compliance risk Archives - EagleAI- Advanced Solutions for Risk Management

EagleAi Trading Risk, Fraud Risk and Compliance Risk is Now available on AWS Marketplace

financial frauds by banks, trading firms

We add a milestone to our strategic partnership with Amazon AWS platform, as EagleAi launches on the AWS Marketplace. With this launch – EagleAi Trading Risk, Fraud Risk and Compliance Risk on the AWS Marketplace SaaS Subscriptions are now available in the US, Europe, EMEA, APAC, and ANZ. We are excited about offering EagleAi on Marketplace because – like AWS – EagleAi is incredibly customer centric in everything we do.

With the EagleAi enterprise scale solution suite, enterprises can make their defenses rock solid.

Built with Enterprise level Data Security, Protection, Encryption, High Availability, Reliability and Scalability.

EagleAi’s self-learning models get to work from the get-go and keep refining its models non-stop, thus keeping it always current and effective.

You can reduce time-to-build your Risk Management solutions using advanced Artificial Intelligence, achieve a speed of “0 to production-ready” in just few days, and integration with EagleAi is seamless and easy.

Why EagleAi?

EagleAi modules have a very high accuracy rate thanks to its ensemble of AI models employed to do its job. With its relying on multiple different approaches to confirm an issue before it is raised as an alert, EagleAi is highly accurate in its identification of issues. Furthermore, it is able to detect a problem before it becomes serious using its trend forecasting techniques.

EagleAi uses innovative methods to triangulate across different models to be able to identify the exact problem such as the specific client, trader, system name etc. that would give enough information to fix any problem instantaneously.

There is no need to second guess with issues identified by EagleAi.

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The following EagleAi Suite of products are now available on AWS Marketplace

EagleAi Trading Risk – Alerts risk managers on unusual trading flows 24×7

This module learns the typical patterns of trading activity across different entities involved in trading such as the client, traders, order management system, symbol, trading desk etc.

The advanced AI engines powering EagleAi Trading Risk modules have been designed to detect issues to prevent loss in trading due to operational issues and regulatory fines.

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Get started with the EagleAi Risk Management SaaS Subscription today.

EagleAi Compliance Risk – Compliance officer’s watch guard 24×7

The advanced AI engine powering the EagleAi Compliance Risk modules has been built to cover many trading related compliance rules globally, supports most trading compliance rules such as US Equities SEC & FINRA Trading Rule 611, 15c3-5, 200, 203, 47A are some of the out-of-the-box rules.

Firms can harness the power of EagleAi Compliance risk to discover lurking issues unknown for several years significantly reducing the chance of heavy penalties and fines.

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Get started with the EagleAi Compliance Risk SaaS Subscription on AWS Marketplace today.

EagleAi Fraud Risk – The fraud detector with eagle’s vision

It is a serious regulatory violation if a firm does not have enough oversight on trading to prevent fraudulent trading patterns such as Spoofing, Layering, Front Running etc within a trading firm.

The EagleAi Fraud Risk solution detects patterns that look very suspicious of such fraudulent trading behavior and alerts the risk managers. This module can save millions of dollars of fine as well as prevent any reputational damages.

Learn more …

Get started with the EagleAi Fraud Risk SaaS Subscription on AWS Marketplace today.

Watch our introduction to EagleAi on YouTube .

Contact our sales team for more information. https://eagleai.com

About EagleAi:

EagleAi is a comprehensive fraud detection, compliance risk and trading risk management solution for banks and trading firms with advanced dashboard visual analytics. EagleAi’s industry leading artificial intelligence and machine learning technology requires some of the best minds in the industry. Our Leadership team with over 40 years of collective experience in Trading, Market Data, Risk Management and Fintech services, is leading the charge, helping its investors and its customers get the best ROI. For more information, visit eagleai.com and follow us on LinkedIn and Twitter.

EagleAi Use Case Series: Compliance Risk – A junior developer accidentally removes critical compliance checks which goes unnoticed for a very long time

One of the most highly regulated industries all over the world is Financial Industry. No matter what the size of a firm is, there are numerous regulations to comply with to do any business in this vertical. From the annual reports from regulatory enforcement bodies like FINRA in the US and information about the fines levied on firms for non-compliance, we know that non-compliance is a very costly affair which could not only lead to financial loss but also cancellation of license to operate. EagleAi can be used to monitor the patterns around compliance rules to detect any deviations that would warrant further inspection.

In this use case scenario, let us consider a hypothetical but a very plausible scenario where something can go very wrong with compliance of a firm due to innocuous changes in a very complex trading environment. If the firm finds about non-compliance, it has to self report to the regulators and hope for lesser fines. If the regulators find about it, it could have a more severe consequence such as the firm being suspended to trade.

A junior developer of a trading firm accidentally removes a critical compliance rule that nets the long and short trading positions of each symbol across all trading accounts and sets whether a sell order for that symbol should go out as ‘Long’ or ‘Short’.
Short-Sell orders requires that there is enough borrow-able shares before it can be traded. This went into production with the result that all sell orders went only as Sell Long and none as Sell Short.
Further, no one noticed the fact that there were no short sell orders from firm’s trading accounts for over six months until the regulators notices this in their audit.
Further investigation revealed that firm was benefiting from these trades with no constraints faced on borrowability of the stock.
Regulators fine the firm over $500,000 and bars them from trading on that asset class for over 2 weeks which is estimated to be more than $500,000 thus resulting in more than $1M loss.
Further there are news items in famous news papers like Wall Street Journal putting the firm in bad light that causes reputational damages along with financial loss.

This scenario even though is imaginary, could have been real incident that transpired in many of the regulatory findings. There are ways firm can protect themselves from such violations and manage compliance risks better. EagleAi’s TradeWatch Compliance Risk module is one such innovative tool that can be employed to raise alerts when something goes amiss.

EagleAi Compliance Risk module is designed to watch the critical compliance related characteristics of every order and observe the patterns of behavior of each trading entity such as client or trader. For example, for each client it observes the fraction of order flows that a client places as buy vs sell, sell long vs sell short, the type of symbols it places as sell short, gross vs net notional value, notional value on various asset classes etc. All of these traits at both an individual order level and aggregate level forms the knowledge base of EagleAi from which it applies its multiple anomaly detection algorithms. If EagleAi Compliance Risk module was at work in a similar scenario, it would have raised alerts that pinpoints the fact the number of Short Sell orders from the trading account is anomalously low. It further gives more context such as which particular system this problem was detected giving clear information that reduces the time to investigate and fix.

EagleAi – A compliance officer’s watch guard 24×7.
Trading Firms can have a peace of mind with EagleAi’s advanced compliance risk modules as it covers quite an array of global compliance rules.
Book a demo today @ https://eagleai.com/tradewatch-compliance-risk/

Check out our complete product suite – TradeWatch Fraud Risk, TradeWatch Trading Risk, TradeWatch MarketData Risk, TradeWatch Position Risk, EagleAi Anomaly Detector, EagleAi Trend Detector

EagleAi Use Case Series: Market Data Risk – Bad market data causes a broker to reject orders from a client incorrectly which leads to a financial loss

In electronic trading, quality of market data is very critical. There has been too many instances where trading firms’ algorithmic engines trading on bad market data has caused huge losses for the trading firm. There are compliance rules that require brokers to ensure the correctness of an order by applying pre-market limit checks. It is important that these checks are applied with correct market data. In this blog we are going to consider a realistic but a hypothetical scenario where bad market data could cause huge losses even when it prevents a legitimate trade from happening.

Scenario: Trading systems subscribe to real time market data which has got bad market data for delta, gamma and other greeks of an option for one of its symbols.

Delta is 20x the usual delta for an option with a similar strike and contract expiry month. The limit checker checks the “Delta Adjusted Notional Value” of a client’s option order and rejects the order as it computed a 20x a typical value of the delta adjusted notional value.
Because of the limit breach, client is not able to send any orders to the exchange through the broker. It takes a while for the support team to figure out what is happening while the client is restless to place the orders.
When knowing about the trading glitch, client is upset with the broker.
Broker makes the client whole by agreeing to pay more than $100,000 for the trading loss suffered by the client during the 30 minute period it took to resolve.

It is obvious that a very high quality market data is critical to any trading activity at an institutional scale. When algorithms make trading decisions, it is even more important to have high quality market data. Despite the efforts of the team that supports the market data infrastructure, erroneous data does slip in. EagleAi can be an effective engine to aid in flagging when bad market data creeps in the stream.

EagleAi Market Data Risk module can process streaming data as an input. As it processes this data, it would self-learn about the characteristics of each symbol such as the typical price increase, the typical bid-ask spread at different times of the day, typical volume, typical values for the greeks if it were an option symbol etc. When EagleAi detects a huge deviation from the symbol’s patterns such as the one in this scenario, it can set a flag on the market data stream so that algos can choose to ignore this market data. EagleAi Market Data risk uses many different AI (Artificial Intelligence) techniques to detect these anomalies to compute a proprietary score named “E-score”. False positives are significantly reduced by flagging it only when EagleAi score is above a high threshold. EagleAi Market Data risk module can prevent trading decisions based on bad market data to prevent financial losses to the Client and maximize profits.

EagleAi – detects abnormal market data at lightning speed.
The EagleAi Market Data Risk module is an ensemble of Anomaly Detection techniques to detect abnormal market data across thousands of symbols.
Book a demo today @ https://eagleai.com/tradewatch-market-data-risk/

EagleAi is a collection of enterprise scale AI engines, which will watch your business’s back and prevent major losses Trading Risk, Fraud Risk, Compliance Risk, position exposures (TradeWatch Position Risk), and Market Data Risk.

Tag Archives: compliance risk