Ben Parker, CEO & Founder of eflow Global, dives into how eflow’s innovative platform, TZEC, is transforming eComms surveillance and empowering compliance teams to proactively tackle market abuse.
Ben, to get us started, could you share a bit about your background and what led you to found eflow Global?
The journey to my role as eflow Global’s CEO is fairly unique. I’m originally from Australia but have called the UK home for the past 25 years. Following my studies at King’s College London, where I read Philosophy and Religion, I began my career in banking, which is what sparked my interest in regulatory compliance.
eflow was founded in 2002 and I joined the business with a range of insights from my roles in mid-sized UK banks. A pivotal moment for the company was during the 2008 financial crisis, which increased regulatory scrutiny and opened doors for innovation. This was what led us to pioneer cloud-based solutions at a time when many in the industry were hesitant to adopt new technology.
Since then, eflow has used its extensive industry experience to develop a range of highly configurable, modular tools that help firms manage their regulatory controls more robustly and efficiently. Our solutions are built on the PATH digital ecosystem, engineered over two decades of research and development, which offers the agility of off-the-shelf software with the customisation of a bespoke platform.
With the increasing scrutiny on eComms surveillance, what inspired the development of the enhanced version of TZEC, and how does it differ from existing solutions in the market?
TZEC’s development was driven by growing regulatory pressure on firms to proactively monitor off-channel communications, which has been evident through the significant rise of enforcement actions taken by global regulators in recent years.Many existing eComms surveillance systems remain somewhat limited in their scope, often offering little more than ‘archive and search’ capabilities. These siloed solutions offer a fairly one-dimensional and reactive view, which can leave compliance teams struggling to piece together fragmented insights. This often ends up draining their resources, rather than making their lives easier.
TZEC sets itself apart by addressing these inefficiencies. Available as either a standalone or integrated system, it eliminates the need for teams to manually ‘join the dots’ across trade and eComms surveillance platforms. Powered by eflow’s Global Lexicon Service (GLS) and machine learning, TZEC not only monitors multiple communications channels but learns from historical behaviours, applying these insights to future alerts. This creates a dynamic and continuously evolving system that adapts to identify suspicious activity based on patterns of behaviour rather than relying solely on keyword detection.
Additionally, TZEC is designed to normalise data from any communication channel, giving firms confidence that any new channels they start to use can be easily integrated into their surveillance strategy in the future.
Given that global regulators have issued over $2.7 billion in fines since 2021 for eComms surveillance failures, how do you see TZEC addressing the key pain points financial firms are facing in this area?
As the number of digital channels used for client and staff interactions continues to grow, financial firms are struggling to keep pace with the complexity of eComms surveillance. Many existing systems lack the advanced capabilities needed to analyse unstructured data, which is critical for detecting suspicious behaviour.
TZEC addresses this challenge by employing sophisticated natural language processing algorithms, powered by machine learning. This enables it to sift through both structured and unstructured data, identifying patterns and anomalies that might signal market abuse or manipulation. By associating relevant communications with trades, TZEC generates a contextualised view of suspicious activity, reducing the noise of false positives and enhancing the accuracy of surveillance efforts.
With these insights, compliance teams are better equipped to make informed regulatory decisions, ensuring that their eComms monitoring is both proactive and precise. Ultimately, TZEC allows firms to navigate the complexities of modern communications with confidence, while mitigating the risks of regulatory penalties.
The integration of AI and machine learning in TZEC is intriguing. How do these technologies enhance the platform’s ability to identify and predict market abuse activities?
AI and machine learning allow the platform to continuously evolve and sharpen its ability to detect and predict market abuse. One standout feature is its sentiment analysis capability, which assesses the tone of communications to detect threatening or coercive messages. This goes beyond simple keyword matching, giving firms a more nuanced view of potential misconduct.
Additionally, there is our Global Lexicon Service, which draws on global data trends to identify suspicious activity across the market, rather than limiting analysis to a firm’s own communications. This is further bolstered by the Client Lexicon Service (CLS), which adapts to firm-specific terminology and acronyms, ensuring that the platform remains tailored and highly responsive to each firm’s unique environment.
You’ve mentioned that TZEC utilizes a Client Lexicon Service to learn firm-specific vocabulary. Could you explain how this feature improves the accuracy and effectiveness of eComms surveillance?
The CLS is designed to adapt to the unique language, acronyms, and terminology used within each firm. This level of customisation ensures that TZEC is not a one-size-fits-all solution, but is tailored to the specific communication patterns of the organisation. As a result, it can accurately identify potential risks that might otherwise be missed by systems relying on generic language detection.
In addition to this, TZEC also utilises eflow’s GLS, which broadens surveillance by incorporating global data and behavioural trends. This dual-lexicon approach—combining firm-specific and global insights—means that TZEC can flag suspicious activities that might go unnoticed if only the firm’s internal vocabulary were used.
Both the CLS and GLS continuously ‘learn’ from new data, enhancing TZEC’s ability to recognise suspicious messages and patterns over time. This makes eComms surveillance more accurate and effective, evolving with the firm’s communication patterns and the wider market landscape.
False positives are a common challenge in compliance monitoring. How does TZEC’s approach minimize these, and what impact does this have on compliance teams?
False positives are a significant issue for many firms, often overwhelming compliance teams and draining valuable resources. TZEC tackles this challenge by offering a highly configurable platform that allows firms to fine-tune their alert parameters in line with their specific risk strategy. This flexibility ensures that the system is tailored to the unique needs of each organisation, significantly reducing the number of irrelevant alerts.
Firms can experiment with different configurations in a secure, independent sandbox environment before applying their preferred settings to the live system. This not only minimises the risk of false positives but also enables firms to adapt their settings as their risk profile evolves.
The result is a more focused and efficient compliance process. By reducing the noise of unnecessary alerts, compliance teams can spend more time investigating genuine risks, ultimately enhancing the effectiveness of their surveillance efforts while easing the operational burden.
Considering the focus of regulatory bodies like the FCA, SEC, and FINRA on eComms surveillance, what do you believe are the most critical compliance challenges firms will face in the near future?
One of the most pressing challenges firms will face is dealing with the increasingly sophisticated tactics used by bad actors. As market abuse strategies evolve, detection becomes more difficult, especially when combined with the growing number of communication channels used to share information. Piecing together the context of suspicious activity across these fragmented sources, as part of a comprehensive trade surveillance strategy, can feel like an overwhelming task.
To keep pace with regulatory expectations, firms will need to adopt a technology-driven approach to manage the vast volumes of data generated by their trading activities. Automating processes and integrating both trade and eComms surveillance into a single, cohesive system will be critical to ensuring compliance.
Regulators are becoming less tolerant of incomplete or disjointed data that hampers investigations. Recent enforcement actions show that firms are being penalised not only for failing to prevent market abuse but even for basic lapses like failing to record and retain electronic communications. Firms must now demonstrate a proactive, tech-led approach to avoid falling short of these heightened regulatory demands.
The behavioural-led insights provided by TZEC are a significant advancement. How do these insights help firms stay ahead of potential regulatory issues and maintain a strong compliance posture?
While many systems focus on ‘archive and search’ capabilities, TZEC goes much further by using machine learning and the GLS to analyse historical communication patterns. This allows TZEC to identify behaviours that could indicate potential market abuse, offering a more forward-looking solution.
Instead of simply reacting to non-compliant actions after they’ve occurred, TZEC proactively alerts firms to suspicious behaviour that could lead to regulatory breaches. This predictive capability enables firms to address potential risks early, strengthening their overall compliance.
By continuously learning and adapting based on emerging patterns, TZEC ensures that firms remain one step ahead of bad actors, meeting both current and future regulatory expectations with greater confidence and precision.
As eflow Global continues to grow, what has been your approach to staying ahead of the rapidly evolving regulatory landscape in the financial sector?
Our strategy team is dedicated to examining regulatory changes, both in terms of imminent and future trends, to ensure our technology aligns with our clients’ evolving compliance goals.
We also maintain close relationships with regulators to stay informed about their strategic direction and its implications for firms. Our participation in initiatives like the FCA’s Market Abuse Tech Sprint underscores our commitment to innovation in this sector and highlights our reputation as thought leaders.
Additionally, we prioritise collaboration with our clients to pinpoint their challenges and identify emerging regulatory threats. This client-centric focus, coupled with our agile product development process, enables us to swiftly address regulatory prompts and adapt our solutions to meet client needs effectively. This approach not only supports market integrity but also empowers our clients to thrive in a complex regulatory environment.
Finally, looking ahead, what are your goals for TZEC and eflow Global, and how do you plan to continue innovating in the RegTech space?
As we look to the future, our primary goal is to harness the transformative potential of AI within the RegTech landscape. We recognise that while AI introduces certain risks, it simultaneously presents substantial opportunities for both firms and regulators.
Leveraging our PATH digital ecosystem, we are uniquely positioned to innovate rapidly and effectively. The modular, monolithic architecture of our regulatory products allows us to deploy new functionalities at an impressive pace, ensuring that our clients benefit from simultaneous upgrades across multiple offerings. This capability is crucial as firms increasingly seek integrated compliance solutions to support their scaling operations.
Our commitment to continuous innovation is also reflected in our proactive approach to client engagement. By understanding the evolving needs of our clients and the regulatory challenges they face, we can develop solutions that not only meet current demands but also anticipate future requirements. This alignment with industry trends will enable us to remain at the forefront of the RegTech space, helping our clients navigate the complexities of compliance with confidence.
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