Introducing :Supercharge Your Holistic Trade Surveillance Strategy

• Introductions

• Reflections on Holistic Surveillance

• Best Practice Holistic Surveillance Maturity Model Research

• Introducing SURVEIL-X: The First AI-Powered True Holistic Surveillance Platform

• Live SURVEIL-X Demonstration

• Questions & Answers

Today’s Presenters

3

Graham UreFinancial Crime Technology

Partner and Co-Lead for Market Abuse & Surveillance,

PwC

Steve LoGalboFinancial Markets Compliance,

Director of Product Management, NICE Actimize

Cromwell FraserFinancial Markets Compliance

Solutions Consultant,NICE Actimize

Tim ArmstrongFinancial Markets Compliance,Product Marketing Manager,

NICE Actimize

PwC reflections on holistic surveillance

NICE Actimize SURVEIL-X Webinar

17 October 2019

PwC

The current state of surveillance ~ facts and figuresFindings from the 2019 PwC Surveillance Market Abuse survey

80% of surveillance identified STORs identify insider dealing

Surveillance is largely performed in channel silos –truly holistic surveillance is aspirational

80% of participants will have automated voice surveillance in place in the next three years

Only 50% of participantswere satisfied with their trade solution,45% with theireComms solution

Less than 0.01% of EMEA alerts lead to a STOR

40 million - Alerts generated by 17 participant banks in the last 12 months

517 October 2019PwC reflections on holistic surveillance

PwC

Are we winning or losing the market abuse surveillance war?

Finding signals through the noise; has effective surveillance detection been swamped by the volume of false positives?

Can surveillance solutions and existing operating models manage the challenge of surveilling for more complex forms of market abuse such as cross product / cross market manipulation?

As surveillance has improved, has there been a co-evolution of bad actors finding more complex, subtle ways of abusing the market?

Has reality replaced hype; ‘Minority report’ style analytics giving way to the attritional nature of identifying and addressing data quality challenges?

617 October 2019PwC reflections on holistic surveillance

PwC

Designing the features of a holistic surveillance solution

Trade surveillance

Risk scoring of alerts. Capture of alert review outcomes to

support machine learning. Coverage of all asset classes. Ingestion of market data. Ingestion of behavioural data to

build trader profiles. More dynamic parameter setting.

eComms surveillance

Reduction in reliance on lexicons through the use of natural language processing techniques.

Analysis of metadata to better understand patterns of interaction.

Build metadata analysis outputs into the behavioural models.

aComms surveillance

More accurate transcription capabilities.

Integrated eComms and aComms Clustering of concepts of interest

Case management

Apply a trader centric view of alerts. Ability to profile trader behaviour and apply time series analysis to generate a time based risk lens. Ability to triangulate all three surveillance channels utilising time stamp data Ability to substantially, if not completely, work and resolve an alert from within the case management solution. Ability to apply machine learning to categorise alert types

717 October 2019PwC reflections on holistic surveillance

PwC

Bringing holistic surveillance to life ~ detection of potential insider trading

14.00Large transaction inCompany A.

13.35 14.00 15.35 15.37Risk

Individual is flagged as high risk due to historical behaviour. This could be based on P/L, training or near miss reports

Individual risk score

Trade dataMarket data

eComms

13.35 Phrase has been used 20 times in the last 10 days, 80% of usage followed by a trade. Flagged as potential code.

15.37Spike in trading in Company A in the market

Monitored trader

Market data

15.35News Alert – Company A involved in merger.

Voice / aComms

15.37Transcribed voice identifies traders congratulating themselves

817 October 2019PwC reflections on holistic surveillance

PwC

Holistic surveillance brings the promise of a step change in capability

True triangulation of alerts enabling a single richer picture of trading behaviour, and the elimination of surveillance silos.1

An opportunity to markedly reduce the volume of false positives and consequently spend more time better investigating a lower population of higher risk alerts. 3

Transformation in how surveillance is performed and reduction in the costs of compliance.4

Opportunity to step away from review of individual transactions to instead focus upon review of patterns to identify real anomalies2

917 October 2019PwC reflections on holistic surveillance

PwC

www.pwc.com

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2019 PricewaterhouseCoopers LLP. All rights reserved. In this document, "PwC" refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

Graham Ure, Partner

Email: graham.ure@pwc.comPhone: +44 7889 644 672

Best Practice Holistic Surveillance Maturity ModelResearchResearch Conducted by

Best Practice Holistic Surveillance Maturity Model

RANDOM

SILOED

INTEGRATED

HOLISTIC

Random sampling of communications, with lexicon-based alerting‘One-size-fits-all' tuning across different markets and asset classes

Separate systems for:• Markets Surveillance• eComms SurveillanceTranscription, No Automated Voice SurveillanceMultiple Markets Surveillance systems for exchange-traded and OTC

Single Case Manager pulling alerts from systems for:• Markets Surveillance,• Integrated eComms

and Voice Communications Surveillance systems

Fully Integrated Markets and Communications Surveillance:• Advanced Machine

Learning (AI) and NLP monitoring

• Automated Trade Reconstruction

• Alerts based on multiple sources identify new risks not previously possible

• Detect ‘Intent’ of actions

Target State Capabilities

Random

Siloed

IntegratedHolistic

7%

26%

As random sampling of communications, with lexicon-based alerting with 'one-size-fits-all' tuning across different markets and assets classes

Each business controlling their own Market Surveillance system and eComms and voice surveillance are owned separately

A single case manager pulling alerts from systems for market surveillance and integrated eComms and voice communications surveillance

Fully integrated markets and communications surveillance

60%

7%

• We find that regardless of where a firm sees their operating model today, few are satisfied with status quo and are investing in key changes to their operating model

• All firms, regardless of size, have seen an opportunity to reorganize

• All respondents indicated that technology is becoming more important for their surveillance capabilities

All had a current global

monitored population of

250-2,000

Split between a global monitored population of over 50,000 individuals and 2,000-7,500

Survey respondent self-assessed target capability by mid 2021

250-2,000 2,000-7,500 7,500-50,000 50,000 or moreKey:

© JWG 2019 14Confidential

Take the survey by 31 October to get your free copy of the survey resultsJoin the JWG Trade Surveillance Interest Group Session: Overcoming barriers

to integrated surveillance: trade, voice, eComms, conduct and AML 5 November 16:30-18:00 at Barclays, Canary Wharf / dial in

Email corrina.stokes@jwg-it.eu to register your interest

Next Steps

Intelligence Collaboration Actionable insight

www.regtechfs.com www.jwg-it.eu/collaboration www.RegDelta.com

Introducing SURVEIL-X

15

The First AI-Powered True Holistic Surveillance Platform

AI-PoweredMulti-Dimensional

Analytics Powerful Case Management

Trade Reconstruction & Story Visualization

Comprehensive Coverage

Trades &Communications

Behaviors &Anomalies

Holistic Surveillance

Complete Surveillance Solution

What Does Provide?

17

Multi-Dimensional Intelligence Capabilities to Improve Detection Accuracy

Analytics Optimization and Anomaly Detection via

ActimizeWatch

AI-Powered Analytics

OOTB and Self-Development

Comprehend risk detected

Intelligent Automation and

Design

SURVEIL-X is the first and only AI-powered True Holistic Surveillance solution designed to help Financial Institutions to automate compliance with key regulations including MAR, Dodd-Frank, FX Code of Conduct, MiFID II, MAS and Regulation Best Interest.

Complete Portfolio Offering

Full Regulatory Coverage

Data Coverage

Advanced Alerting

Fully IntegratedSurveillance

DATA & COVERAGE ANALYTICS STORY VISUALIZATION

•

Cloud-native SURVEIL-X ensures fast deployment, hassle-free upgrades and streamlined innovation to stay a step ahead of new regulations

SURVEIL-X cloud reduces infrastructure, operational, support and training costs

SURVEIL-X cloud improves scalability, resiliency and security

Analytics

19

SURVEIL-X uses Multi-Dimensional Analytics

AI within SURVEIL-X finds undetectable risksSURVEIL-X empowers the end-user with self development tool box

Data

20

SURVEIL-X includes market data service connects to 150+ real-time data sources including:

• Level 2 Data• OTC and Exchange Traded Instruments• News Sentiment • Ratings and benchmark data*

SURVEIL-X provides simple integration platform to pull in data:

• Trades, orders and executions• eComm’s data, email, chats social media• Voice conversations• Any additional data or documents

Actimize Analytics Engine

Adapter Engine

OMSIntegration

FIX Protocol

CustomerOMS Output Communications

Visual Alerts

21

SURVEIL-X uses advanced alerting with visual display for instant investigation

SURVEIL-X uses machines to gather all this information you need

SURVEIL-X displays the full story detailing what was said and what was done

NICE Actimize

Financial Markets Compliance

for Buy Side for Sell Side for Exchanges for Regulators

for Reg BI

Vertical Packages

for Insurance

24

DEMOINSIGHT INTO THE VISION

Questions?