Since Nikhil Rathi’s arrival last October as CEO of the FCA, he has been busy transforming the FCA towards a “data driven” culture.
A key part of the transformation was the recent appointment of Jessica Rusu as the FCA’s first Chief Data, Information and Intelligence Officer (CDIIO). The importance placed on this new role was highlighted when Ms. Rusu was added to the FCA’s Executive Team.
Ms. Rusu brings years of corporate data experience to the FCA, previously running 'big data' roles at eBay and Ford Motor Company. She is chartered with leading the transformation of the FCA’s use of data, intelligence and information to effectively oversee the 60,000 firms it regulates.
The FCA has advocated that financial regulators need to be at the forefront of technological changes and invest and adopt innovative solutions. This allows regulators to stay in step with the financial firms and markets it is supervising.
Financial firms are increasingly using sophisticated technologies including algorithmic and automated trading to drive new trading strategies with sometimes intended or unintended consequences of creating market manipulation strategies.
The FCA’s transition is similar to other global regulator’s that rely on KRM22’s Global Risk Platform (GRP) to harness the powerful market insights based on the regulatory data it is holding. The implementation of various regulatory reporting regimes including EMIR, MiFIDII and SFTR has provided regulators valuable market insights.
Coupled with the rise in Suspicious Transaction Order Reports ('STORs') submitted by regulated firms; our clients now have access to a wealth of data to instigate investigations. All of our regulatory clients are still evaluating how to make use of this growing data-lake and leveraging this new strategic data driven approach. It will be interesting to see the initiatives the new data-led organisations will launch.
All regulators have been encouraging first and second lines of defence functions within the financial industry to 'up their game' with the adoption of artificial intelligence and machine learning tools as part of an automated surveillance solution in order to detect the most complex of market manipulation strategies and to reduce the number of false positives.
The Global Risk Platform allows KRM22’s clients to address the challenges of dealing internally with disparate data sets sitting across 'siloed' business functions by creating a new holistic approach to surveillance. Our approach is to advocate that firms need to 'join the dots' in order to unravel complex misconduct scenarios, including layering market surveillance alerts at a trader lever with P&L performance and VaR position limit breaches.
This can only be done with a rich and integrated risk solution across market and regulatory risk a key component of KRM22’s Global Risk Platform.