Regulator bot is here

Robots are automating yet another bank job: the task of sifting through traders’ messages to spot foul play, a process currently carried out by legions of human employees.

Nasdaq Inc. is partnering with a company called Digital Reasoning to combine its trade-surveillance software with Digital’s system for monitoring trader chats and messages. UBS Group AG uses the technology, according to a Nasdaq statement on Tuesday. Bloomberg LP, the parent of Bloomberg News, also offers clients tools for communications surveillance.

While banks slimmed down their trading operations in the aftermath of the financial crisis, the ranks of employees who keep tabs on traders have swelled. Computers may have revolutionized trading, yet analyzing employee e-mails, texts and calls often remains a manual task requiring a large staff.

“The systems that are around are either very, very manual and they require a hundred people in the basement to do the work, or they are automated but come up with so many false positives that you yet again have to sift through everything,” said Valerie Bannert-Thurner, head of risk and surveillance solutions at Nasdaq.