Technology Addresses Compliance Demands
A diverse set of compliance needs, from time-stamping to crowdsourcing and Bitcoins, is creating a demand for compliance technology, and solution providers are rushing to fill the gap.
Perseus Telecom’s High Precision Time service, launched last year in conjunction with CME Group, enables customers to synchronize their time systems across multiple data centers.
With high-frequency trading ratcheting up the number of orders and messages flowing through financial networks, firms need to certify the time in which it recognizes a market signal, down to the sub-second level.
For U.S. equities trading, the Finra OATS 7430 compliance rule states “all computer system clocks and mechanical time stamping devices must be synchronized to any source within one second of the NIST standard.
The Consolidated Audit Trail (CAT) rule mandates that self-regulatory organizations and Finra members must sync the date and time of any reportable event. Reporting each event to the central repository requires NIST timestamps to be within one millisecond or finer increments.
“Perseus has exclusive rights to offer the government time stamp on the atomic clock in Boulder, Colo.,” said Karen Bertoli, Perseus Telecom’s chief marketing officer. “A Tier One bank has deployed High Precision Time globally because they believe they will be called upon by regulators to have a time stamp. Should anything go wrong, you’ve got your time stamp saying a trade happened at a particular time, so it’s a form of preventive risk.”
The service includes access to a National Institute of Standards and Technology (NIST)-certified GPS antenna as well as Network Time Protocol (NTP) and Precision Time Protocol (PTP) connectivity with nanosecond accuracy to the Coordinated Universal Time UTC (NIST) timescale.
In the next few weeks, Perseus Telecom will offer connectivity to the only anti-money laundering exchange for Bitcoin, based in London, Bertoli said. Earlier this month, Perseus announced that it will accept Bitcoin as payment for its services. Perseus will process the Bitcoin transactions with GoCoin, an international payment processing service.
High-speed trading communities who profit from strong volatility may now be getting the relief they need to continue to trade via Bitcoin rather than the highly regulated major currencies across all asset classes.
“Aligning with GoCoin for Bitcoin processing directly supports efficient trading, from pre-trade to post trade, and other digital enterprises such as online gaming who earn Bitcoin as part of their everyday business,” said Dr. Jock Percy, chief executive of Perseus.
For hedge funds, regulatory uncertainty has not allowed firms to normalize and adapt to a stable regulatory environment, leading firms to consider this lack of clarity as the greatest obstacle to adapting to regulatory changes. FATCA, Form PF, and AIFMD, are expected to have the most significant effects on hedge fund operations, Aite Group said.
CrowdBouncer, a software startup, enables securities intermediaries to implement compliance controls for private equity fundraising arising from the Jumpstart Our Business Startups Act (“JOBS Act”). The software also allows individual investors to manage their accredited investor verification through a single platform that is connected to many broker-dealers and investment sites through CrowdBouncer’s application programming interface (API).
“There is a tectonic shift in how capital is being raised,” said CrowdBouncer CEO Bob Carbone. “The impact of the JOBS Act, changes in Regulation D solicitations, and looming crowdfunding regulations will enable entrepreneurs’ greater access to capital, while imposing increased compliance responsibilities and reporting to accredited, non-accredited and all other lawyers, and intermediaries involved in the capital fundraising process.”
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