RegTech provider Shield of Tel Aviv has opened a one-man office in London with a view to selling its compliance platform to financial institutions in the City.

Shield runs a cross-regulation compliance platform for electronic communication trade and market data. "Cross regulation compliance" is a term that refers to the carrying out of various compliance-related duties that pertain to different EU regulations such as MiFID II, EMIR, the AIFMD and the GDPR simultaneously. Shira Rottner (pictured), the only person at the London office so far and not a coder herself, explained: "The way we see it is that financial institutions are burdened with MiFID II etc and are having a hard time. We address different requiremts in different regulations, although we don't look at the ISO standards. The platform brings in all communications data at a firm, providing the compliance officer with a two-stop shop.

"The first stage is bringing data together and correlating it. This is almost always done manually right now and entails going to every system and bringing the data together. It's usually the compliance officer's job. Once that first stage is over, we can use a surveillance tool, a monitoiring tool, to produce alerts. This homes in on traders using slang - if they do this they could be manipulating the market. At both stages there's a bit of machine learning taking place. We provide the machine learning and artificial intelligence to analyse the data, most of which is normally kept in system silos across the board. Then we normalise it (indexing and correlating it, looking at different forms of commununication). At most banks, the systems don't speak to one another."

Compliance Matters asked Mrs Rottner whether Shield automatically uploaded new requirements to suit every substantial piece of new EU legislation that affected financial services. She replied: "You can adapt the platform when there is a new EU regulation. I dont think that anybody's platform can accommodate them all. We're small, a start-up, and we can therefore tailor all these requirements to the financial institution's needs.

"On that note, when it comes to data sources, they're very very heavy. Bringing them in is very difficult. The compliance officer needs to go and bring data in - the traders are usually on chat. He has to dig through the information. He has to read emails. We automate all that."

Compliance Matters asked the obvious question: would any compliance officer trust the software to read through data and spot all suspect behaviour without bothering to read everything himself? It the machine were to fail, the company would punish him and not it. Why should he not trust his own eyes rather than the computer?

Shira Rottner was sanguine: "He'll do it anyway. You must have a human element to it, but the machine is learning when he's doing it."

Compliance Matters asked whether her firm (which has 15 people in its main office in Israel) was thinking of branching into money-laundering control and generating suspicious transaction reports. She said: "We're thinking about doing it, we think about it every day, but now we are small. We have to take a strategic approach."

Tel Aviv, where the firm's original 15-man office and R&D centre is, is a prime location for spy technology and surveillance companies that service Mossad, but she said that her firm was not connected to such companies.

When asked for her vision for the future of regulatory rules expressed as machine code, Shira Rottner agreed that eventually regulators' computers would send rules in the form of code to banks, demand data back from them in the approved format and humans would go nowhere near the process. She did add a rider to this, however: "Banks are nowhere near encouraging this type of technology. Their stakeholders are very often technophobes. If you were a thrusting executive on the main board of a bank and you wanted your bank to adopt a certain piece of RegTech, you would be putting your job on the line if things went wrong. My advice to such a person is to get down to the basics - the data. If the data is in a mess, there's no point in bringing in the new technology. Most banks are a long way from ready. Also, most banks want solutions on the premises - they therefore need a dedicated team of people to work on their servers, which adds to the cost. If they were to move to the Cloud it would be cheaper."

* Shira Rottner is available through www.shieldfc.com