Sell-Side Technology Awards 2019: Best Sell-Side Compliance Product—SIX

The best compliance products not only offer high-quality performance, but are constantly updated to meet new regulations and market requirements. This certainly holds true for SIX, winner of this year’s best sell-side compliance product for its Sanctions Securities Monitoring Service. 

Oliver Bodmer, senior product manager at SIX, says there are some 30 million financial instruments and 200 million companies in the world, of which some 70,000 are publicly listed. “When we talk to our clients, they have huge sanctions teams in place,” says Bodmer. “They have about 30 people who are doing this manually, and they always do it on a case-by-case basis. We don’t do it that way—we look at the global universe, and for this you need to have adequate technology in place to do so,” he says.

The technology behind this massive undertaking is innovative and highly sophisticated. Bodmer talks about matching people to companies using Levenshtein algorithms that have been optimized to process large volumes of information automatically. The matching process is automated with data sources mapped on an in-house-built system. SIX has to react quickly when it comes to identifying relevant financial instruments whenever new sanctions are introduced and more companies are added to the list.

While technologies like machine learning are important, Bodmer says SIX also needs to employ people with foreign-language skills like Russian, Chinese and Arabic. Each team tracks the regulators they are assigned to and eventually the results are merged. In a week, SIX monitors close to 25,000 movements, which might entail a new instrument or change in ownership. “Once you are a sanctioned individual and you own or control companies, you try to get rid of your majority investments into these companies by ceding your ownership to relatives,” Bodmer explains. 

SIX began monitoring sanctions back in 2014 when Russia invaded Ukraine. At the time, sanctions had been issued by the US, the EU, Switzerland, Australia and Canada against certain named entities. In 2016, the firm shifted its focus away from a targeted approach centered on Russia and started to follow different regulators. Today it tracks sanctioned files from nine different regulators. 

SIX has close to 50 clients located mainly in the US and Europe. It is currently also carrying out negotiations in Japan with plans to expand its services further. “We are looking at adding the Netherlands to our service, because now with the whole Brexit discussion we can see that many companies that have been based in the UK are moving their headquarters to the Netherlands,” he says. “So they have an interest in tracking specific additional sanctions once they move their headquarters to the Netherlands.”