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Robotic Process Automation for Trade Reconstruction

Evolving regulatory requirements are creating complex challenges for financial institutions around the globe. Regulations such as Market Abuse Regulation (MAR), Code of Conduct, Dodd-Frank, and MiFID II, mandate organisations to ensure rapid trade reconstruction which in some cases needs to be turned around within 72 hours.  

Due to multi-channel communications, trade reconstruction is an operational challenge that most financial firms, regardless of size, experience. Traders now have multiple communication channels when communicating with customers such as voice calls (at a desk, turret, or on a mobile phone), by email, instant message, SMS, chat, social media, Skype, etc, with the data for each one of these normally stored in separate locations.

In order to reconstruct the trade, all relating data needs to be gathered and is typically obtained in one of two ways:

  1. a request is made to the respective data owner, who needs to find all communications, across channels, related to the trade in question
  2. an analyst needs to manually log on to each system, search for related communications and trade data (usually by date, time, trade and/or trader ID), and manually piece all of this information together

Voice communications are especially problematic as they are mostly unstructured. Analysts can speculate on a call’s relevancy based on when it was made and by who made it, however to be certain, they would need to listen to it

As a consequence, firms are forced to employ teams of individuals whose sole role is to listen to recordings of calls all day long in order to find the one they are looking for.

The problem is - a reviewer might have to listen to hundreds of calls to find the one that matters. This can be especially challenging and time consuming for transactions that take months to execute and involve numerous communications across different channels.

As regulations place greater demands on firms to address regulator requests for trade reconstructions, in shorter periods of time, technology can enhance and facilitate the analyst's performance. 

This is where robotic process automation for trade reconstruction comes in.

Robotic process automation for trade reconstruction 

A lot of the tasks that go into trade reconstructions are repetitive and tedious. By understanding the science behind these processes (what needs to be done, in what order, how and why), automated trade reconstruction solutions can cut trade reconstruction time from days to minutes, and help firms improve their responsiveness to regulators.

With robotic process automation, the above processes are completely automated and transparent to the analyst; the technology brings together all the various silos needed for the trade reconstruction, providing the analyst with the ability to quickly search across multiple communications to find what they are looking for.

By spending less time on the mechanics of a trade reconstruction, the analyst can devote more time to carefully reviewing the results, before handing them over to the regulator. Analysts can also use their time more effectively, by proactively managing risks, instead of just reacting to requests.

Moreover, trade reconstruction technology benefits the regulator too. Instead of receiving separate files, the technology simplifies their job, allowing them to visualise communications on a timeline as they happened and as such giving conversations proper context.

As the pace of regulatory change accelerates, it's a given that financial firms will need to get better and faster at trade construction. Automated trade reconstruction technology will allow them to streamline their processes in order to manage risk and their workload efficiently. 

Robotic Process Automation Technology Solutions: