NewSmith is using the product for pre- and post-trade compliance with UK market regulations as well as its own internal rules. The implementation took just three weeks, and included the creation of dozens of new rules to enable the system to adhere to NewSmith’s internal guidelines. “It involved a list of internal regulations and guidelines. We went through a process of looking at which regulations fit which templates, and working with our developers who are SQL specialists to create customized rules,” said Nelson Ra, a product manager for Watchtower. Ra estimated that there were probably 25 to 50 unique rules, though they often had to be applied differently for different types of accounts.

Added Matt Weir, head of risk and control at NewSmith, “The flexibility of the Watchtower compliance product enables us to monitor compliance and risk across all positions and funds.”

The way new rules were created for NewSmith was basically by using Watchtower’s rule wizard to build on the rules templates within the system, explained Pete Adams, a Watchtower product manager. Though there are many templates, the most commonly used ones fall into two main categories: concentration rules, where no more than 10 percent of assets could go into foreign exchange for example, and restriction rules, where certain securities are excluded from a portfolio. New rules were created by mixing and matching and modifying these existing templates.

NewSmith signed up for Watchtower, just months after implementing Eze Castle Software’s OMS, the Traders Console.

“The real-time integration with our OMS and email system allows us to stay on top of investment compliance monitoring and exposure risks. We are alerted instantly when potential compliance issues arise,” said NewSmith’s Weir.

Though the Trader’s console comes with built-in pre-and post-trade compliance tools, Watchtower allows users more ownership of the process, said Rob Keller, Eze Castle’s vice president of product management. Among other features in addition to the rules wizard are a flexible crystal-like reporting system, and diagnostic checks for checking data integrity.

Demand for compliance products has increased in London as well as in the hedge fund market in the US, Keller said.

“In the US there is a lot of demand with the registering of hedge funds. While they’re already compliant with the OMS, they want to be able to run compliance checks ad hoc and store them,” he said.

www.ezecastle.com

www.newsmithcapital.com