Automated compliance systems

Abstract

In recent years, investment management companies and other financial service entities have placed an increasing emphasis on strengthening their compliance departments and systems. Factors contributing to this heightened emphasis on compliance include the globalisation and growth of the financial services industry; the development of new and more complex financial instruments; increased scrutiny, higher standards, and tougher sanctions from regulators; and several high‐profile failures that resulted, at least in part, from inadequate compliance. To meet the heightened demands placed on compliance personnel, most investment managers have, to a degree utilised advances in technology to ease the burdens and to improve overall compliance. One of the main uses of technology has been to monitor compliance of securities transactions with regulatory and client‐imposed investment requirements and limitations prior to the execution of the transactions (so‐called ‘pre‐trade compliance’). This paper examines automated pre‐trade compliance systems, focusing on the reasons such systems are needed, the types of systems that are available and the benefits and limitations of such systems.

Citation

Ackerman, F.E., Darrell Mounts, R. and Thomas, D.U. (1999), "Automated compliance systems", Journal of Financial Regulation and Compliance, Vol. 7 No. 1, pp. 48-56. https://doi.org/10.1108/eb024996