As the appetite for anytime, anywhere access to trading workflows increases, global capital markets are transitioning to “virtual trading desks”. While COVID-19 has acted as a catalyst for this structural shift, this transition will have a permanent impact on trading floors. With cloud-based voice solutions liberating traders from legacy hardware to trade and manage business remotely, Cloud9 and OpenFin are playing a key role in equipping the industry for the trading desktop of the future. Cloud9 Chief Operating Officer Jim Miller and OpenFin President and Chief Operating Officer Chuck Doerr discuss how we’ll get there and what we can expect along the way.
Cloud9 recently hosted a machine learning technology meetup alongside Google and Quantiphi, one of the top data science companies. The event, “Applying Machine Learning Technologies for your Business,” took place in front of a capacity crowd at the Google NYC offices composed of representatives from major financial services firms, technologists, and industry consultants.
The speakers, which included Lukman Ramsey from Google, Asif Hasan from Quantiphi, and German Soto Sanchez from Cloud9, discussed how businesses can take advantage of the latest developments in machine learning and artificial intelligence.
See highlights from the event:
During the event, we debuted our Cloud9 Voice Transcription solution, which enables firms to harness the insight in their trader voice recordings and data by accurately transcribing calls in near real-time.
This solution, developed with cutting-edge deep learning technology in partnership with Quantiphi and utilizing Google’s TensorFlow technology, will revolutionize the compliance process for firms, powering advanced surveillance as well as advanced analytics capabilities.
An attendee of the event – Richard Bryant, a fixed income trader and capital markets executive with over 20 years of trading experience – said of the live demonstration:
“Cloud9 Trader Voice Transcription will be game-changing for this industry. To hear an actual trader voice call and then to see the model identify the complex jargon and precisely transcribe the conversation is truly remarkable. Up until now, since many had promised and failed to provide such a solution, I did not think this was remotely feasible.”
Interested in learning more about Cloud9’s groundbreaking transcription solution? Contact a Cloud9 Salesperson to get a demo today!
In our latest webinar, Cloud9 brought together capital markets and compliance industry experts from Greenwich Associates and Behavox to discuss the role and future of technology in helping firms manage risk and optimize compliance.
- Kevin McPartland: Head of Market Structure and Technology Research at Greenwich Associates
- Erkin Adylov: CEO of Behavox
- German Soto-Sanchez: Global Head of Corporate Development at Cloud9 Technologies
The panelists contributed to an engaging conversation about the ability of new technologies to capture and analyze voice data to enhance the compliance process.
The audience, which consisted of brokers, traders, and IT managers from a number of top-tier financial institutions, also shared their views on compliance challenges at their firm and where they were most likely to implement innovation.
During the call, three key insights emerged:
- Voice is still crucial to relationship building in the capital markets, and it is now easier to regulate thanks to technological advances.
- Firms are most likely to implement cloud-related innovation for compliance and communications services.
- Transcription and trade reconstruction are the largest trade-related compliance challenges for the capital markets.
Voice and Trader Relationship Building
In a recent Greenwich Associates report, 70% of institutional investors confirmed that the level they trust their brokers impacts how they direct their trades.
Since the financial crisis, firms have been looking a lot more closely at managing reputation risk, even ranking it as high in importance as market and operational risk. Trader voice calls and human relationships still remain crucial in most financial markets, however trying to manage risk in that environment can be challenging, especially with the current regulatory mandates.
As Behavox CEO, Erkin Adylov explained, “Sell-side as well as buy-side are still utilizing phone calls to communicate with each other. That’s where there is a point of risk for a lot of institutions that are trying to capture voice, but also analyze and make sense of it from a reputational risk perspective.”
German Soto-Sanchez, Global Head of Corporate Business Development at Cloud9 Technologies elaborates: “Voice communications is crucial to the trading relationship for three reasons. First – voice is the most natural form of interaction. Second – when you deal with complex transactions, things like structured products, you require voice. Third – which is potentially the most important – developments in technology are now facilitating the ability to get much more out of the voice conversation than ever before.”
With new cloud-based as well as machine learning technologies, firms now have the ability to treat voice as data – facilitating a number of compliance functions like surveillance, biometrics, and transcription that can help mitigate risk and assist with the trade reconstruction requirements of regulations like MiFID II.
Firms Implement Cloud for Compliance and Communication Services
As the panelists discussed over the course of the webinar, banks seem to be increasingly more receptive to cloud technology as it becomes safer, improves their communications, and enhances their data-gathering capabilities for compliance. Rather than spending millions of dollars on back office investigators, lawyers, and intelligence officers to sort through and monitor trader communications, firms can now implement a software-based solution.
In a poll conducted during the webinar, 60% responded that they were most likely to implement cloud-related innovation at their firm for communications, with 40% most likely to implement for compliance.
“Thanks to the cloud we’re able to lower the total cost of ownership, deployment is much easier, you have inherent disaster recovery, and you have the ability to have enhanced surveillance, compliance, and analytics,” said Soto-Sanchez, outlining the many benefits of the cloud. “The regulatory authorities and the government are using the cloud also – if it’s good enough for the government and good enough for FINRA, then you can feel comfortable that it is safe and secure for your institution as well.”
For those firms who have not yet made the transition to the the cloud, Adylov says, “Seeing Goldman Sachs talking about how they use Amazon Web Services should be a pretty big clue about the importance of cloud for large financial institutions. As senior management starts recognizing the impact that the cloud is going to have on ROE, I think the industry is going to have to start shifting into the cloud, because that’s going to be a key competitive advantage.”
Transcription and Trade Reconstruction are a Challenge for Firms
Attendees surveyed during the webinar responded that transcription and trade reconstruction were the top trade-related compliance challenges for their firm, both tied at 44%. Much of this frustration is due to the the limitations of many solutions when it comes to the recording and analysis of trader voice.
“Under the existing legacy infrastructure, your ability to harness data is very limited, and we believe that’s unacceptable,” said Soto-Sanchez.
Due to recent developments in machine learning and voice recognition technology, complete and accurate trader voice transcription is becoming more of a reality.
“Off the shelf transcription solutions today are very ineffective for the kind of dialogue and vernacular that gets used in the conversations around trading, and existing speech APIs probably have accuracy rates in the teens,” explains Soto-Sanchez. “But the difficulty of transcription is starting to change now for a few reasons: Number 1 is the technology – firms have made significant investments in speech recognition technology. Number 2 – you have data. Specifically, the kind of data you need to develop the kind of sophisticated speech recognition models that you need for this space.”
Erkin went on to explain how compliance analytics platforms like Behavox are already changing the game when it comes to the type of data and information that can be extracted by voice. With a model that analyzes phone records, they detect suspicious activity, such as whispering, with a precision of 93%.
Adylov went on to explain the other benefits of trader voice analysis, “Not only can I tell you where there are instances of whispering, but I can also tell you if there is laughter on the phone call, if there is mention of high value keywords, if it an engaging conversation or not – it starts revealing a lot of useful information for also managing your salesforce or for retaining and training employees for HR purposes. The use cases for the data set are infinite and they are genuinely transformative for the organization.”
While it may sound like something out of science fiction, the technology and platforms already exist to help firms manage their reputation risk with enhanced trade reconstruction and analytics.
As regulatory mandates continue to change and evolve, the future will be defined by institutions that are leveraging this kind of modern technology and running their organization in a data-driven way.
Watch the recorded webinar here to listen to the full discussion.
Greenwich Associates recently published a report, “Electronifying Relationships: Managing Institutional and Reputation Risk,” about the benefits of adopting modern technology to help mitigate risk and keep capital markets firms compliant with regulations.
In 2016, Greenwich Associates interviewed nearly 15,000 institutional investors and the largest broker/dealers around the world to understand their trading relationships, what they trade, how they trade, and what drives their decision-making process. For this research, they examined responses exploring the importance of trust when allocating trade flow to trading counterparties, adoption of electronic trading, the use of voice trading, and the importance of managing reputational and institutional risk.
70% of institutional investors confirmed that the level they trust their brokers impacts how they direct their trades – a stark change from how Wall Street viewed reputation a decade ago. As such, financial firms now must value reputational risk management alongside market and operational risk to limit downside and increase profitability.
With trader voice calls and human relationships still at the center of most financial markets, creating safeguards and maintaining regulatory compliance becomes even more difficult. The solution to relieving this compliance burden? Putting in place technology that drives better controls and increases profitability for voice traded asset classes.
Read the whitepaper to learn more about:
- The impact of broker trustworthiness on trades,
- The importance of voice trading in maintaining that trust, and
- The competitive advantage of adopting cloud and machine learning technologies for compliance.
The UK and European Union are deeply interconnected when it comes to capital markets, with 80% of EU capital markets activity managed and conducted out of the UK. With Brexit proceedings commencing at the end of March, financial firms in the UK are starting to prepare for the considerable impact on their operations, including market volatility, relocation of headquarters and staff, trade disruption, and changes to regulatory mandates.
Particularly with the issues of relocation and compliance, now is the time for European firms to re-evaluate their trading technology.
Headquarters and Staff Relocation
One of the primary risks of the Brexit is the loss of passporting rights, which allow institutions established and regulated in any country within the EU to do business in another member country without having to secure authorization. The UK is the most active country currently using these rights, with UK-based firms accounting for over 75% of all passporting activity in the EU. UK firms would need to maintain a local presence in the EU to continue enjoying passporting rights.
The loss of passporting rights as well as the loss of the ability to clear the Euro in London has many financial firms evaluating if they want to retain their European headquarters in the UK. While many predict a small movement at first, a chain reaction will likely occur as banks follow their clients, and vice versa. In addition, many UK-based firms will likely face regulatory pressure to develop a more significant presence in continental Europe to effectively conduct business. For now, a UK firm may only need 5 people staffed in the EU, but in a few years, that number may increase to 50 or 100 employees.
In addition to disrupting business operations and the lives of employees, the cost of a move for a financial firm is substantial. Rerouting trader voice communication lines alone can cost firms tens of thousands and can take weeks to properly implement.
For firms considering a move, this period of transition provides best time to re-evaluate current technology for solutions that will cut costs and reduce the disruption caused by relocation.
The UK’s transition away from the EU will take at least two years, with some experts projecting it could last up to a decade, and will involve negotiating everything from customs to energy policy. During this time, the UK will be an acting member of the EU, meaning that all current legislation will be implemented in full – including the upcoming MiFID II regulations, set to take effect in January 2018.
While it is likely that the UK will need to maintain equivalency with EU regulations in order to continue doing business, the UK will have to establish their own set of regulatory mandates for financial industry. With frequently changing sets of regulations in their future, financial firms have the burden of keeping their systems and technology updated, often a costly task.
Now is the time for firms to make the necessary equipment upgrades and replacements for systems that are more adaptable to changing compliance regulations.
Moving your trading floor? Cloud9 can help. Contact email@example.com to schedule a demo.
To learn more about the benefits of Cloud9, watch this quick tutorial.
Set the stage for smart growth by reducing manual processes and championing automation on your DevOps team
As your business grows, it’s increasingly important to understand how to scale engineering processes and methodologies. The amount of time spent on setup, deployment and manually testing code is often ignored by technology teams and managers. Manual server configuration and code quality tests are not only error prone, but they ultimately result wasted time and money.
3 steps to automate software development
Introducing automation into your Software Development Lifecycle (SDLC) and infrastructure scaling projects is the most effective way to improve code quality and deployment velocity. These three steps will help you do that:
Implement a continuous integration strategy
Continuous integration (CI) is a development practice where code is checked into a code repository, tested and verified in an automated process. By regularly integrating changes into a centralized repository that is automatically tested for code quality, syntax errors and unit/integration test issues, errors can be detected and located more easily.
There are various continuous integration tools available—the most popular being Jenkins, Travis and TeamCity—and each offers benefits for different organizational use cases.
At Cloud9, we’ve adopted Jenkins as our continuous integration (CI) platform. All changes to shared code repositories are automatically picked up by Jenkins, which we’ve configured to run quality, syntax and unit tests on any new code that is committed. Builds that fail these tests will automatically notify the person who was responsible for the failed build and include the reason why it failed. This automated testing and deployment structure helps developers and engineers focus on creating exceptional code and sets the stage for smart technological growth.
Make code testing a shared responsibility
Developers and quality assurance (QA) share the same goal in the SDLC: delivering a quality product on time and on/under budget. To ensure cooperation and alignment towards this goal, developers should share the responsibility of quality testing.
Following the agile methodology, all members of my team (including development and QA) are responsible for testing code. Before a build even reaches the QA department for black-box testing, it has already been thoroughly tested, including unit and integration testing via a CI process. Load tests are performed to ensure race conditions are caught and mitigated, and smoke testing is performed automatically before the QA department is even involved.
From the moment a sprint is started to the time QA receives a qualified build, a constant stream of communication has already been established, ensuring QA knows exactly what to test, how to test it and what can go wrong.
Adopting a mentality of shared responsibility for testing reduces the number of obvious functional bugs that make it to QA, and it decreases the time to market for builds.
Implement the concept of infrastructure as code
Infrastructure as code (IAC) means writing code using a high-level language to manage the configuration and provisioning of infrastructure. This allows for quick and repeatable deployments of new application or web servers in your environment.
The concept of scripting infrastructure is not new, but IAC goes beyond basic scripting. By using a configuration management tool such as Puppet, Chef, Saltstack, or Ansible, changes in infrastructure can be written in a language that is consistent with the SDLC process at your company.
These tools enable teams to provision a server and spin up a new environment in minutes and also foster an environment of cooperation and innovation. Rather than leaving the process of server provisioning and configuration management to system administrators, any engineer can easily write infrastructure code and engage in the activities of the DevOps team
Implementing an IAC strategy eliminates infrastructure and configuration sprawl, decreases chances of outage-causing production changes, and ultimately saves your company time and money.
Going through these steps should make your company a lean, mean, rapidly scaling machine. But remember DevOps automation isn’t a one-shot effort—the whole process requires continuous monitoring and improvement. By continuously reevaluating your processes, you’ll be able to introduce additional automation over time.
See the original article on Network World.