Wall Street is spending more than ever on technology designed to keep an eye on traders after regulators extracted record fines from many of the world’s biggest banks for lapses in monitoring communications.
The industry will spend about US$1.8 billion on surveillance technology this year, up 20 percent from 2021, according to Coalition Greenwich, an analytics firm tracking the financial-services industry. Two-thirds of that spending comes from banks and broker-dealers alone, the London-based consultancy said.
The increased spending comes after US regulators reached settlements with a dozen banks in a sprawling probe into how global financial firms failed to monitor employees’ communications on unauthorised messaging apps, bringing total penalties in the matter to more than US$2 billion.
The investigation forced many of the world’s biggest banks to hire compliance consultants to review the monitoring and archiving of work-related communications, including those on employees’ mobile phones or other personal devices.
“With record-keeping lapses triggering steep fines, it makes economic sense for capital markets firms to invest in technology that helps monitor communications in a more stringent manner,” Audrey Blater, a senior analyst for Coalition Greenwich, said in a statement.
Compliance professionals want to
add technology that allows them to store audio files they record of employees’ conversations along with searchable transcripts, Coalition Greenwich’s researchers
Wall Street firms also are looking for software providers that let them store information beyond the two years of history that third-party systems usually offer, the consultancy said. — Bloomberg