A new frontier for recordkeeping and surveillance teams
As data comprehensiveness becomes mission critical, the intersection between recordkeeping and surveillance is more important than ever.
Written by a human
Any self-respecting surveillance professional knows that good outcomes are only ever the result of good data, but for years the source of good data has been distinctly separate from the surveillance function driving the outcomes. Recordkeeping and surveillance remain disparate teams, with different reporting lines who, despite key areas of overlap, work in silos to meet different regulatory obligations.
I’ve experienced several conversations lately between surveillance leads and recordkeeping counterparts. Often, it comes up that surveillance are struggling with gaps in venues or communication data. The recordkeeping team, on the other hand, notes that they have complete communication data across all channels and venues. The recordkeeping function has the “gold copy” of the communications data – structured, clean, and preserved in an archive – while the surveillance team are working with fractured data sets. Bad data in – bad data out. Surveillance teams are struggling with data-driven bad outcomes, while the recordkeeping teams hold the key to their problems.
The two functions aren’t wilfully gatekeeping their roles – there just isn’t natural communication within organizations to understand what both these critical players are working with.
If the $350 fine issued to JP Morgan for a lack of comprehensive oversight and ”completeness” of trading venues it anything to go by, this is a common theme within organizations. Recordkeeping teams have the gold-copy of communication data across every channel, while surveillance struggles to see what channels are being used, let alone who is saying what. In the event of investigation, processes are clunky and misaligned as the two teams work to share data and make sense of it. Often, they’re using different programs, legacy systems, not to mention the difficulties of sharing high-value data across teams in an organization.
Organizational silos, it seems, mean that one hand doesn’t know what the other is doing. In turn, this leads to bad compliance and surveillance outcomes – which is bad for business given these are the teams with their heads on the block if things go wrong.
Is it time that recordkeeping and surveillance became bedfellows?
Nobody in a bank uses records with the same amount of comprehensiveness and scrutiny as the surveillance team. Meanwhile, nobody in a bank has a clean, structured copy of an organization’s records as the recordkeeping team. As regulators sharpen their focus on data comprehensiveness, conduct and culture, and communication monitoring for market abuse –there is now a case for recordkeeping and surveillance teams to work in lockstep.
Would there be any more powerful force than the symbiosis of the team that preserves comprehensive data, and the team responsible for understanding what is happening within that data?
The other pillar to this is accountability – or roles and responsibilities. In JP Morgan’s case, for example, the surveillance team was held to account for operating “with gaps in trading venue coverage and without adequate data controls required to maintain an effective trade surveillance program.” In a future where recordkeeping and surveillance are more closely aligned – or possibly even bought together as one function – the two may be jointly held responsible where gaps in data occur. This broader accountability would place a lot of weight on the shoulders of fewer individuals, but without question would inspire a more cohesive approach to recordkeeping, surveillance, and compliance in which the consequence of failure is so great, nobody would dare to get it wrong.
Is it time for a joined-up approach to compliant communication more generally?
The coming together of recordkeeping and surveillance is not limited to human collaboration, but could also be considered when approaching compliance solutions. For years, recordkeeping teams have used data archive vendors to store and manage their communication data, while surveillance teams have turned to surveillance specialists to assist with communication monitoring.
For years we have all been saying that data is king, and operational resilience is critical, so it makes sense that the compliance functions should work together in undertaking recordkeeping and surveillance together in one seamless solution – technology vendor or otherwise. Consolidated technology mitigates third-party risk, reduces administrative burden, encourages data completeness, and allows a firm’s full tech stack to evolve in tandem rather than in isolation or bolted together with gaps.
Historically, AI-enabled surveillance solutions are sold, with data then having to be sourced, refined, cleansed, structured, tested, and tested again before any positive outcomes are gleaned. Just like the recordkeeping and surveillance function, AI solutions are separate to the data that fuels them. There is room for a technology shift here – especially as AI’s role increases. Why should the fuel, the car, and the driver, all exist separately?
The future of surveillance and recordkeeping solutions probably relies on technology vendors that care as much about structured, clean, and comprehensive data as it does true positives. A vendor that can offer comprehensive management of both data and AI-enabled surveillance may ensure a joined-up approach that is as good at delivering iron-clad archiving as it is delivering defensible, accurate flags for misconduct.
As the adage goes – bad data in, bad data out. But if firms can find a solution that focuses as much on the ‘data in’ as on the ‘data out’, recordkeeping prevails and surveillance will be accurate. Whether human or technology, the future may lie in co-ownership.
