Automate Personal Account Dealing Reconciliation: The Importance of Electronic Broker Feeds to the Modern Compliance Officer
We recently sat down with Mark Robinson, Director, Technical Services at StarCompliance, to find out how broker feeds on the STAR platform enable clients to reduce risk, reduce human error, and save compliance teams hours of time.
WHAT ARE ELECTRONIC BROKER FEEDS AND WHAT PROBLEM DO THEY SOLVE?
A broker feed provides an automated way for employees’ personal account dealing transaction and position data to be sent electronically by brokers and populated directly in the STAR platform.
Before the advent of broker feeds, this was a slow, inefficient process, with compliance departments typically receiving paper trade data statements and PDF statements by email once a month. To reconcile reported or pre-cleared employee trades with executed trades recorded by the employee’s broker-dealer, the data on these statements had to be manually entered into the compliance platform. This process was time-consuming, labor-intensive, prone to human error, and diverted the attention of compliance officers from other key responsibilities, such as investigations.
SO, WITH BROKER FEEDS IT’S THE TECHNOLOGY THAT DOES THE HEAVY LIFTING?
Yes, exactly. Automation is key – it’s the compliance software rather than already over-stretched compliance officers that does the work of reconciling employee trades. Automatically importing trade data from the broker’s system into STAR is much faster and more accurate than manual data entry ever could be, and frees the compliance team up to focus on other key responsibilities and priorities.
HOW DOES THE PROCESS WORK?
With broker feeds, employee transaction and position data is sent every 24 hours, usually overnight during early US morning hours, five days a week. This gets processed into the database immediately. STAR then runs surveillance and monitoring workflows to make sure everything is in order. If a file fails, Star’s data feed team will step in and work with the broker to resolve it. Persistent fails will go into reconciliations and are flagged to the firm’s compliance team for investigation.
Broker feeds enable the fundamental trade data reconciliation process to take place far more frequently, allowing any inconsistencies or anomalies to be revealed much faster, and provide far greater accuracy. This means a real reduction in risk for the firm and prevents any employee conflicts that could arise from trading certain securities.
WHAT’S DIFFERENT ABOUT STAR’S BROKER FEEDS?
Star currently has around 120 broker feeds in place, plus hundreds more available through clearing houses. But it’s not just the number – it’s also our approach to managing them which sets us apart.
Star has a dedicated broker feeds team, part of our Technical Services group, based in the US, UK and India. The team of a dozen provides second-line support, continually monitors broker feeds and proactively resolves issues, and includes dedicated developers working alongside our support engineers. They’re able to react quickly to anything urgent and can also handle more involved issues.
WHAT’S NEXT FOR STAR’S BROKER FEEDS OFFERING?
We’re always ready to engage with new brokers our clients introduce us to that are looking to automate their trade data feed. We can either develop to the broker’s specification – modifying their data, based on their format when it comes to us – or we can ask the broker to modify it before they send it to us, which requires no development work on Star’s part. Our clients can also take a hybrid approach – Star can do the monitoring and issue resolution but clients can also still be included on email notifications, for example.
Star’s broker feeds are designed to make compliance with personal account dealing obligations as easy as possible for clients, so we’re on a constant mission to ensure the process is completely seamless. This includes exploring the possibility of using APIs for brokers to send their trade data to Star, which would help to reduce employee trading risk still further, and enable Star and our clients to react more quickly to any irregularities flagged by the platform.
And with no immediate end in sight to the trend of brokerage firms consolidating, Star will continue to help clients impacted by these mergers and support them through the broker feed migration process.
FINALLY, WHY SHOULD FIRMS BE USING STAR’S BROKER FEEDS?
In a nutshell, taking advantage of broker feeds directly into the STAR platform is the fastest, easiest, most accurate and reliable way for our clients to monitor the personal trading activity of their employees. This saves a huge amount of time and effort, and most importantly, significantly reduces the risk associated with less frequent trade data reconciliations, ensuring employees aren’t trading securities that could cause trouble for themselves, or the firm.
To learn more about employee compliance and personal account dealing, register for our upcoming client panel webinar here.
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