Separating the signal from the noise: Building next-generation compliance surveillance programs on AWS

© 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved.
Separating the signal from the noise:
Building next-generation compliance surveillance programs on AWS
Iolaire McKinnon
Senior Consultant, Global Financial Services
AWS Professional Services
C a p i t a l M a r k e t s
Jerome Lambert
Director of Communications Compliance
NICE Actimize

Agenda
• Today’s Surveillance Landscape
• Solving Surveillance Challenges using the AWS Platform
• Working with the APN Partner Network
• NICE Actimize
• Compliance Business
• Market and Trade Solutions
• Communications Surveillance
• ‘No Compromise Surveillance’ on AWS
• Closing Remarks

FX Code of
Conduct
Global Guidance
• Protect Confidential
Information
• Complete, Accurate Data
• Measure and Monitor
Updated 2016
APAC
Regulations Demand Trade Compliance
5
Dodd-Frank
U.S. Legislation
for Swaps
MAR
European Directive
MiFID II
European Directive
2018
Refers
to
• Surveillance in Place
to Detect Market Abuse
• Record Keeping
(Recording)
• Trade Reconstruction
2013 2016
• Record Keeping
(Recording)
• Trade Reconstruction
• Detecting Market
Abuse
• Detect and Prove
Intent Even if
Unsuccessful
• China to create its
version of MiFID II
• Hong Kong expects
Authorized
Institutions to adopt
a holistic framework
2018

841 Enforcement Actions, $3.9 Billion in disgorgement and penalties
55% of All New Enforcement dealt with Investment Advisor issues, B/D
Misconduct, Insider Trading and Market Manipulation
Regulatory Pressure is Increasing (FY 2018)
SEC (US)
83 Enforcement Actions (most since 2013), over $947 Million in penalties
(including restitution and disgorgement)
Most Cases with Judgments of $10 Million or more in the history of the
CFTC
CFTC (US)
504 Enforcement Actions (25% increase over 2017), 54% of all new
cases relate to the Compliance issues (surveillance)
FCA (UK)
Under Chairman Guo Shuqing, the CBRC has levied more fines since
2017 than in the previous 14 years of the regulator’s history
COMBINED (over 800 fines issued on banks and individuals in Q3 of
2018 alone)
CBRC (China)

Surveillance Is Difficult and Expensive
Detecting Intent
Accurately
Identifying
Suspicious
Communications
Minimizing
False Positives
Uncovering Risky
Entities /
Individuals
Inefficient and
Costly
Investigations
Multiple Siloed
Surveillance
Platforms
Random and
Reactive
Labor
Intensive

Surveillance Has Rapidly Evolved
8
Entities and
Events
Known Threats
and Risks
Structured and
Unstructured
Data
Machine
Learning, AI,
Natural
Language
Understanding,
Behavioral
Analytics
Out-of-the-Box
and Custom
Models
and Legacy Systems Haven’t Kept Up

Storage Compute
Dynamically scalable
storage and compute
services to process all
of your data
Data Catalog Data Warehouse
Optimized environments
and frameworks to handle
a broad set
of big data use cases using
consistent
ETL processes
Machine Learning
ML tools and
frameworks to optimize
alert output and extract
hidden relationships and
insights in the data
Sandbox Graph Database
Easily spin up sandbox
environments for testing
and innovation using
tools like
graph databases
AWS helps organizations manage these challenges

Effective surveillance architectures share common traits
Scalable storage and compute
Data lineage and effective
querying
Data analytics
Amazon
EC2
Amazon
S3
Data lake serving
as the single
source of truth
Data warehouse
optimized for big
data use cases
Elastic compute
that scales based
on market
conditions
Centrally managed
data catalog and
consistent ETL
processes
Amazon
Redshift
AWS
Glue
1 2 3
Amazon
EMR
Scalable and
customizable
environments for
development,
testing, and
production
Amazon
Sagemaker
Platform to easily
build, train, and
deploy machine
learning models
at any scale
© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.

On-premises static capacity requires time and effort to provision the appropriate resources. However,
unanticipated market events or business requirements can result in the actual demand exceeding the
available capacity and adversely impact SLAs and project timelines.
Challenge: Ability to handle variable and increasing amounts of data

With Amazon EC2, you receive secure, scalable
compute capacity in the cloud.
With Amazon S3, you never need to worry
about provisioning storage resources.
Amazon S3 Amazon EC2
Elasticity
Scale up or down quickly, as needed, provisioning
capacity in minutes, making it easy to meet
changing requirements while reducing costs.
Flexibility
Establish flexible data and overall technology
architectures that can meet evolving demands of
business and external regulatory entities.
Solution: Scalable, elastic compute and storage

• Legacy infrastructure stores the data for different asset classes, products,
and regions in multiple disconnected data silos
• Each data silo has distributed ETL processes at multiple levels and
inconsistent data transformation between silos, obscuring lineage back
to source data and resulting in downstream data quality issues
• Duplication of effort in data management (data lifecycle, retention,
versioning, etc.)
Challenge: Ability to build more sophisticated surveillance reports

Incorporate cross asset/
cross product activity
1. Integrate market news
with alert logic
2. Augment alerts with market /
third party data
3.
FX Data
Data Lake
Market Data
Market News FX Futures Data
Comprehensive coverage of firm and
client activity
Generate more substantive alerts
Provide more insight and context
around the activity for the analyst
FX Data
Data Catalog
ETL
Spin up multiple environments
to build and test enhanced
surveillance reports
Consistent ETL
process minimizes
data quality issues
Solution: Data lakes provide the foundation for enhanced surveillance reports

Impact
Increases risk: High
number of false
positive alerts may
result in an actual
issue being
overlooked
Increases costs:
Requires resources
to review alerts
Perception risk:
Regulators question
why the firm has a
high number of
market misconduct
alerts
Underlying issues
Without a well articulated approach, the
parameters for the alert generation logic is
often set conservatively to “cast a wide net”
The current rules based approach is rigid and
does not easily adapt to changing market
conditions.
Regulators require documentation and
rationale on how the threshold values
were determined
The threshold values in production need
to be reproducible using the
documented process
Challenges
Challenge: Large volumes of unproductive alerts

Calibrate thresholds in transaction
surveillance alert logic
Refine keywords and phrases
used for e-communications
surveillance lexicons
Extract hidden relationships
and insights in the data
Drive “what if” analysis on
risks which are not covered
by existing metrics/analysis
Optimize alert output: New scenario analysis:
Solution: Use machine learning to optimize surveillance logic

2018 Amazon Web Services Inc. or its Affiliates. All rights reserved.
Technology PartnersConsulting Partners
Support assessing compliance requirements, designing
surveillance solutions, and developing implementation plans.
Technology solutions designed to meet compliance
surveillance requirements.
Whether your surveillance solutions are built in-house or through
a vendor, the AWS Partner Network (APN) can help you build or
enhance your surveillance program.
APN Partners can help build or enhance existing solutions

Compliance and Surveillance
Improve your trade compliance readiness with
intelligence and automation

25
To protect financial institutions by enabling
regulatory trade compliance through automation
and intelligence.

26
• Identify
unknowns using
statistical and
machine
learning
• Generates risk
scores
• Heat maps
highlight risky
entities
• Identifies
deviations from
normal trading
• Automatically
surveil 100% of
trade
conversations
• Analyze voice,
email, chats and
documents
• Customizable
Policy Engine
• Supports
dozens of
languages
• Supervision and
Investigation
ActOne ENTERPRISE RISK CASE MANAGEMENT
Consolidates and correlates all data to provide a centralized, holistic view of risk, workflow management and investigation support.
• Captures all
communication
modalities
• Securely
retains
communications
• Enterprise
search and
replay of all
conversations
• Automated
Recording
Checks
• Regulatory
Reporting and
Alerts
• Reconciliation of
recording and
policies
• Reconciliation of
recording with
third party voice
platforms
• Advanced Call
Extraction
• Voice-to-Text
Transcription
• Keyword based
searching
• Detects market
manipulation
• Cross product
manipulation
• Advanced
insider trading
analytics
• Covers all asset
classes
• Enterprise or
Cloud
Deployment
• Correlates
conversations
with associated
trades, orders,
executions and
alerts
• Uncovers intent
• System of
Record for
Trade
Reconstruction
• Simplifies
review process
• Automatically
surveil 100% of
the voice calls
• Supports
dozens of
languages
• Supports
Phonetic or STT
• Automate
manual trade
clearing via
robots
• Trader Insight
trends and
topics within the
trade
conversation
• Reconcile voice
executions with
trade records to
find
discrepancies
Turrets Mobile Email NewsChat Trades Orders
AGGREGATE & ANALYZE
PBX Unified Comms TransactionsVideo Social HR DataMarket Data
COMMUNICATION COMPLIANCE HOLISTIC SURVEILLANCE
Compliance Assurance Discovery Operations
Communicatio
n Discovery
Communicatio
n Surveillance
Market
Surveillance
Trade
Reconstruction
Behavioral
Analytics
• Ensure
suitability
• Broker risk
dashboard
• T+1 review of
transactions
• 140 OOB
detection
scenarios
• Custom rules
Sales
Practices
26

27
in Trade Surveillance
& Financial Crime Management
- Celent
“Pioneer of Holistic Surveillance.”
Best Compliance Product
Best Trade Surveillance Solution for MAD/MAR (2018)
Market Surveillance
Product of the Year (2018)
Best Financial Crime Technology
(2018)
Best Compliance
RegTech (2018)
- Opimas
“Leading position in trade and eComms
surveillance market share.”
- Aite
“Execution in product offerings
does not disappoint.”
27

Top U.S. Banks
10 of 10
Top APAC Banks
4 of 5
Top EU Banks
10 of 10
Top Global
Investment Banks
10 of 10
Customer
Deployments
360+
Local Offices
35+
NICE FY 2017
Non-GAAP Revenues
$1.3B
(NASDAQ:NICE)
NICE

29
Our Customers

30
Market and Trade
Surveillance

Market Surveillance Analytics
• Configure rules,
thresholds and filters at
model, platform &
reporting levels
• Monitor different
jurisdictions by adjusting
entity and threshold
values
CONFIGURABILITY
• News sentiment
based analytics
• Order based analytics
to identify intent
ADVANCED INSIDER DEALING
• Market to Market
(cross-venue)
• Market to Underlying
Mkt.
CROSS PRODUCT / VENUE
• Equities, FI, FX,
Derivatives, Swaps,
Futures and Options
• Decade of FI and FX
experience
EXTENSIVE COVERAGE

More than a decade of experience
in FI and FX surveillance
Proven Swaps Analytics used by
leading dealers
Expertise identifying / mapping /
standardizing complex FX and
Swap trading data and product
classifications
Integrated and scalable data
management for all asset classes
within single database
Most Comprehensive OTC and Exchange Coverage
32
Single Platform for OTC and Exchange Traded Instruments
Market Replay

News-based Insider Dealing analytics analyzes news events & price movement
Price-only models generate false positives
Accurately Detect Insider Dealing
33
Generate
Insider
Trading
Alert
Analyze
Market
Sentimen
t
Identify
Suspiciou
s
Transacti
ons
Firm Data
Play
Through
News
Impact
and
Relevanc
e Check
Raven
Pack
News
Feed

34
Communications
Surveillance (voice
and ecoms)

No Easy Way to Connect Trades with Communications
5
“Can I get a
quote for..”
“Done deal..”
“Have a large deal
coming for...”
“Will make the
changes..”
“Confirmed..”
“The deal has
cleared..”
Sales Trader with Client Trade Support with Back OfficeTrade Support with Sales TraderTrading Desk with Sales Trader
“Can you
recommend..”
“What are you
hearing about..”
COMMUNICATIONS
LIFECYLE OF A TRADE
PRE-TRADE TRADING TRADE OPERATIONS CLEARING
Market Views Bid / Ask Market Sounding News Negotiations Confirmations Settlements TransfersQuotes Amends Cancels Reconciliation
TRADEDATA

Intelligent Communications Surveillance
• New regulations demands
surveillance of ALL relevant
conversations across any
line of communication
• Improve surveillance
detection through NLP-
driven analytics and
machine learning-enhanced
models that correctly
understand context of
communications
• Rapidly reconstruct
complete trade and
communication timelines
across all channels
Monitors 100% of
Conversations Across All
Channels
Most Accurate Analytics Accelerate Investigations
Chats Emails Text messages
Mobile phonesOffice phonesSocial Media

APAC – A Unique Language Challenge
我想从IBM公司购买这个stock
Shall we proceed ?
• English terms mixed with other languages
• Local expressions / phrases
• 1 desk = 5 nationalities = 3 languages = 8
accents
• Manage exceptions
• Enrich the transcription engine with a
continuous and seamless learning process
Match Polices and Rules
Understand Context
Identify Trends and Patterns
Facilitate the Review
Initial teaching
Users feedback
Build analytics
Continuous learning

Language Detection results in Reduction of false positives by applying analytics to relevant languages
Language ID support for multiple languages simultaneously simplifying the configuration for Speech Conversion
Voice Surveillance Functionalities – Multi-Languages
DICTIONARY
AUDIO DICTIONARY
TRANSCRIPTION
OUTPUT N-LEVEL
WORD PROBABILITY
PROCESSING
NATURAL LANGUAGE MODEL
APPLY DOMAIN MODEL SMART INDEX
Dari Korean -Russian
GermanHebrew
Bahasa
Italian
Japanese
Korean Russian
Thai
Dutch
Danish Polish Tagalog
Spanish
• Castilian
• Latin American
French
• Canadian
• European
English
• International
• Australian
• N.A.
• UK
Chinese
• Cantonese
• Mandarin
Telugu
Hindi
Turkish
Brazilian
Portuguese
words
words
words
words

The Power of Integrated Communications Surveillance
Combined
Alert
Using only Market
Surveillance provides a
limited view of all the threats
Combining Market Surveillance
and Communication Surveillance:
• Detect intent
• Reduces false positives
• Provides the full picture
• Accelerates investigations
Trade Alert
Communications
Alert
Communication
Surveillance
Market
Surveillance

40
Intelligent Surveillance
in the Cloud

Surveillance
Most
Comprehensive
Asset
Coverage,
including OTC
Best Case
Management
Solution
Integrated
Communications
Surveillance &
Trade Reconstruction
Most Advanced
Analytics
with Fewer
False Positives Best Value with
Lowest TCO
Get proven coverage for complex types of market abuse and investigate threats
better for the same price as a ‘tick the box’ solution
Don’t Compromise on Surveillance
41

Cloud Solution
Tuning
Exchange Data
Alert
Investigation
Cross Market
Analytics
Custom Analytics
Real Time Analytics
Communication
Surveillance
Robotic
Automation
Exchange Traded
Analytics
ONE OPEN SURVEILLANCE
PLATFORM TO DETECT ALL RISK
Native
Cloud
Market Replay
Users interact with
advanced capabilities
in the cloud

Efficiently transform your data infrastructure and enhance your compliance surveillance
program with AWS and our APN Partners
2018 Amazon Web Services Inc. or its Affiliates. All rights reserved.
Work with your AWS
account team to gather
requirements and develop
a framework for building
a customized data lake
on AWS.
Work with an APN
Partner to implement
surveillance solutions
on AWS.
Contact the Amazon ML
Solutions Lab and
investigate opportunities to
accelerate incorporation of
machine learning into the
surveillance reports.
Ready to start building?

Scan the QR code on your
badge and complete the
online survey to receive an
AWS passport holder or a
travel organizer at the
reception counter
AFTER 3pm.
YOUR FEEDBACK IS IMPORTANT TO US

Thank you!
Iolaire McKinnon
iolaire@amazon.com
Jerome Lambert
Jerome.Lambert@nice.com

Separating the signal from the noise: Building next-generation compliance surveillance programs on AWS

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Separating the signal from the noise: Building next-generation compliance surveillance programs on AWS