Trade Activity Monitoring

March 16, 2022

A major European bank required an integrated trade monitoring system. Brickendon was brought in to design and build a new system to replace the existing tactical system, which had been found to be unstable and unreliable. Alongside this project, the client requested a strategy proposal for a revised monitoring operating model. This model would alleviate control concerns and provide an efficient and meaningful way of sharing monitoring results with other stakeholders across the institution.

The Challenge

The client’s immediate priority was to replace a failing tactical system, which posed several key issues for the project team:

  • The delivery date was brought forward following high profile internal control failures
  • The solution needed to comply with regulatory requirements in multiple jurisdictions
  • There was complexity surrounding the book structure, legal entity and cross border reporting
  • Trade booking involved multiple systems with different versions of trade workflows (this required the monitoring systems to be aligned in order to arrive at comparable control data)

The client’s second requirement was for a revised operating model for its monitoring function. This presented several issues for the project team:

  • Changing the existing operating model presented a significant organisational change and buy-in from various areas was crucial for this to be accepted across the firm
  • In creating the revised operating model there was a need for exception-based reporting that would highlight unusual trading activity. This required extensive industry knowledge and a detailed understanding of trader activity across asset classes to be able to build rules that would remove false positives

The Brickendon Solution

Brickendon Consulting was approached to provide business advisory and project management services. The Brickendon offering included:

  • In-depth assessment of project scope, definition and requirements for the new system build and a detailed bottom-up project plan
  • Establishing rapid milestones and tightly managing the project team to meet these
  • Analysis of trade versioning across all front office systems to ensure consistent reporting of trade activity
  • Detailed research of industry rogue trading and market abuse cases was carried out, coupled with thorough business analysis to arrive at meaningful monitoring reporting and escalation points
  • Clear communication with stakeholders so that the new operating model could be rolled out with buy-in from all areas, including the front office, operational risk and compliance

Client Benefits

The benefits of the new system and revised operating model included:

  • The project was delivered on time, on budget and without a reduction in scope
  • Serious control failures were rectified and the new system was endorsed by internal audit and operational risk
  • Differing regulatory requirements were addressed (FSA and BaFin) within a single framework
  • The system significantly improved the transparency of trading activity
  • The new operating model vastly increased the level of accountability for the monitoring function
  • The redesigned reporting workflow included clearly defined escalation procedures

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