RegTech - Implementing the Right Compliance Systems

Rutherford's Leadership Series is a series of interviews with key players within the compliance, financial crime, legal and cyber security sectors. These informal conversations will serve as an opportunity for professionals to get insights on the trending topics within their field.

For this next instalment of the Leadership Series, we briefly discuss the importance of technology within compliance with a top Head of Compliance in financial services. Many say that RegTech is the future of the compliance sector, as stated in one of our latest articles: what happens though when the implemented technology is not suited to a firm's realities? We explore the topic with our compliance expert below.

What are your overall views on RegTech?

RegTech is incredibly important: I think technology is where financial services firms should be investing in the near future. Where you can rely on technology - the right sort, that is - to assist with ensuring compliance with regulation, then it makes processes a lot more efficient.

What do you mean by 'the right sort'? What would be the wrong type of technology?

You have to be careful when it comes to selecting technology. I think it can go wrong if you are not careful with its coding aspect: the results produced by your selected technology might not necessarily be the right ones. You need to review the technology in place to ensure it is producing the right data.

Nothing is wrong with buying an off-the-shelf market abuse monitoring system - there are many on the market after all. What is wrong, though, is getting a system that isn't suited for the nature of the business and the securities that it trades. So, for example, a quant firm that is trading very liquid instruments in a very quick time will need technology that allows one to monitor market abuse in a way that is consistent with the way the firm is transacting.

So it might be best to build a system in-house?

Often, you need to. And from my perspective, unless you have the right sort of technology in place, then there is no point in having a market abuse surveillance system for a quant firm if it truly is only relevant for insider trading, for example.