News
Winterflood Securities case study
Winterflood Securities champions emerging trading surveillance tool
Background
Winterflood Securities (“WINS”) is a leading UK market maker, responsible for buying and selling equities and fixed income products to wholesale counterparties such as stockbrokers and institutions comprising of fund, asset and wealth managers.
As with all Securities companies, WINS are regulated by the FSA, and one of their primary focuses is the integrity of the market via the market abuse regime. WINS typically handles in the region of 40,000 - 50,000 trades per day although, during the height of the financial crisis, this reached a staggering 90,000 transactions daily.
Solution
WINS has a number of robust internal procedures enabling them to comply with FSA regulations but a decision was taken to complement and add value to their existing monitoring programme by implementing Market Detect, a sophisticated trading surveillance system. According to Simon Rafferty, Head of Compliance at WINS, “Market Detect is a powerful additional risk mitigation tool which we view as an integral part of a strategic approach, working in conjunction with other systems and processes to provide best practice compliance monitoring.”
When reviewing trading surveillance systems, Simon explains “during our evaluation, two types of systems became apparent. Purely rules based systems, where you constantly have to tweak the rules, or where you apply the same rules across different types of counterparty, trading in different types of security and yet you’re assessing them against the same set of principles. The other type of system evaluated was Market Detect, which intelligently learns from the information it is fed.”
Outcome
The case handling and real time monitoring of the alert system are key features which WINS feel they are benefitting from since systems implementation. Various Suspicious Transaction Reports (STRs) have also been generated as a direct result of Market Detect and new alerts such as ‘layering’ have been created to better suit WINS requirements. Simon Rafferty states “the real benefit lies in the fact that Market Detect acts effectively as scalable extra headcount. It monitors the same number of trades that 10 people could and is capable of monitoring the same number of trades as 100 people whilst still producing the same output.”
