Interviewer: Welcome to Broadridge, Chris. Who is J&J and what value do you add for Broadridge clients?
Chris Montagnino: J&J is a consulting and technology firm. Recently, Broadridge purchased the Compliance division of J&J which is now part of Broadridge’s Message Automation team. The value add from the former J&J team is twofold. First, we have a number of compliance subject matter experts who can perform compliance and testing assessments for existing Broadridge clients. Also, on the technology side, J&J’s ECS service provides equity trade surveillance capabilities and regulatory reporting for SEC Rules 605 and 606 which are not presently offered on the Broadridge platform. Our experience has seen several clients originating business with the consulting team and eventually engaging on the technology side and vice versa.
Interviewer: What are the benefits of centralizing your regulatory reporting and surveillance needs with one trusted partner?
Chris Montagnino: Well first, you only have to provide your order and transactional data to one vendor thereby alleviating the additional risks of sharing such data with multiple parties and managing multiple connections with multiple vendors. Also, you only have to reference one interface for your reporting and surveillance monitoring and analysis, rather than multiple portals to navigate – a one stop-shop for the folks that are doing this review on the client side.
Interviewer: How does Broadridge distinguish its services from similar surveillance and reg reporting vendors?
Chris Montagnino: Our service offers an interface that is intuitive and one that does not require our clients to hire an expert or be an expert to implement, as is the case with other surveillance and reporting vendors. We provide clear descriptions of our surveillance scenarios and offer customizable parameters to allow our algorithms to be tailored to the particular trading or client patterns of our customers. We also provide tools to analyze and review our regulatory reports which were created with compliance and supervisory officers as users in mind rather than technical users. Our interface is configurable and certain enhancements can be implemented by the user directly without developer assistance.
Interviewer: Why is it so critical to work with a partner who have experts in compliance and regulations to support their product?
Chris Montagnino: Because having access to compliance expertise who have experience in interpreting regulatory reporting and surveillance requirements is as valuable as the technical service generating the reports or the exceptions. Our experts have worked with regulators and other broker dealers across the industry and can provide feedback on best practices observed during their experiences and engagements. We can provide guidance on use cases particular to our clients and relieve the burden from our clients related to regulatory interpretations and analysis. Our experts are active with industry regulatory groups to stay current on evolving regulatory requirements and changes and engage with the broker-dealer community to identify best practices.
Interviewer: Talk about the most significant challenges for an effective surveillance system.
Chris Montagnino: Sure. The significant challenge for any surveillance system is to have appropriate scenarios that address the risks inherent in the customer’s trade activity, number one, and to have parameters calibrated to yield effective surveillance exceptions. Achieving the balance between relevant exceptions and acceptable numbers of false positives is crucial. We seek to achieve that by properly understanding the client’s business, working closely with the clients during the onboarding and testing process and periodically meeting with them to assess recent exceptions and potentially refresh those parameters. We also provide tools, in addition to the exceptions, that allow clients to effectively analyze their exception output without leaving our system. Finally, our case management system has been designed to assist clients with identifying patterns of behavior over time, which is particularly useful with manipulative trading type patterns.