As firms expand, the increasing volume of MNPI and deal-related data can tax compliance officers if they lack the help of control room automation software. Here's StarCompliance CEO Jennifer Sun with three specific ways software can make the most of your firm's control room function
In the current financial services environment, manual control room monitoring methods are simply insufficient for ensuring full compliance. Firms are handling a higher number of large, complex deals than ever before. And as they continue to expand M&A, trading, research, sales, and other activities, the increasing volume of material nonpublic information, or MNPI, can tax even the most seasoned compliance officers. This is especially true as the pandemic has created a more geographically dispersed workforce in the financial services industry. As employees collaborate remotely, digital communications channels make the flow of MNPI even more complex and difficult for compliance officers to manage. And as firms expand, regulators are evolving to keep a closer eye on them. To stay within regulatory bounds and ensure the smooth closing of deals, compliance officers today need tools capable of handling the increasingly complex flow of more MNPI and other deal-related data.
Automated control room software can help in the following ways.
1. COMPILING A COMPREHENSIVE VIEW OF MNPI
Compliance officers need to see all MNPI in one place in order to maintain proper oversight. The right software will automatically integrate with a firm's existing employee trade monitoring tools to pull all that data into one centralized view for compliance officers to see.
At the same time, employees can use the software to easily self-report and update projects with any MNPI or other pertinent information they gain access to. Compliance officers can see this information immediately in their centralized view, so they can then monitor the flow of information for deals in motion and catch any potential conflicts in real time.
2. BUILDING THE IDEAL TEAM
To staff deal teams, compliance officers must consider employee skill sets, experience, availability, and bandwidth along with the types of deals or transactions for which they're building teams. It can be a difficult and time-consuming process, especially when, due to the higher volume and complexities of deals, bankers are likely working on more projects for longer periods.
Control room automation software eases the burden on control room teams by compiling all notable deal details in one place. Rather than jumping between spreadsheets, emails, and institutional memory to determine the best fit for a team and uncover potential deal-team conflicts, compliance officers can simply view it all in one, convenient digital collection.
3. MANAGING INFORMATION BARRIERS
Control room officers spend a lot of time managing information barriers to control the flow of MNPI. Manual methods are especially time consuming and can create room for error, which can lead to market abuse and regulatory trouble. Control room automation software can make the creation and management of information barriers more efficient and effective.
Not only can such a tool aggregate all necessary employee data—such as role, location, and whether public or private-side employees are involved—into one central view, it can also associate that information with specific projects, deals, and types of required restrictions. This makes it much easier for compliance officers to see in real time who knows what and the barriers that must be in place to prevent the mishandling of MNPI.
Firms that fail to scale compliance functions at the same pace they scale other critical firm activity will eventually find themselves on the wrong side of regulators and the wrong side of the regtech revolution. Control room automation software is the key to scaling compliance oversight quickly, keeping up with growing demand, and staying competitive in the always fast-evolving financial services industry.