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Context for Compliance: The Big (Bad) Behavior Picture

Analyzing all the trading data out there is difficult, especially for regulatory purposes. Compliance officers have to take the big picture into account when examining data for bad behavior in the markets.

Jim Austin, the CEO of Vertex Analytics, Inc., announced that it was National Bring Your Daughters and Sons to Work Day during his FinTech Exchange Conference presentation, and put some children to work on stage to demonstrate the evolution from pit to screen trading and the importance of compliance officers.

“Everyone knows the floor is not there anymore,” Austin said. “But all that was tracked back then was the actual fill itself.”

Today, Vertex collects an average of 4.5 billion market messages per day – compared to Twitter’s .5 billion messages per day.

With the enormous amount of data that can be captured, Austin said, “What do you do with it once you capture it? How do you collect it, manage it and store it?”

In particular, compliance officers need to look at the full market context of the data streaming in and not just at one particular trader’s behavior. “These things don’t happen in isolation,” he said. Each trader is responding to an input.

Compliance officers have a number of tools in their arsenal but AI isn’t necessarily needed in all cases. “If machine learning was only done with only one of those traders, the trader would have been found guilty of misbehaving,” Austin said.

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Rudolph is managing editor of John Lothian News (JLN).