Advice on an international brokerage firm’s trading and surveillance control environment

Following a business transformation, we were asked by an international brokerage to perform a targeted assessment of the controls deployed by their trading and sales teams and the adequacy and effectiveness of their surveillance framework. The firm had recently made a number of enhancements to its arrangements and this was an evaluation of the robustness and sustainability of the systems and controls.

We met with a number of sales and trading staff, covering the different instruments traded by the firm. We assessed the manner in which sales and trading staff engaged with their customers, how they interacted with other market participants and how they were able to demonstrate an effective control environment and timely escalation of matters to Compliance, where necessary.

Having reviewed these controls, we assessed the firm’s enhanced surveillance arrangements. We considered the coverage of the system, the breadth of the algorithms in place for trade and communication surveillance, alerts handling and the treatment of suspicions. We provided our views on the relationship between the first and second line of defence controls and identified where additional steps could be taken by the firm to augment its framework and ensure control sustainability.

We provided a report to the firm that could be used by the Head of Surveillance in their conversation with management and the regulator.