New application
From an initial start in foreign exchange, Features Analytics is now applying its approach to equities.
Soviany says: “We have been working with a leading global investment bank that gave us equities market data from a specific geography. Its current solution for detecting market abuse was looking only at fixed time intervals, usually periods of most intense activity.
“Our system is more dynamic. It was able to identify something the existing solution had missed, an account that exhibited a suspicious spoofing behaviour at another moment during the day and this was caught by our solution which uses a parameter-free alerting unit with dynamic thresholding.”
Features Analytics is also talking to providers of market infrastructure – exchanges and trading platforms – as well as to more banks and investment banks focusing just on activity among their own customers and traders.
Dealing with market infrastructure providers may allow a broader view of evolving patterns of market activity and divergences from them. That may help with investigations into layering and wash trading – forms of spoofing in which connected groups appear to buy and sell between themselves in an effort to create a misleading impression of deeper market activity to lure in buyers or sellers.
Growing demand
And why would a computer scientist want to make that pivot from detecting cancer to detecting market misconduct?
Partly because Soviany is an entrepreneur who has spotted an opportunity and set up her own business. Also because the opportunity is big. The increasing frequency, scale and sophistication of attempted fraud, as well as a sharper focus on money laundering by regulators, are driving growing demand across the banking industry for more advanced anti-financial crime tools.
A forthcoming report suggests that the global market for services that detect and prevent fraud is expected to see a compound annual growth rate of 20% over the next six years and will reach $71 billion by 2025. That’s up from $16.5 billion in 2017.
The UK’s FCA produced a first annual survey of reporting firms’ financial crime data in November last year and found that while cyber-crime is the big worry – with identity fraud and theft, phishing and computer malware the most prevalent – the overwhelming majority of 2,000 firms reported almost every kind of fraud is increasing, especially those enabled by new technology.
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Proportion of firms that perceived the incidence of fraud increased or decreased, by fraud type, 2017 |
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Source: Financial Conduct |
In the final quarter of last year CGI announced CGI HotScan360, developed in close collaboration with large banks, which delivers integrated, intelligent and real-time anti-money laundering, customer due diligence and fraud detection capabilities.
“Financial crime is increasingly sophisticated, and new technologies enable criminals to replicate fraud across the globe 24/7,” says CGI vice-president Jan Macek. “In addition, with real-time payments, banks no longer have hours or days to analyze transactions, but must do so instantaneously within milliseconds.”
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