Risks from technology keep compliance professionals up at night

d by 260 percent year-over-year in 2024, and regulators increasingly targeting small- and mid-market firms, this should serve as a wake-up call for the thousands of smaller financial institutions and trading firms seeking to proactively enhance their compliance operations.

When asked how regulators could better support firms in their efforts to ensure regulatory compliance, 62 percent cite the need for greater transparency around regulator expectations and enforcement action. 48 percent say closer collaboration between regulators and compliance teams, followed by greater standardization of international regulatory requirements (45 percent), clear guidance on minimum core technology standards (37 percent) and increased use of data and technology to enhance market oversight and greater credit for proactive self-reporting (30 percent each).

The survey findings highlight the changing landscape and increasing challenges faced by compliance professionals in the financial services sector. With technology-driven risks emerging as a major concern, professionals need to stay up to date with regulatory changes, assess risk profiles across multiple asset classes, and identify insider trading and market manipulation accurately. Integrating trade and electronic communications surveillance is a key component of a holistic compliance strategy, as is the ability to interpret and explain trade surveillance reports effectively.

Ben Parker, CEO of eflow Global, emphasizes the importance of firms enhancing their compliance operations to meet evolving regulatory requirements and avoid enforcement actions. In light of increased global enforcement activities and regulators targeting smaller firms, the need for proactive compliance measures becomes even more critical. The survey results underscore the urgent need for greater transparency around regulator expectations, closer collaboration between regulators and compliance teams, and standardized international regulatory requirements to support firms in maintaining regulatory compliance.

As technology continues to shape the financial services industry, compliance professionals must adapt to the evolving landscape to mitigate risks effectively. The use of data and technology to enhance market oversight and promote proactive self-reporting can provide valuable insights and improve compliance operations. By addressing these challenges and proactively enhancing compliance measures, financial institutions and trading firms can navigate the complex regulatory environment with confidence and ensure long-term compliance.

The full report from eflow Global offers comprehensive insights into the regulatory challenges facing compliance professionals in the financial services sector. With technology risks taking the spotlight as a significant market force likely to cause compliance issues, professionals must equip themselves with the knowledge and tools to address these challenges effectively. Enhancing compliance operations, staying informed about regulatory changes, and leveraging technology to enhance market oversight are key strategies for ensuring regulatory compliance and mitigating technology-driven risks in the financial services industry.