Alerts On Inappropriate Trader Behaviour Increase
Compliance and Surveillance officers are ramping up their efforts to stamp out inappropriate trader behaviour, according to new findings from Fonetic.
A communications surveillance systems provider, Fonetic received a 20% increase in requests from banks to address conduct risk monitoring calls and chats between their traders and other employees. The data also showed that alerts on trader behaviour such as swearing or using derogatory language are eight times more frequent than alerts on intents related to market abuse.
The findings land as financial institutions come under increasing pressure to reform their culture following global movements like #MeToo and the Senior Managers Regime (SMR), which aims to increase personal accountability of senior banking execs. While many financial institutions are enforcing stricter ethical policies, the industry is still tarnished by long standing stereotypes of misogynistic old boys’ clubs.
Commenting on the findings, Juan Diego Martin, COO of Fonetic said: “Unacceptable trader chat has not gone away, and financial institutions are in no position to brush it under the carpet. The wide scope of movements, such as #MeToo, means compliance officers are doubling their efforts to wipe out any inappropriate behaviour. Any scandal or even alleged incident could have an instant negative effect on the reputation and therefore valuation of any bank.”
But where derogatory workplace comments may have been historically hard to detect, technology now provides banks with the means to directly identify the severity of conversations.
Martin went on to say: “Banks are now in a stronger position than ever to hold their traders, brokers and senior executives accountable. Technology has advanced way beyond detecting offensive conversations or terminology. Natural language processing can now put exactly what traders are saying into context.”
Regulators expect firms to continue to record calls despite the disruption.
Rule 606(b)(3) will provide managers a forensic trail of their trades.
Bans on short-selling have significantly degraded market liquidity and price formation.
Short-selling bans inhibit orderly markets rather than promote them.
The guidance offers suggestions on how listed companies might implement contingency plans.