mobile phones Notification of recording: parties outside the firm must be notified all communication will be recorded All conversation must be retained for at least 5 years Monitor Market abuse: firms must provide evidence they capture and monitor all required communications 6
MAR In force since July 2016 Record all communications of Direct Market Participants (Brokers and Dealers) Be able to identify intent - requires surveillance Monitor Material Non-Public Information(MNPI) Identify of a responsible person for the dissemination of false or misleading information 7
Dodd- Frank Communications to be captured, tagged, retained, searchable and available to the regulator within 72 hours from the request Firms require insight into their system to ensure they function properly Transaction Reconstruction: Voice is a key component Prevent Fraudulent Practices: Now that firms captured voice, email, IM and chat for their traders, they must have some form of monitoring and surveillance in place Reports requested monthly, bi-monthly, quarterly, annually 8
Code of Conduct Code of conduct was updated May 2016 Measure and Monitor- firms are expected to promote and maintain a robust control and compliance environment to effectively identify, measure, monitor, manage, and report on the risks associated with their engagement in the FX Market. Compromising Confidential Information Complete and Accurate Data- This is fundamental to support effective surveillance. Each communication alert should be dispositioned to the extent that it can be independently reviewed and audited 9
Regulations Are Changing Recording Demands More Modalities More Proof More People 10 More Data More Reports More Conversations
11 Introducing
Are the correct people recorded? Did I capture everything I should have? Can I find the calls I am asked for quickly? How do I prove the correct people are in the system and successfully recording? How do I know the system is working even though I don t have any alarms? How do I export the calls you are asked for quickly? Are all calls archived successfully with the correct retention? Do outside callers know they are being recorded?
More than Just Recording is Required Capture ALL communications Multiple devices (turret, desk, mobile) Pre- and post trade conversations Back- and middle office On-site or remote working Prove ALL communications are captured and stored All required people and content is captured All regulated users are in the systems Reconcile regulated users are actually being captured Systems are fully operational Retrieve ALL communications quickly Central retrieval from multiple locations Fast search for any type of communication Bulk download for conversations under investigation Monitor communications for market abuse 13
14 Recording Check
Phone Tests to Prove Operation Test all the turrets and PBX phones on 34 recording systems. Different recording system locations 100% of all devices 255 days to complete 20 devices per day per site 90 man days 15
NICE COMPASS Automated Recording Checks Proactively detect any recording system issues Test clients strategically placed in network which can make test calls to each other Check successful recording and archiving after test call is finished Trigger alarms in case of any Recording Check failures Show the status of Recording Check test 16
COMPASS Recorder Check Flow 1. The Recording Check Server triggers execution of the script(s) using the Task Scheduler. 2. RCS sends a command to the test client s Recording Check Agent App to create a call to another test client. 3. Agent App sends audio, received by the Virtual Audio Cable, serving as the audio device of the VM. After that it sends a command to stop the call. 4. Test clients are targets in NICE Trading Recording, recorded like any other call. 5. RCS checks if recordings with matching call data are available in the NTR database and if the call recordings were properly archived. 6. If there are any issues with recording or archiving, the Recording Check Ntr Service raises alarms, visible in the NTR WebGUI. 7. The Recording Check Server sends the test results to the WebGUI of the NICE Compass Portal. 17
Thank you, please also join: Webinar 25 January 2018 Compliance Assurance Evidencing with Automated Reporting and Alerting Regulations such as MiFID II with a global impact are also imposing new stricter reporting requirements on FSO s which now need to provide evidence to regulators that communications for all regulated users are being reliably recorded and retained. Learn how NICE COMPASS automated compliance assurance reporting saves time, ensures compliance, and reduces the risk of fines, by providing a thorough, end-to-end reconciliation of the entire recording process across all regulated users. www.holisticsurveillance.com / webinars For more information visit: www.holisticsurveillance.com