Investment banks

The ability to manage conflicts of interest, effectively control the flow of information - particularly inside information, is critical to the success of any investment bank operating in the primary and secondary capital market.

The Compliance Control Room sits at the very centre of this architecture. Acting as the bank’s nerve centre and carefully coordinating the activities of different business areas, it ensures the bank stays on the right side of rules and regulations. Often dealing with vast volumes of data and a need to make swift, accurate decisions, the function is responsible for areas including wall-crossing, research clearing and managing i, /when and how any particular business area may need to be restricted.

Given the demanding nature of the function, it is of vital importance that the controls and processes that underpin the daily operation of the Control Room are well-thought out and operating like clockwork.

Regulatory expectations

Whilst the industry hasn’t seen any major development that significantly impacts the responsibilities of the Control Room since the Global Research Settlement in 2003, the continuing expectation of regulators with regards to conflict management and proper market conducts cannot be understated.

As a result of MiFID II, it is a given that conflicts of interest must be managed or avoided. In practice, this means that firms must continually examine their business model and activities and assess where conflicts could arise. And where potential conflicts arise between the private and public side business areas, we would expect the Control Room to be a key component of the risk mitigating framework.

Meanwhile, regulators continue to pile pressure on the industry to get market abuse controls right. A string of recent enforcement cases and hefty fines suggest that this is an area where firms are likely to be punished for errors. A fundamental control for market abuse behaviours, particularly, insider dealing, is the management of the flow of inside information, a task that cannot be managed without a functional and effective Control Room.

How we can help

Through our work with investment banks in the industry, we understand key challenges that the Control Room faces, from the daily task of getting transaction update to determining when information ceases to be inside information. We help banks build robust frameworks for their Compliance Control Room function.

Control Room health check/ assessment – we can help you to review your processes and controls and identify potential for efficiency enhancement.

Policies and procedures – we can help you to implement policies and procedures to maintain and effective information barrier.

Control Room surveillance support – we can assist in selecting control room surveillance systems, calibrating alerts, and designing case management processes.

RegTech enabled solutions – we partner with STAR Compliance to provide support and help firms streamline and automate certain Control Room processes.