Risk and regulation compliance are critical concerns in the trading industry. Failure to give trade compliance the time and detail needed can lead to legal penalties or trading errors. With the use of pre-trade risk and compliance monitoring software, trade and investment managers can mitigate risk and ensure regulatory compliance across multiple trading platforms.
Dangers of Pre-Trade and Trade Compliance Risk
The Madoff investment scandal of 2008, which scammed investors out of about $50 billion, is a prime example of major ramifications of careless trading. Bernard Madoff admitted that the wealth management arm of his firm was an elaborate Ponzi scheme that was only mailing paper copies of trading records to clients rather than providing electronic access to his trading platform.
Now, as two lawyers attempt to recover the stolen money, criticisms abound that the fraud could have been avoided “if the US had introduced regulations to force firms to use technology to increase the transparency of financial transactions.” As noted in The Guardian, “Madoff slipped through the [SEC’s] cracks, and Americans lost billions of dollars.”
Trade compliance is complex. Hundreds of amendments can be made to the system’s nomenclature within a year. Compliance problems can hurt your bottom line and damage your company’s reputation, and the best way to avoid these dangers is by using pre-trade risk and compliance monitoring software to monitor and implement regulatory changes in real time.
Using Pre-Trade Risk and Compliance Monitoring Software
With so much on the line, the process of managing in-house trade compliance monitoring can seem overwhelming, which is why many rely on technology for a simpler solution. Traders, firms, investment managers, and more can avoid the massive amounts of time and money that it takes to rectify compliance issues by validating your data and using pre-trade risk and compliance monitoring software. Tracking and confirming every trade, checking purchase restrictions, fund substitutions, and other restrictions, and applying compliance controls are all aspects of risk management our software does for you.
Increasing Transparency and Preventing Investment Fraud
At BlazePortfolio™, we are serious about mitigating risk. Our pre-trade compliance monitoring software has automated the data validation process, so you can be confident in the trade calculations, prevent incorrect trading, and notify managers to review specific trades. We also keep detailed records of everything done in the system (which makes regulators happy), analyze to find hidden risks, and automates reporting to reduce compliance costs.
HR1530, “The Fiscal Transparency Act of 2017,” was introduced in the U.S. House of Representatives on 3/15/2017 and would require “federal financial regulatory agencies to adopt specified data standards with respect for format, searchability, and transparency.” Supporters of the bill say that it will help prevent the next Bernie Madoff – but we’re one step ahead. The data standards outlined in this bill have been part of our platform for years. See for yourself – schedule a demo of our pre-trade and trade compliance risk software today!