Background: Pre-trade Compliance
Running a public investment fund poses considerable operational challenges. In the US, the new Rule 18f-4 will be enforced next month. In Europe, the Undertakings for Collective Investment in Transferable Securities (UCITS) are some examples. Unregulated funds also need to stay within their own self-determined risk budgets.
Being compliant at the start of day (SOD) does not necessarily mean compliance. As funds execute trades intraday, limits can be breached. Most OMS systems have some form of pre-trade compliance checks that prevent trades from being executed if they will cause a breach, but these can be limited to simple asset classes such as equities.
When more complex assets are traded like options and futures, OMS systems lack proper alerts, pricing models and risk models. Everysk has powerful workflows that can automate the whole pre-trade compliance process and work with your existing order management system.
How Everysk Can Help
Everysk is a technology company specialized in automations for the financial sector. Our platform allows professionals without any coding experience to orchestrate sophisticated daily workflows. Our programmatic workers are tailored to portfolio management, regulatory/compliance reporting, pre-trade compliance, risk and liquidity monitoring, anti-money laundering and many other financial applications.
Building a workflow is easy: All you need to do is drag and drop robots from the library to the design canvas
Our robots are designed for financial applications and they perform tasks, such as:
- Explode the contents of an invested fund into another root fund
- Insert intra-day trades into appropriate books/sleeves from start-of-day (SOD) portfolios
- Aggregate positions coming from different brokers into a holistic portfolio
- Call our multi-asset, forward-looking calculation engine to perform risk and liquidity analysis
- Generate datalakes containing a blend of Everysk calculations and client’s
- Perform complex data explorations and set dynamic criteria
- Connect with outside APIs, distribute reports and alerts using email, Teams or Slack
- Perform conditional tests, branching the logic of the workflows
- And many other tasks
Our workflows are designed to benefit from highly scalable infra-structure in the cloud. Report templates can be easily designed and can dynamically bind elements from the automation for scalable report generation and distribution.
Starting a workflow can be done manually, via API, at a scheduled time or triggered upon receipt of a file via SFTP.
Automating Pre-trade Workflows in Everysk
Clients can plug and play a pre-canned workflow that would automatically check trades before execution. See below for an example of Everysk’s pre-trade compliance workflow:
Once portfolios are uploaded and parsed by Everysk, the following tasks are performed by the pre-trade workflow:
1) Ingests a trade blotter with trade information and portfolio/book destination
2) Parses the blotter and inserts trades into portfolios already saved in the system
3) Calculates various metrics such as VaR and exposure for the original portfolio and the portfolio plus trades
4) Checks individual limits for each portfolio
5) Performs a conditional test to check if any breach took place
6) If no breaches are found, sends the trades directly to an OMS, such as Enfusion or another API-based OMS
7) Sends an alert with trades’ compliance status to the client’s Microsoft Teams channel
8) Distributes a granular report with additional exposure and VaR contributed by trades, by individual trade and by book
The whole process is automated, saving hours of daily work and enabling trades to happen quickly. All the daily tests are securely stored in clients’ accounts and readily auditable.
A sample report can be found in the link:
Please reach out to us at firstname.lastname@example.org if you would like to learn more about our automations and/or our pre-trade compliance module.