"AIB catastrophe won’t be the last" Says Financial Compliance Specialist

London – 8 February 2002 - STB Systems, leading specialists in financial compliance software, warns rogue traders will continue to damage banks around the world until investment is made in an inexpensive new technology.
The company, which has advanced software systems that automate audit of data
integrity, says systems are available today that could pick up reconciliation irregularities inherent in rogue trading before it gets out of hand.

According to James Phillips, Business Development Director at UK-based STB,
many banks must still be as exposed as AIB clearly were. "There is a way to
detect non-compliant activity long before it’s a major problem," said Phillips. "Since the Leeson case there has been huge investment in risk management technology and in regulatory pressure, yet many financial organisations clearly remain exposed to fraud or misstatement of financial

STB's software can interrogate any number of trading and accounting systems,
reconcile positions, or other data that ought to match, and automatically alert management if they do not. Whilst in the AIB case it is too early to say what went wrong it is believed that fictitious option trades were used by the trader to offset failed foreign exchange transactions. If this is the case, then the software would be able to automatically check and immediately highlight anomalies between fictitious options data and non-existent balancing entries elsewhere – a process known as "continuous business audit".

"These software tools constantly sniff around inside a Bank's systems and ring alarms if abnormal activity of is occurring," added Phillips. "If trends change, profit centres are suddenly not profitable, or more fundamentally data in one system does not reconcile to another, systematic errors whether fraudulent or inadvertent are immediately flagged. This process could prevent a build up of rogue trading and protect financial institutions from the consequences of it."

The alternative to automated tools is hugely expensive manual auditing, says
STB. "But often the manual audit comes far too late," concluded Phillips.

STB Systems Limited has provided automated financial compliance software for
nine years. The company now holds a major share of the UK market for compliance and regulatory reporting solutions and has expanded into the rest of the world, quickly gaining leading positions from its operations in both New York and Hong Kong.

STB software provides automated reporting for FSA-supervised firms, and is one of few to be recognised by the Bank of England for electronic reporting.

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development