Pre-trade Compliance: Better, Cheaper, Faster
Firms answer regulatory, investor demands with added controls and third-party systems
At the heart of Societe Generale's recent EUR4.82 billion ($7.01 billion) in losses from unauthorized trades is the fact that the accused trader--Jerome Kerviel--was able to use his knowledge of the system to get around the checks and balances. Kerviel, an equities trader, started in the back office and had maintained the French bank's compliance technology. Societe Generale has acknowledged that he understood the trade processing and control procedures and knew how to avoid them.
The alleged fraud comes as regulators and clients alike are demanding better transparency, reporting and accountability. Firms are beefing up their pre-trade compliance technology, turning to Web-based delivery to reduce costs and improve accessibility, expanding asset-class coverage, replacing in-house platforms with third-party vendors' and adding more checks and controls to existing systems.
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