Post by anenro on Oct 19, 2020 14:50:26 GMT 4
With traders far from offices, banks bring surveillance to homes
In this open-ended era of working from home, the financial industry is taking unprecedented steps to police bankers and prevent wrongdoing.
Traders at firms like Barclays Plc must certify they work in separate rooms to housemates. Morgan Stanley bankers are using laptops where every key stroke is recorded. Lenders including NatWest Group Plc are requiring daily location updates from traders and recording video calls.
With fresh lockdowns sweeping Europe this weekend, including Londoners being banned from mixing with other households indoors and Parisians under curfew, such remote monitoring seems here for the long haul.
The pandemic has already forced compliance officials at banks and trading firms to navigate a steep learning curve since March when they cobbled together a patchwork of measures for the first government-mandated lockdowns. Regulators, who early on had to relax some monitoring rules to enable traders to work from home, now expect kitchen tables to be as closely monitored as trading floors.
“Going forward, office and working from home arrangements should be equivalent,” Julia Hoggett, director of market oversight at the U.K.’s Financial Conduct Authority, said at a City & Financial Global conference this week. “This is not a market for information that we wish to see be arbitraged.”
The stakes for the banks are high. Insider trading, manipulation, and improper use of own accounts are all elevated risks when dealers are home alone.
After a decade trying to rebuild trust lost in previous trading scandals, firms have to show they have not forgotten the lessons. In the five years to September 2017, banks forked out $375 billion in conduct fines, according to a report by industry panel FMSB.
Empty Skyscrapers
With offices around the world set to stay sparsely populated under tightening Covid-19 restrictions, the challenge of monitoring remote staff is here to stay. In the U.K. where about 1.1 million work in finance, government officials have urged office staff to work from home for as long as six months.
Things have improved since the first few chaotic weeks, when unprecedented market volatility triggered an avalanche of warnings that in some cases made enforcement impossible. Trade surveillance alerts increased over 600% for some global market participants in the first three months of the year, at the onset of the pandemic, according to data from Greenwich Associates.
“There were some weeks of chaos in some firms,” said Danielle Tierney, senior advisor for market structure and technology for Greenwich in New York. “Many firms simply were not able to comply with the rules.”
Remote Measures
More muted markets and a refinement of remote compliance measures helped stem the tide of red flags since, with firms recalibrating their alerts and transferring staff to clear backlogs while introducing a slate of measures to police home offices.
Firms are logging every conversation and sifting corporate emails for troubling language. At many banks including NatWest, traders can only place orders if the request from the client is coming from an authorized device.
Taped phones and restricted bathroom breaks are common, while the head of a trading desk of a U.S. bank in London, who didn’t wish to be named, has requested that his team write every trading move into a recorded chat.
In this open-ended era of working from home, the financial industry is taking unprecedented steps to police bankers and prevent wrongdoing.
Traders at firms like Barclays Plc must certify they work in separate rooms to housemates. Morgan Stanley bankers are using laptops where every key stroke is recorded. Lenders including NatWest Group Plc are requiring daily location updates from traders and recording video calls.
With fresh lockdowns sweeping Europe this weekend, including Londoners being banned from mixing with other households indoors and Parisians under curfew, such remote monitoring seems here for the long haul.
The pandemic has already forced compliance officials at banks and trading firms to navigate a steep learning curve since March when they cobbled together a patchwork of measures for the first government-mandated lockdowns. Regulators, who early on had to relax some monitoring rules to enable traders to work from home, now expect kitchen tables to be as closely monitored as trading floors.
“Going forward, office and working from home arrangements should be equivalent,” Julia Hoggett, director of market oversight at the U.K.’s Financial Conduct Authority, said at a City & Financial Global conference this week. “This is not a market for information that we wish to see be arbitraged.”
The stakes for the banks are high. Insider trading, manipulation, and improper use of own accounts are all elevated risks when dealers are home alone.
After a decade trying to rebuild trust lost in previous trading scandals, firms have to show they have not forgotten the lessons. In the five years to September 2017, banks forked out $375 billion in conduct fines, according to a report by industry panel FMSB.
Empty Skyscrapers
With offices around the world set to stay sparsely populated under tightening Covid-19 restrictions, the challenge of monitoring remote staff is here to stay. In the U.K. where about 1.1 million work in finance, government officials have urged office staff to work from home for as long as six months.
Things have improved since the first few chaotic weeks, when unprecedented market volatility triggered an avalanche of warnings that in some cases made enforcement impossible. Trade surveillance alerts increased over 600% for some global market participants in the first three months of the year, at the onset of the pandemic, according to data from Greenwich Associates.
“There were some weeks of chaos in some firms,” said Danielle Tierney, senior advisor for market structure and technology for Greenwich in New York. “Many firms simply were not able to comply with the rules.”
Remote Measures
More muted markets and a refinement of remote compliance measures helped stem the tide of red flags since, with firms recalibrating their alerts and transferring staff to clear backlogs while introducing a slate of measures to police home offices.
Firms are logging every conversation and sifting corporate emails for troubling language. At many banks including NatWest, traders can only place orders if the request from the client is coming from an authorized device.
Taped phones and restricted bathroom breaks are common, while the head of a trading desk of a U.S. bank in London, who didn’t wish to be named, has requested that his team write every trading move into a recorded chat.