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WINS Securities Champions Emerging Trading Surveillance Tool to Support Growth and Scalability

Published 09 July 2010 | By Business Systems UK

WINS Securities ("WINS") is a leading UK market maker, responsible for buying and selling equities and fixed income products to wholesale counterparties such as stockbrokers and institutions comprising of fund, asset and wealth managers. Operating with circa 100 traders, they cover the full range of UK equities from FTSE 100's to Small Cap and AIM, dealing in gilts, corporate bonds and investments.

As with all Securities companies, WINS are regulated by the FSA, and one of their primary focuses is the integrity of the market via the market abuse regime. WINS has an obligation under those rules and regulations to prevent and detect market abuse, educate their traders in areas related to market abuse whilst also having the responsibility of reporting any suspicious activities they see in the context of the wider market place.

WINS typically handles in the region of 40,000 - 50,000 trades per day although, during the height of the financial crisis, this reached a staggering 90,000 transactions daily. Today's trading environment is highly sophisticated with the majority of trades being completed in real time via WINS's bespoke electronic trading platform "Winner" and with fewer than 10% of trades now being completed by phone.

WINS has a number of robust internal procedures enabling them to comply with FSA regulations but a decision was taken to complement and add value to their existing monitoring programme by implementing Market Detect, a sophisticated trading surveillance system. According to Simon Rafferty, Head of Compliance at WINS, "Market Detect is a powerful additional risk mitigation tool which we view as an integral part of a strategic approach, working in conjunction with other systems and processes to provide best practice compliance monitoring."

WINS developed an interface which provides Market Detect with trades, orders and RNS feeds. The system can then detect when there is a price sensitive announcement and can retrospectively look back and view any unusual trading patterns in the data prior to the news release which may indicate "insider dealing."

When reviewing trading surveillance systems, Simon explains "during our evaluation, two types of systems became apparent. Purely rules based systems, where you constantly have to tweak the rules, or where you apply the same rules across different types of counterparty, trading in different types of security and yet you're assessing them against the same set of principles. The other type of system evaluated was Market Detect, which intelligently learns from the information it is fed. So whilst it still has rules, it adjusts its sensitivity depending on what it knows about the usual behaviour for each counterparty and security, so it can look at exceptions based on the counterparties history or the stock's own trading history."

The case handling and real time monitoring of the alert system are key features which WINS feel they are benefitting from since systems implementation. Various Suspicious Transaction Reports (STRs) have also been generated as a direct result of Market Detect and new alerts such as "layering" have been created to better suit WINS requirements. Simon Rafferty stated "the real benefit lies in the fact that Market Detect acts effectively as scalable extra headcount. It monitors the same number of trades that ten people could and is capable of monitoring the same number of trades as 100 people whilst still producing the same outputs. We are able to scale our coverage from 40,000 to 90,000 trades daily, whilst still meeting our compliance obligations."

Market Detect also benefits from a financially dynamic pricing model with WINS paying for it on the basis of the volumes of transactions they execute. This makes it a compelling choice but Simon Rafferty noted "it was also attractive to us, because it is an emerging technology in this arena, it has taken time to develop but we have worked closely with Business Systems to fully tailor it to meet our needs. We have built flexibility into areas such as case handling and we welcome the fact that the technology continues to evolve and adapt to suit new market behaviours and trends, we feel it is instrumental in keeping us ahead of the market."