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We’re living in a world of relentless uncertainty. For compliance teams, this uncertainty normally only means one thing – cybersecurity risk. Against this backdrop, you might think that the volatility of the global economic landscape would be the primary cause of compliance issues for firms this year. But does this environment in fact increase the danger of other risks?
In March this year, our report gauged the opinions of 300 regulatory leaders from around the world on global trends involving market abuse and trade surveillance. One of the key findings was that the majority (64%) of regulatory professionals said cybersecurity risks were most likely to cause compliance issues in the next year. Next up was, unsurprisingly, global economic uncertainty (58%), followed by increasing regulatory complexity.
Given that a lot has happened already this year, does this ranking remain the same? Or are other market drivers playing a bigger role than expected?
Chief Executive Officer & Founder of eflow Global.
The role of tech-driven risks
AI, of course, lies at the heart of tech-driven risks. It has become both compliance’s enemy and ally. While AI trading models are designed to optimize for profit and increase efficiency, their rapidly accelerating sophistication means that they have the potential to become increasingly unpredictable. As AI-driven trading strategies interact with one another, market movements become harder to control and forecast. This is just one of the reasons why the benefits of AI tools also bring significant risks.
These dangers explain why proprietary trading firms, who rely on high-frequency, algorithmic trading strategies, were especially concerned by tech-driven risks, with 70% of respondents picking it as a key issue for this year.
Simultaneously, however, AI is becoming a great aide to compliance teams. Effective surveillance now depends on machine learning and AI to detect nuanced and initially obscure connections between instruments, firms or markets. These insights can support compliance professionals in detecting increasingly sophisticated forms of market abuse, while also reducing false positive alerts – a major resource-drain on monitoring teams.
Of course tech-driven risks aren’t just limited to AI. Off-channel electronic communications (eComms), where employees communicate via unmonitored apps like WhatsApp or Signal, present major compliance risks, while the increase in regulatory clarity around digital assets, such as the second part of EU’s MiCA regulation which came into force in December 2024, means their journey towards the mainstream is only likely to accelerate.
What’s true, however, is that global uncertainty heightens these risks.
How global unpredictability aligns with increasing regulatory action
Global economic unpredictability has undoubtedly been the story of 2025 so far. US trade tariffs, geopolitical conflicts, supply chain disruption and economic volatility have created a trading environment where the next move can be impossible to ascertain. But it’s also the case that this uncertainty is becoming more accepted, with regulators and firms adapting to ensure they are set up to withstand any unexpected twists and turns in the market.
So how do firms mitigate against this uncertainty from a regulatory perspective? One approach is to ensure you have stringent and robust trade surveillance controls in place. Over the last few years, instead of predominantly levying fines for abuse, regulators have been focusing on insufficient eComms recordkeeping and trade surveillance systems and controls.
Our report illustrated how trade and eComms surveillance fines accounted for over three quarters ($1.4 billion) of total enforcement action in 2024. There has also been a widening of who global regulators have been targeting, with firms of all sizes – not just the tier one banks – being handed stiff financial penalties.
Why robust trade surveillance controls underpin compliance
Some events are impossible to predict. Global uncertainty is always a factor, so robust controls are needed to mitigate risk and maintain compliance. Current compliance technology is already advancing to manage this rising range of risks, with features such as conditional parameters that can adapt to market volatility and liquidity, or sandbox environments to test new configurations in a controlled, low-risk setting. These developments are a crucial step in building systems that can respond to the complexities of risk in today’s markets and ensure firms can keep on top of regulatory requirements.
With eComms and trade surveillance coming under particularly intense regulatory scrutiny, the compliance strategies that integrate trade and eComms data together are the ones best placed to manage risks this year. While trade data offers quantifiable evidence of suspicious activity, the intent behind it often lies in communications data. By adopting such an integrated approach, compliance teams can spot abuse that might not otherwise be apparent and build comprehensive cases.
Controlling the uncontrollable
It’s too early to call what risks are causing the most compliance issues this year. But there is no question the three areas highlighted by regulatory professionals in our report align with the current compliance reality. Rather than weighting one risk above another, however, what compliance strategy calls for more and more is the need for an integrated and holistic approach that accounts for the relationships between these risks.
Of course, it is necessary to have an awareness of what risks are a particular problem at a given time. But an integrated approach can bring to light risks that would otherwise remain hidden. Above all, what it comes down to is control: when outside events are deeply unpredictable, regulatory processes and systems that are robust, well designed and executed efficiently are worth their weight in gold.
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