Voice and Electronic Communications Surveillance in Capital Markets

Executive Summary

Exciting communications surveillance initiatives abound at global investment banks and tech-savvy hedge funds, but most capital markets firms are still a long way from being remotely preventative. In Opimas’ interviews with 140 compliance teams, several takeaways about the industry became evident.

As a rule, the sell side has invested more heavily than the buy side in its capabilities to monitor both text and voice communications.  The main exception to this rule is hedge funds, where investment has been deliberate to bolster compliance processes across the board. While it is rare to encounter a middle-market sell-side institution without automated text communications surveillance, 25% of the interviewed asset managers with assets under management (AuM) over US$50bn did not proactively monitor their employees’ communications.

Figure 1. eComms Adoption on the Sell Side and Buy Side

Source: Opimas, interviews with 140+ compliance teams

Voice surveillance follows similar general patterns, where activity and innovation are higher on the sell side. Most market participants still rely on human spot checking, though voice-to-text is quickly rising in popularity.  

While market participants are still struggling to improve surveillance of siloed communications channels, especially as they continue to grow in number and complexity, the dream state remains elusive. In the future, interviewees hope to jump beyond the siloed streams and bring together a much broader array of data sources that enables preventative, risk-based alerting.

Figure 2. Voice Surveillance Adoption on the Sell Side and Buy Side

Source: Opimas, interviews with 140+ compliance teams

 

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