Trade Surveillance is a key component of monitoring Compliance in Broker-Dealer, Advisor, Asset Management and Wealth Management firms
Client trades and portfolios need to be monitored to address Regulation Best Interest, product concentrations, portfolio drifts , unsuitable products being traded, churn and wash sales that created unwanted fees and other such conditions
Personal Trades of employees, registered representatives and advisors have to be monitored to identify conflicts in their trading patterns Vs those allocated to the clients, insider trading and other violations .
Data aggregation for trades and positions across various trading platforms, clearing, custody and brokerage systems can be cumbersome.
GRACE's Trade Monitoring web based solution can help setup automated scheduled connectivity to various systems to bring the trade data in. Easy to set up business rules, restrictions and limits can help compliance with automated red-flagging and bring issues to light for their day to day monitoring. Easy workflow queues, visual red flags, trading and concentration patterns can help identify risks and issues quickly. Issue management can be initiated to ensure all violations are tracked and mitigated.
Trade Monitoring is a big component of activities for a compliance monitoring team in asset management organizations. Depending on the complexity of the operations, data needs to aggregated for trades and positions across various trading, clearing, custody , brokerage organizations from their systems. Restrictions and limits that are set upon the trading systems and trading teams have to be managed on a day to day basis. End of day trade data needs to verified to see that the defined restrictions were not violated by any. Trade concentrations have to be measured to identify risks. Regulatory examinations needs a central repository of information as proof of verification
The Compliance Challenge
Bringing in trade, holdings, accounts data from multiple sources on an everyday basis and working with excel files to monitor compliance to business rules makes compliance monitoring a very cumbersome and error prone task. Managing all of this information is much better done with automation. Working with a web based system like GRACE Trade Monitoring will enable you to build a central system that can help your compliance team, receive aggregated from multiple source systems, define the business rules to monitor them, and monitor them thru the rule based engine and automated red-flagging. Issue management from identified trade patterns and violations can be centralized and managed effectively. Client allocation, violations and conflicts can be quickly identified managed in a similar way. GRACE provides a central repository of information that can be easily retrieved and offered for audit and regulatory examinations.
GRACE Can help you Manage this process efficiently and effectively
GRACE web based / tablet enabled, Trade Monitoring System provides you with a collaborative tool which encompasses the Compliance department, Trading system, Trading staff for pre-approvals and Issues Management to build a central repository of information, work flow and analytics to be able to stay on top of all trade issues as they occur and ensure their mitigation.
It allows you to setting up of trade restrictions and business rules in a central way that can be shared with trading systems. It provides the staff, registered representatives and advisors functions to send their pre-trade approval, private placement requests. It reduces workload by auto approval and auto rejections based on trade restrictions . It provides e-mail alerts for compliance staff on approvals and rejections. Personal trade files can be pulled into GRACE from whichever brokerage the personal accounts are automatically to verify against the business rules for violations and auto flagging.
Business rules for client trades for red flagging can be set up and client trades, account balances and positions from brokerages can be automatically loaded to the system along with automated red flagging based on the business rules.
Issues can be recorded and the common issues management platform allows issues to be assigned for remediation, recording mitigation status and follow up. Issues dashboard can help slice and dice issues, their status, workloads and concentrations.
GRACE Trade Monitoring Modules
Help your Compliance Team conduct Trade Monitoring, Not data gathering
Trade Restriction Management
GRACE allows you to set up the trade restrictions in a centralized way
Trade restrictions can be set up on GRACE and shared with the trading systems or the restrictions set up on the trading system can be brought into GRACE to keep the consistency in trade monitoring
The restriction information set up here will be used both for automated red-flagging of trades as well as for auto-approval / auto-rejection of pre-approval trade requests from staff.
GRACE powerful trade dashboard provides deep drill down analytics, charting, queries and reports on all aspects of trade monitoring.
It includes the status of all the trade loads, metrics on automated red-flags, assignments, issues and status of issues for easy monitoring on all aspects of trade.
Issues can be viewed all the way to the notes and case management including reviews, escalation to ensure closure. Issues dashboard can also show trends
Automated Trade Data Pull
GRACE can easily build connectors to the source system from where end-of-day trades can be pulled in the GRACE Database on an automated basis
As the data is being loaded into GRACE, based on the business rules will be applied to mark up issues and highlighted to the compliance officers for attention to the red-flagged items.
GRACE can aggregate data from different source systems so the staff can have a single place to conduct their oversight monitoring.
Trades with issues get into the issue management life cycle.
Client Trade Allocations
GRACE can help you look through all the trade allocations to see that there is a pattern of fair allocation across your clients through various queries and reports
GRACE provides online forms for staff to request for pre-trade approval, private placements and for other such approval requirements where needed. Automatic approval or rejection based on trade restrictions enable emails to be sent to respective staff for the result. Requests that need approval are queued to the compliance officer with an e-mail sent to them.
Compliance officers can review and reject or accept the request with e-mail notification send to the requestor
GRACE provides a standardized way to record and manage issues across all functions
Issues can be recorded into the issues pool and allocated to different issue owners depending on their functions
Notes and case management including reviews, escalation and follow up alerts workflows enable proactive issue management
Issues Dashboard can be used by management to monitor issues and view trends
Automated Trade Monitoring
Trade Data can be automated to load into GRACE from source systems whether it be brokerage houses or internal systems. Personal trades can also be loaded for employee trades in brokerages.The data will be automatically red-flagged for business rules to allow compliance officers to quickly recognize trades that do not have pre-trade approval, are on the restrictions list or exceed pre-trade approvals that were given.
GRACE provides flexible querying of information across dates, employee, instrument, issue type and other parameters as well as see trading patterns personal trades violations, trade concentrations, insider trades and mark them up as issues.
Best Execution Monitoring
When an investment advisor serves as an asset manager, and has responsibility to select broker-dealers, to execute client trades, the adviser assumes fiduciary duty to oversee best execution over how the Broker-dealer manages costs, quality and conflicts associated with trade execution venues.
A quarterly review of own quality of execution report which has to be published by each of the execution venues and an annual report about the monitoring of the execution quality of all used execution venues should be collated and analysed(when executing client orders).
Execution venues have to provide information on intra day price and trading day price information for each financial instrument. This data can also be brought into GRACE through automation
GRACE can help provide analysis and reports based on trading venues for the compliance management to see if the actual trades are as per policy that has been defined
The Great Value GRACE Brings to Trade Monitoring
Help your Compliance Team conduct Trade Monitoring, Not data gathering
Efficiency and Effective Trade Monitoring
Ability to automate and integrate with source systems, sychronize the trade restrictions and automated red-flagging can reduce the manual work load in doing these enormously
Trade Monitoring from Anywhere
Given the ability of GRACE to be accessed anywhere, it allows the Compliance staff to conduct Trade Monitoring from where ever they are and at all times ensuring quick control in case of risk issues
Standardized Process for Trade Monitoring
Across the organization Standardization in the Risk Identification, Classification to Mitigation can be achieved by using a single system
Risk reporting becomes Online and Real time
Regulatory reports can be easily generated from GRACE and can save a lot of money in integrating and managing data for reporting can be minimized.
By standardizing the process of identifying issues quickly and taking corrective action along with the ability to drill down to the status of mitigation, accountability for monitoring and risk management gets well established
Regulatory examinations can be handled with confidence
The GRACE system becomes the proof of records for regulatory examinations and can save enormous amount of money in this data gathering and report creation process.
Insider trading can be caught very easily
With the Aggregated Trade Information along with Personal trade monitoring and Market Data, Insider trading can be quickly identified using the trading patterns in GRACE
Organization Ownership of Data
Organizations suffer when key risk and compliance staff leaves. The information is scattered if maintained solely by individuals and are lying on disks in various forms. GRACE becomes the single central repository of data, documents, data and processes enabling continuity even when key people leave the organization
Central Database for Single Source of Truth
By Aggregating Information from various source systems, GRACE becomes a Single Source of Truth for trade information that can be easily accessed for issue management
Easy to Integrate and Customize
GRACE offers easy integration with organizational source systems to enhance the functionality and extend it at low costs. This is a great benefit for end users who can bring in all the relevant data into a single system through automated process allowing them to focus on risk management and compliance instead of data gathering
Monitoring trades in multiple systems eliminated
Trade monitoring through multiple systems and non-standard processes will get eliminated and central trade monitoring can be achieved
Best execution and Fair Allocation Proven in Best Interest of Client
The Standardized process for monitoring Best execution and Fair Allocation ensures that organization is working in the Best Interest of Clients
Automated Alerts and Dashboards keep everyone on track
Automated Alerts from the system make it easy for everyone to stay on track and manage the process.
Enormous Cost Savings
Enormous costs savings in unwanted labor, avoid regulatory fines, legal costs, reputation risks and empowers the organization in managing risks.
Complete Source of information : https://www.klgates.com/SEC-Proposes-Cybersecurity-Risk-Management-Rules-for-Investment-Advisers-and-Funds-3-9-2022. All Language quoted and attributed to the article On 9 February 2022, the U.S....
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