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How Trade Monitoring and Surveillance Can Help With Regulatory Compliance?

How Trade Monitoring and Surveillance Can Help With Regulatory Compliance?

The amount of regulations that are present in the financial markets today can be challenging for many financial firms. However, these regulations are designed to reduce exposure to risks and all players operating in the financial markets are expected to meet each rule without failure. Violating regulations can lead to very detrimental penalties. Trade monitoring and surveillance is one of the key strategies that the financial sector is using to comply with regulations. A trade monitoring and surveillance system is basically a software that tracks, monitors and reports transactions that don’t meet a specific set criteria. The aim of such systems is to ensure traders in the stock market are in control. The systems have helped to prevent insider trading and other forms of stock market fraud.

Compliance Monitoring – What Does It Mean

Compliance monitoring is basically a strategy that is designed to help firms in the financial sector know whether they are compliance to regulatory standards or not.  But of course this is just a simple definition. The whole idea of compliance monitoring encompasses a variety of things and here they are:

  • Capital limitations – as part of compliance monitoring, trading firms are expected to have internal control systems that monitor capital usage to ensure set limits are not exceeded.
  • The process may also involve the development of a company specific compliance strategy that is aligned to the risks the firm faces
  • Compliance reporting is central in compliance monitoring. It allows firms to see loopholes in compliance strategies and find ways to address them.
  • Firms are also expected to set up early warning signs that detect capital market frauds earlier before the damage is done.
  • Compliance monitoring may also involve training of staff on regulatory rules and systems in place to ensure they are met.

Developing A Compliance Monitoring Plan

The idea of developing a comprehensive and effective compliance monitoring system is not easy, such software solutions require a lot of expertise but the great thing is that you don’t need to worry about this. Third party software providers can help integrate your trading systems with compliance monitoring solutions to ensure that you are in control. An enterprise software solution is cheaper, more effective, and saves you a lot of time.

What Are The Benefits?

Investing on a compliance monitoring system has its benefits. The first thing is that it gives you a proactive option in dealing with stock market fraud and potential cases of regulatory violation. The system also makes it easier for financial firms to maintain trading integrity without necessarily reducing the efficiency and performance.

See Also

Meeting regulatory compliance in the stock market has its challenges but exploring modern transaction monitoring technology can make things easier. Visit Trapets anytime and see how this works.

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