EagleAI- Advanced Solutions for Risk Management

EagleAI- Advanced Solutions for Risk Management

Request a Demo
  • HOME
  • PRODUCTS
    • EAGLEAI – TRADEWATCH
      • TRADEWATCH – TRADING RISK
      • TRADEWATCH – COMPLIANCE RISK
      • TRADEWATCH – FRAUD RISK
      • TRADEWATCH – MARKET DATA RISK
      • TRADEWATCH – POSITION RISK
  • SOLUTIONS
  • SERVICES
    • ENTERPRISE RISK MANAGEMENT
    • RISK ASSESSMENT SERVICES
  • PARTNERS
  • BLOG
  • ABOUT US
  • CONTACT US

Tag Archives: Wall street journal

  HomeEagleAI- Advanced Solutions for Risk Management   : :   Blogs   : :   Wall street journal

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

0

Recent Posts

  • financial frauds by banks, trading firmsEagleAi Trading Risk, Fraud Risk and Compliance Risk is Now available on AWS MarketplaceAugust 25, 2021
  • Introduction to EagleAi TradeWatchFebruary 14, 2021
  • EagleAi Use Case Series: Fraud Risk – Undetected spoofing practice at a trading firm brings disrepute to the firm along with hefty finesFebruary 13, 2021

Subscribe to EagleAI Blog

Gallery

Popular Tags

Advanced Risk Management Ai artificial intelligence bid price compliance risk compliance rules current price Data detect different techniques disrepute Eagleai Electronic trading false positives fines fraud detection controls Fraud Risk Fraudsters fraudulent trading patterns front running hefty fines high price investigation layering low price market price moving the price regulatory regulatory authorities reputational damages Risk Anomalies sell order sell orders sophisticated spoofing spoofing techniques technology TradeWatch trading trading algorithm trading behaviors trading desks Trading patterns Trading risk wall street

Categories

  • Blogs

Archives

  • August 2021
  • February 2021
EagleAi
5 Penn Plaza, New York, NY 10001
info@eagleai.com
1-833-324-5324

About Our Company

EagleAi LLC is a wholly owned subsidiary of Quantel Ai, Inc (https://quantel.ai), a FinTech startup founded in 2018 with cutting-edge AI and Deep Learning expertise. We aim to solve real-world problems with the help of most advanced technologies and help make a difference to our clients.

Talk To Our Experts

+1 833-324-5324

Quick Links

  • Products
  • Free Consultation
  • Meet Our Experts
  • Our Partners
  • Blog
  • Career

Latest News

  • financial frauds by banks, trading firmsEagleAi Trading Risk, Fraud Risk and Compliance Risk is Now available on AWS MarketplaceAugust 25, 2021
  • Introduction to EagleAi TradeWatchFebruary 14, 2021
  • EagleAi Use Case Series: Fraud Risk – Undetected spoofing practice at a trading firm brings disrepute to the firm along with hefty finesFebruary 13, 2021

News Letter

Sign up today for hints, tips and the latest product news

Follow Us On

Copyright © 2021 EagleAI- Advanced Solutions for Risk Management . All rights reserved.
  • Privacy Policy
  • About Us
  • Contact Us
IBM, AWS, Google, Oracle, Mphasis, devicepilot, etc. are the registered trademark of of their respective owners and/or its affiliates.
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.
Cookie SettingsAccept All
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT