So thank you everyone for attending. This is Navigating the Commodity Trading Compliance Landscape, the AI Evolution. So for everyone joining online, thank you very much. We’re really pleased to have you. We think we’re gonna have a really good discussion today. So let’s start off with introductions, and we’re gonna go, kind of across our panel. I’m just gonna pick, right to left from the people I can see, on my screen. So Aviv, Niv, and then Shlomit. Tell us who you are, and then I’ll talk about it. Hi. I’m Aviv Handler. I run a small consultancy called ETR Advisory. We’re based in London, and we cover, the regulation of the energy and commodities markets, wholesale energy trading, commodity trading focused on European regulation. Great. Thanks, Aviv. Nev? Hi, everyone. Niv Bodo. Very happy to, be here today. I’m a senior manager at Deloitte, risk advisory in, New York. And, I focus my, my activity on supervision, record keeping, and and surveillance of traded markets and and instruments. Shlomit. Hello, everybody. I’m Shlomit Labin. I’m the VP of data science, at Shield Financial Compliance, with many years of experience in first at the academy, but then, developing AI based, products and in the recent, years in the financial industry as well. So Oh, great. Great to have everyone. I’m Alex DeLucena. I’m with Shield as well. I’m our in house, or I’m a director of product strategy, but I’m also our in house SME. And I’m a SME by virtue of experience. I had sort of, working in communication surveillance, over the years. Now before we jump in, I wanted to sort of tell a quick story about how I came to understand some of the elements around, the commodities market. So a long time ago, and we’re not gonna get into how long ago, I had a gig. Right? It was just a job, and I had it for a year. And I worked for a utility. Right? And I was an energy auditor, and my job was to to go to real estate to residential real estate buildings in New York, and to assess how they were using their energy. And I learned a lot about a a lot, around demand, and different demands they had on their equipment and and deliveries and that kind of thing. And it was all just knowledge I accrued the way you do when you’re young and you do different jobs. Now the job I got after that, which was the one that set me on the path I’m on now, was in communication surveillance. And I started at the bottom. I was a communication surveillance reviewer. I had to look at just every email that came in, and it was flagged by lexicon and random review. Now the institution I worked at had a really big energy trading presence, And it was uncanny that I was able to take a lot of this knowledge I’ve learned kind of walking around New York and, talking to different superintendents about their boilers and begin to apply it to this market that in a in a lot of ways, the consumer has a much stronger relationship than they do to securities. Right? So intuitively, people understand that in the summer, we need more electricity for our air conditioning, and we know the times that we have our air conditioning on and off, right, when we’re in the house and when we’re out of the house. And our utilities follow those. Right? And a lot of what we trade and how the markets, work is is is oriented around this these very tangible use cases for these pieces of the planet. Right? And and that we use and buy and trade to sort of live the lives we do. Right? High level. Right? But what I think is less obvious to the consumer is just how complicated each of those markets are. Right? Because, obviously, it’s not just energy, it’s not just oil, it’s metals, and so forth. Right? And so what I wanna do for the purposes, I’m gonna frame the discussion we’re gonna have and then, you know, let’s have it. Right? Since we have a pretty diverse audience online, I wanted to start talking about the energy or or the commodities markets writ large. Right? I wanna talk about who’s regulating it, and then I wanna get more into the nuts and details of how we monitor it, best practices, things on the horizon, and then get into a few special use cases. For anyone online, any questions, you can put them in the chat. Those will be folded back to us. We’ll probably answer them most, at the end. But, obviously, anything, relevant to the conversations we’re going, we’ll try to fold in. So let’s just start generally, and then we’re gonna kind of, work our way down into more detail. So, Aviv, let let’s start with you. Let’s talk about the commodities market writ large. What is this market, and and and and what would you kind of call about it call out about what makes it different from other markets? So first of all, yes, the commodities market, comprises people trading commodities. It’s a very old market originally. Commodity trading goes back, for longer than financial trading. You know, even formalized commodity trading starts in London in a coffeehouse, more than three hundred and fifty years ago. And so it’s quite a traditional market, and, actually, that’s important, for this discussion. But, first of all, who are the players in those markets, and what sort of trading happens? People trade physical commodities, and they trade financial contracts with those commodities as underlyings. Those can be traded on organized, marketplaces, or they could be traded bilaterally. And they could comprise physical deals where I could sell something spot or forward. I could sell you some wheat in a year’s time or now, and there could be financial deals with those underlying. So in terms of who’s in the market, banks trade in those markets as do merchants, commodity traders, producers, suppliers, and many traders in the middle. And those are often not financial rate financially regulated firms. The banks obviously are often, but not always, those physical traders who will also trade derivatives and and others often under an exemption from financial regulation, will not be regulated. So that’s an important difference in terms of the players. The last thing I’ll say, this is a very brief chat I’ll give, is that, energy, in particular, gas and power, is quite different to other traditional commodities, oil, metals, agriculture, and the like. So that’s what the market looks like. It’s my my elevator pitch of what the market looks like, and that’s who’s in it. In terms of how those, companies, fulfill requirements and and carry out surveillance and things like that, I would say that, traditionally, energy traders and commodity traders, they look like banks and financial institutions in many ways, but in some ways, they lag behind in terms of maturity of infrastructure, technology, and also compliance is a bit different partly because they’re not regulated and partly because of the very traditional nature of the business. So I would say in terms of surveillance and looking for market abuse, and we’ll talk about why a bit later, that surveillance lags behind. Most commodities and energy firms that I know do not do what I would call deep, comms events, for the time being. Some do. They are mainly, at the moment, focused on transaction order and transaction surveillance. So it’s it’s quite a varied and different market. Okay. That’s a great start. I think just before we kinda dive down a little deeper, is there anything you would wanna call so you called out energy and kind of the other markets. Are there any other distinctions you would call out just kind of across markets? Are there any sort of oddities or that kind of thing as we think of, different metal classes or the agricultural or or that kind of thing? Again, it’s gas and power, I’d say, is quite distinct partly because it’s generally a regional business, because, yeah, other than with liquefied natural gas, you can’t really ship it from one place to the other, whereas other commodities tend to be a bit more global in nature. We shouldn’t, forget about emissions, which in many jurisdictions counts as a commodity as well. So certificate trading, emissions trading, and that sort of thing. Each commodity has its own oddities. Each commodity works slightly differently in each part of the world. This is a very traditional business. Metals work differently in different parts of the world. Coal is shipped differently in different parts of the world. The characteristics are different. The players are different. It’s very varied. But I’d say the energy versus other commodity split is quite distinct. Okay. Cool. That’s useful. And how about just the way business is conducted? How how is that different from, say, your traditional finance, as a comparison? Well, if we’re talking about the traders and, again, there’s different players. If we’re talking about the traders, in many ways, those resemble what you would see in a a financial institution. But, again, some of it’s a bit more traditional, especially in non energy commodities. A lot of commodity trading will be done bilaterally by people wandering around, going to different places. It’s quite a traditional business. But at the same time, you have on venue trading as well. You have lots of commodity exchanges in the different commodities. You have trading platforms. You have other mechanisms for people to trade, and those could be physically settled or financially settled. So, yeah, it’s just a market that’s very different. The mentality is very different as well, also to compliance matters. Got it. It’s evolving, but it’s it’s it’s a bit different. And and and and so just focus on traditional, you just sort of mentioned mentality. Let’s just talk about that and and then and then kinda compliance distinctions. And then, Niv, I wanna get into kind of the regulatory landscape with you. So so so, so zero in on on that if you don’t mind. But so so you think so so so the approach to compliance might be different. So I would say that the compliance departments of commodity traders, the ones who aren’t, financial institutions, will generally be a bit smaller scale than they would be in financial institutions. That is changing. But at the end of the day, they’re not you know, most of these comp most companies are not regulated financial institutions. Some would have a regulated entity here and there for various reasons, but the majority of trading isn’t carried out out of a financially regulated institution, and that impacts how compliance works both in terms of what you have to do and in terms of the mentality. Okay. Cool. And then how might that mentality be different then? Does that make them more prone to risk? Does that make them less interested in certain controls, or is it just a difference? It it’s a different set according to risk. The risks are different. I would say that if you outside of regulations, I’m I’m talking now about Europe. So in Europe, we have, yeah, a specific anti abuse regulation called remit, About to get remit too any day now, which is specifically about market abuse in gas and power, be it physical or financial. And in that regard, there is quite a high risk because there have been many fines around that. There have been over a hundred since since the rule started about ten years ago. The fines started in two thousand fifteen, so it’s been even less time than that. The risk is quite high. I would say in terms of risk, because there are less rules that apply, the risk of a regulatory breach is slightly lower and occurs less often, but it’s increasing. That that’s what I would say. And therefore, the mentality is a bit different as well. Some are also concerned with things like reputational risk and things like that, but, I’m sure we’ll talk about that later. So we’ll we’ll go into that a bit more later. Excellent. Okay. So great overview. Niv, over to you. Let’s talk about the regulatory landscape. Who who’s regulating, different commodities, regionally, so forth. Just give us, the same kind of overview, we got from Aviv. Let let’s do that with the regulators. Yeah. Absolutely. So when we talk about, energy and commodities trading, we’re talking about, a few different types of, of of instruments, really. So there’s the exchange traded, futures, options, and those are mostly regulated under the, the financial instruments regulators. We then have the, the swaps, which are also pretty much regulated under under the same, regulators that, that are covering financial markets. But there are some separate, nuances and and requirements that apply to the swap side. And then we also have the, the physical, trades and and and spot trades. And those are covered by, national, regulatory authorities in the EU or specific, more specifically in the US, it’s it’s the FERC. And and, obviously, there’s also, quite a lot of overlap between what these regulators are are covering. And and the reason is that, obviously, these instruments and these trades can be interconnected. There could be, different ways of manipulating one market using the related instruments. It could work in both ways. So quite a lot of overlap, in in terms of, the orders and and trades that, that these regulators cover. To be more specific, if we talk about the EU, so, as I mentioned, we have we have the security or or the financial markets, regulators such as the FCA in the UK. The main regulations that apply there are, are based on MiFID two. And MiFID does include in its scope, the relevant futures, options, swaps, and and commodities to an extent. Then the EU has, ACER, which is an agency for, the corporation of of energy regulators. And ACER basically coordinates and works with the national regulatory authorities. Right? So you have the Italian, energy regulator, for example. You have the the French energy regulator and and so on and so forth. And, basically, the role of, of these regulatory authorities is to, basically, follow the the remit regulation, which is the regulation for wholesale energy markets integrity and enforce all the, the the the remit requirements. And and they also have the authority to hand out fines and, and penalties. So that’s really how it works, in in the EU. In the US, obviously, things always work a little bit differently. So as I mentioned, we have the CFTC, that basically, has in its scope, all the futures, options, and and swaps, for commodities. We also have the, the NFA, which is, the CFTC’s, enforcement arm similar to, FINRA on the security side. And then we have, FERC, which is the Federal Energy Regulatory Commission. And, basically, FERC covers all the, the the trading in, the physical trading. But but, again, there is overlap, for these, energy products and and commodities. In terms of the the different regulations, so in the EU, we mentioned Remit. We mentioned, MiFID two. And, again, as Aviv mentioned, we’re actually getting Remit two as well. So there are a lot of new requirements coming every few years. In the US, it’s, it’s more about the Commodities Exchange Act as well as the Dodd Frank Act. All these regulators basically are looking at, the areas of insider trading and and use of material, non public information or inside information. They’re looking at conflicts of interest, and they’re also looking at market, abuse and, manipulation. Right? So any attempt to manipulate the prices, any attempt to provide less than optimal trades to and and order executions to clients. All of that is covered, under, these different regulators. And all these regulators essentially have requirements around record keeping and, for any business types of, communications, with clients as well as the, the monitoring of these business communications. The edit requirements for, the swap sides, especially in the US, but but also under MiFID two, For swap dealers, there’s also, the requirement to, record, and, maintain those records for audio calls as well. So that is a very specific requirements for, for swap dealers around swap transactions. And then there’s also a a very specific Dodd Frank requirement around, trade reconstruction. Right. And, and and those specific components have been quite challenging for firms, not not just the energy and commodities firms, but but financial firms as well. So I I think it’s fair to say that that some of them are still working on on kind of meeting some of those specific requirements around the capture of of the calls, and definitely around the trade recon start reconstruction, which has been mostly a moving target for, you know, for most firms. Right. Right. Cool. And then, among those regulators, sort of what monitoring requirements are you know, so we talked about the swap dealer quickly, right? But what monitoring requirements, have those, regulators imposed, on these populations, and who’s being monitored? So, essentially, you have any any entity or any market participant that is is trading in these products that is being, monitored. The monitoring includes both the kind of the the the trade surveillance related requirement and market manipulation, again, insider trading, all all of these specific, types of risks. And then there is also as I mentioned, there is also the requirement to, to maintain the the relevant records, which are all the electronic communications for fraud dealers or also the the audio, and essentially monitor those for any types of, kind of unethical or, any types of breaches, really. Okay. Great. And then have we seen an increase in monitoring and sort of the obligation or the best practice or or anything along those lines for for monitoring across any of these populations? Yeah. I mean, I mean, the standards are are definitely, being increased. So firms are are held to, to more stringent requirements. We also see that, in terms of the number of enforcement, sometimes the size of of these enforcements as well and the penalties. And and, yeah, it’s, there’s definitely also, an additional focus, on kind of the more complex types of schemes and and looking at, an actual risk based approach and and, understanding what, fraudulent patterns can be can be implemented by by fraudsters rather than just checking the box on on a specific regulatory requirement. Right. In terms of and and I think we also wanna talk about, at least a couple of of enforcements from, that have to do with with some of these record keeping and communications required. So we’re we’re definitely seeing a lot more of that recently. Yeah. We’ll we’ll get to a few use cases. I actually wanted to go back to something Aviv was saying, right, where you’re talking about how it’s just traditional market. Right? And so you have people who, you know, maybe negotiated in over chats and that kind of thing. Right? But you said there are people just walking around to, and that kind of thing. Right? So I think, it might be useful just to talk about who’s not being monitored. Right? So we know, you know, there may be traders, working directly on this stuff. Right? They might be monitored. But who’s who’s not being monitored, Aviv? Depends what you mean by monitored, I’ll say, in which market. So, again, gas and power in terms of pure commodities, and I’m talking now I’m I’m thinking about Europe. Gas and power, I would say, is is more monitored in many ways than the other commodities. Because as Neve said, you have remits. You also have the market abuse regulation as well that applies. So in terms of regulators monitoring that activity, not necessarily in terms of communications, but in terms of looking at trading patterns, I would say that both the NRAs, the energy regulators, and the NCAAs, the financial regulators, are monitoring those markets, looking for abuse, etcetera. So so and, yeah, e e and that is because there is quite a heavy trade reporting requirement, around those rules, particularly remit. Mara is a bit less direct, which allows the regulators to monitor that activity, and they use that data to monitor the market. In other commodities, certainly in Europe and actually in other parts of the world, it’s a bit more fragmented. So where we’re talking about on venue activity, be that in futures and options or other sorts of on venue activity, whether they’re physically settled or not. That is often monitored, but not always. But there’s a lot of what I would call, again, traditional trading of people phoning each other, people meeting each other. That’s what happens. It’s it’s it’s still a traditional business where real things are being delivered. So that’s obviously harder to monitor and also the definition of abuse, itself and insider trading is more difficult to nail down. Okay. So yeah. I’m gonna stop you there because I wanna get to that, but I wanna make sure that we we we bring Shlomit into this conversation too. Right? And and so we’ve started to talk about monitoring, and, obviously, that’s your bread and butter, Shalomit. Right? So so you spend your time, I think, to do Before I answer your question, Alex, I have a question to the team here. Why do you think the energy market is, less heavily regulated in terms of rules and the regulators themselves. Why is it? I think it’s if I may answer that. In terms of gas and power, it’s just a newer market. So unlike the other commodities, which I say are older than the financial markets, you know, deregulation of gas and power is quite new. It’s thirty, forty years old or something like that. And those markets, while there are financial products traded, the players there are not usually financially regulated. So under MiFID two, for example, in the EU, most use an exemption. And while the products might be financial instruments, they trade under what’s called the activity exemption and don’t have to become financially regulated. So because of that and because the industry is relatively new and they’re not banks, they’re just behind in terms of, organizational maturity, I would say, and also in terms of what they have to do. And because they’re not directly supervised, they are not so heavily watched. You know? E even if you are under an NRA, in in the EU under one of those, regulators, it’s not like being financially regulated. You don’t have people auditing you quite as much, not on the trading activity and that sort of thing, maybe now, but that hasn’t in certain respects, that hasn’t really happened. So, so as those guys aren’t financially regulated, the thinking is just not quite as much like a financial institution. So, just to that point exactly, I think that, if we look at the entire world of trading and dealing, we see that regulations are constantly in a trend of increasing. So some, let’s say, banks, were the first and the regulations, put them on the spotlight, from the beginning. And if you are saying the energy market is slightly newer and different players in the market, let’s say, traditional finance cause cause it to delay, we do foresee in the future that regulations will catch up. We do expect it to catch up. This is maybe legal estimation, but, I can say that from the other side, technology is catching up. So things that could be done couldn’t be done in the past, ages can, be done now. So if once the people were meeting, outside the office and talking, now all communications are electronic and can be monitored. So there is an advantage towards that direction that regulations can be enforced in energy market and in in general. The second thing is now technology allows us to actually find the financial risks. Risks. So I expect that this will also be a driver for regulators, regulators themselves to to increase the overseeing and, in the future, put on on more regulations and even more fines on the ones that do exist and are not, tightly, being monitored, by the law enforcements themselves. And, the thing that I wonder, what will happen, first is will the, commodity market adopt technology and be prepared for it or wait for the fines to come in and only then understand that technology must be adopted in order to avoid all of these, fines. And I have a story from the classical financial industry, I think, that, and, you were talking about, Niv, about, record keeping of voice. This is a general, something that is becoming more and more, heavy requirement from the regulation side. Different regulators, different regions with different requirements. But in general, the FCA specifically, two years ago, put a fine. I think it was on the JC, if I recall correctly, for on them just for not having, all of the traders’ calls being surveilled. They did a random sampling. That couldn’t have happened five years ago just because the technology of transcription was not good enough. So this expectation was, couldn’t be put on the table. So financial institutes, could wait and say, yes. We have a random sampling, and this is good enough, and the regulator would be satisfied. But, as of two years ago, the regulator came and say, no. That’s not not a good enough monitoring system in our eyes, and now you have to pay a fine just for not having a monitoring system in place. And I can tell you from a shield’s perspective, we see a huge increase since that occasion in interest in voice surveillance. The thing that used to be considered the same as energy market as a a kind of a a nice to have, but, since there is a real threat for a of a final money lost, now all of them want to put it in place. And I was wondering what will happen in the energy industry because we know technology has evolved dramatically. We all see the capabilities of AI. I think that it is becoming very, very salient even for the, layman, to understand what are the capabilities in this day and age. Everybody, is experiencing with Chargept, even not for work use cases. So even traditional, or less technology savvy, people know what can be done. And that applies also to the regulators, themselves, and they know what they can demand from people. And if traditional industries in the past would say, we don’t need to, we don’t have to, we are even afraid of adopting, these new, technologies, I think that they will be forced to in the, upcoming few years. So so let’s do this quickly. So, Shlomit, I wanna hear, I think, about your domain a little more, but I think you’ve raised a really good question. So let’s ask our colleagues, Niv and and Aviv first. Like, what do you see just from from from from your knowledge across this domain? What do you see leading, the ease of, technology adoption regulator pushing these firms to increase their controls? Sort of which do you sort of see leading, the adoption of better controls? And then Shlomi will talk a little bit about, those controls themselves. Yeah. I I I can I can start with that? I think, there are early adopters in in every industry, so we definitely see those. But but I think beyond the early adopters, usually usually, it’s the it’s the regulatory, scrutiny and and pressure that comes first, and then there’s the improvement. I think another another sign of maturity usually, and and it’s something that we saw in in in financial markets, will be when when firms basically move to, to a risk based to an overall risk based approach that that adopts a high, high watermark type of standard across regions and and across, you know, offices and in terms of of meeting requirements rather than checking the box on on local requirements. And, again, it usually all comes almost in parallel, but it but it’s it’s it is oftentimes driven both by success stories that they they see some of, their peer firms that that have adopted technology and and see, improvements in, in their overall program as well as in, in in cost efficiency. And also in terms of the regulatory pressure, it’s it’s still kind of the the primary trigger that pushes firms to, you know, make significant improvements and enhancements. And I don’t know, Avi, if Yeah. So so so so add something to that. Yes. So so, again, I’d I’d say there’s three elements. As you say, there’s there’s fines, and there’s ease of technology, and there’s also legislation, as well. So it’s interesting. So if you go back ten years in the European energy sector, very few firms had even a transaction surveillance system. There were some exceptions to that. That changed when the market abuse regulation came in in two thousand and sixteen. And according to most interpretations, it required you to do some self monitoring, which as an unregulated firm, you didn’t need to do before. And it started a trend of people initially buying transaction surveillance systems and going through the difficulty of implementing them because they had to and then extending their use because it was a good idea. And that will continue now with Remit two adding that, same requirements as well. In terms of recording, it’s still quite patchy in Europe if you’re a nonregulated firm. In the UK version of Remit, there’s a requirement to record, and I think later we talk about a fine that was levied on that. Under other versions, there is not. And as unregulated firms, there isn’t always a requirement to record. And when there isn’t, there’s actually a difficulty in terms of privacy law in doing that. Having said that, as I said, there’s been a lot of remit fines for market abuse, and that is pushing people to push forward with what they’re doing. And the technology does get easier to implement as well, and, also, there’s more experience around in the sector to implement it too. So all of those things does mean that, yeah, the the process of evolution carries on in terms of capability, and it’s not going away. It’s just slower. But it it’s happening. Yeah. I I think that another factor that influences all industries is that, the world is also, moving towards more and more electronic communications. What what was done previously face to face is now even today, you never go to your bank, office. You just call them or chat them or email them or do something. Use the application. Same is for all, markets. And, the effect of that is that you have a trace for everything that is being actually done, and, the risks can now be revealed. So not only monitored, but also revealed, later by the ones who are doing investigation if something actually occurred. Maybe five or ten years ago, not everything would have been documented, and you couldn’t actually the the the these trends actually make you more exposed to future revolution of all kinds of financial violations and, eventually, fines. So this will also serve as a driver, also serves as a driver for increased both regulations and interest from the company side to to to put in place something that will enable, watching these controls. So and I guess the question for you, Shlomit, is as someone, you know, whose work entails, I think, taking those signals as they, you know, come across communication. So what’s the work you do? You know, what goes into sort of developing robust detections that can surface the kind of risks, you know, we’ve started to talk about, across markets generally and then across commodities markets, specifically. So what’s your approach, and and what goes into that? So I think that the and, also, traditionally, in general in a surveillance domain, looking for risk indicators in electronic communication was the first step to do. The technology, varies because, it used to be lexicon based, and today it’s more AI driven. And the capabilities of the new age AI enables you to understand better, to read better, to, look into wider context. And, in this, in the case of commodity, it is even more important because the indicators are more, I would say, fluff or specific if you’re looking at a a plat flat window. It’s more complex. It’s harder to catch with pinpoint phrases. This is on the one side. On the other side, you will not necessarily find direct risk indicators. Nobody will say front running in a communication, not necessarily. So you will have to look around for hints of some foul play going around. So we will look for, I don’t know, hiding activities, secrecy, repetitive, communications all coming in the specific, traditional financial call and maybe raise a flag for inspection if this is a a thing that is going on for a while. Maybe raise a financial flag there for a compliance team to look look out for this. So since we have more advanced technology, we can look at more subtle, indicators in the communication, since we can look for them in a wider context and, throughout longer periods of time and, actually pinpoint the act the the risk itself and not needing the explicit mention of it. Yeah. Okay. Cool. That that’s that’s really helpful. I think we look into you, like, so I think Shlomit’s kinda given us a a a good idea of how we can surface risk across communications and that kind of thing and how those can be applied to different risk indicators. Right? But when we think about the commodities markets, what are some behaviors or risks that may be allowed there or not allowed there that, you know, that that that that would or wouldn’t appear, let’s say let’s say, across equities markets. So what what’s what what can people do that they can’t do in one or the other? And and and and there would there would be a differentiator as you sort of monitor it across these comps. Well, yeah, as you said, first of all, that’s what’s allowed and not allowed. And then I say I’d say one of the woolliest areas is is in the definition of inside information, particularly in nonenergy commodities. So in energy commodities, actually, that’s now quite extensively covered and defined under the remit regulation. But the way that information is shared in the more traditional commodities, it’s sometimes questionable as to whether a particular piece of information is inside information or not. And, therefore, you’re allowed to trade it on us or not. And, interestingly, even in the market abuse regulation, there’s a clause that specifically talks about commodity derivatives and the fact that for something to be considered inside information, it has to be something that’s eventually expected to be published. So that’s what might be allowed and not allowed. But in terms of their behaviors that so that so that’s one thing. You know? People share information, and they share it in different ways via brokers, which you would no longer do, in the financial markets. And, actually, there isn’t necessarily an easy solution to that. It’s just normal practice sometimes in commodities and isn’t necessarily abusive. But but quickly, just to interrupt then. So putting your market abuse hat on, assuming that free flow is fine, and that’s great. That’s the way that market works. Right? What would be inappropriate then? For example so so I’ll give you an example in remit. So so the classic example is that, a power station has tripped and is out, and nobody knows it except, for the insiders. You’re not allowed to trade based on that information until it is disclosed, and it has to be disclosed in a particular way or what we call an inside information platform under remit. That that would be something that isn’t allowed. And then, again, in terms of market manipulation, it’s sometimes difficult to know whether something is a manipulation or not. So if I’m a producer and my traders are trading are selling a large part of my produce for a particular commodity for agricultural or metal, particular metal or something like that, that activity is going to move an index, and it should because that’s what the index captures. Now there there is a risk of being accused of, yeah, a physical financial index type manipulation or benchmark type manipulation. It’s It’s not always clear whether it’s a manipulation or not. So there you have interesting gray areas where sometimes something is normal practice, but the impact of that might then give leads to improper practice as well. And that varies per commodity and per company. It’s it’s quite specific. And so even knowing what is abusive is is often quite tough. And then detecting it when you don’t know whether it’s allowed or not is even tougher. Well, so how would how would a firm look then to evidence that they were doing the right thing whether just to themselves, let alone to a regulator? The usual way. You keep records. You have a policy about it. You make sure you’re doing the right thing. Another example is, yeah, the oldest sort of manipulation market cornering, where I don’t offer a commodity to the market in order to push up the price. If I think that the yeah. Does that outlaw, I don’t know, a a contango or a contango play? Not necessarily. It all depends on the influence I have. So those sorts of abuses are quite difficult to define as well. How would you monitor that? You’d look at a combination of your inventory levels and the behavior around it of your traders. Right. What about things like cross market manipulation? Is that something that comes up as a meaningful risk, across commodities markets? I I find that a tricky one. Yes. I guess it could. It’s very hard to, a, detect and, b, define, because, you know, some commodities are interlinked. Gas and power is interlinked. A cross market manipulation, that’s an actual manipulation, is a, quite difficult to pull off and b, even more difficult to, determine, or or to to detect, I should say. Okay. Yes. I think we see a little bit more cross product, manipulation or or at least detection of cross product manipulation rather than cross market. There’s definitely a lot of focus there on on kind of the the correlation between the futures and and options and and swaps and and and the spot trades. Okay. And have you seen, sort of specific approaches to how firms are looking to actively monitoring that, or are they taking a more reactive approach, or just a a a a best practices approach where they do sort of periodic check you know, kind of periodic checks? So what what do you see as you kinda look across that specific, kind of monitoring? You’re starting to see more firms that are are basically putting thought into designing surveillance scenarios and and controls that can look at these at these correlations in addition to just looking at, kind of the the physical trades separately and and the exchange traded, activities separately. Okay. But it’s it’s it’s definitely tricky. It’s it’s fairly complex. I think it’s tricky. You touched on it on the holy grail of the surveillance or compliance, the trade reconstruction effort that has been for a long time a kind of, I wouldn’t call it mission impossible, but very, very challenging, effort. And this is something that does occur and did occur since the last burst of, generative AI technology that, this actually can be solved now because identifying the elements of a trade in a communication is something that can far more easily be done today than before. So, again again, I think that the connection that is very needed, was not done until now mainly due to the technology challenges. And this is also something that, I expect to change dramatically in the actual I think what you’re saying, Shlomit, is I think the ability and correct me if I’m wrong, but I think you’re saying the ability to sort of capture, especially across language, you know, with the LLM models we see sort of coming out, just these distinctions, across how people are managing different asset classes maybe let’s not say easy, but is is is we we have a clear path to it that we did. But I I would call out that, you know, Aviva has talked about this being a very traditional market, and I think there’s a lot of what we would call traditional data, right, that comes from those exchanges. And it’s, and by traditional data, I mean, not great data. It can be really hard to incorporate to sort of drive a meaningful signal, for trade reconstruction. So, I think knowing that, like, is is is is is is sort of what are some challenges around there? And then I wanted to just pick your brain also quickly on, you know, Aviv called out these distinctions between the equities and commodities markets. Things that we might surveil for in equities that would be wrong, wrong, wrong are fine, fine, gray area, wrong across the commodities market. So for you, how do you draw those lines? How do you surface here but minimize there and and that kind of thing in a meaningful way? So, again, it’s a it’s the challenge of, creating as a, let’s say, a vendor, a model that will serve one market. One market, excuse me, when there are things that are common against things that are different. I think that for the commodity market, you definitely need to develop something that is unique, again, from these, specific reasons because behaviors are not the same. They are not drawn the same. If you read it in the context of, a traditional bank and the same part of the communication will be in a commodity market. One will be okay and the other will not. So definitely models and the crafted behaviors should be adapted and changed according to the, what’s accepted in this market. And this is something that needs to be done. You cannot just adopt an out of the box bank model and put it in your commodity surveillance. This is one challenge that, and also the customers themselves or the market themselves, the compliance officers themselves, they cannot easily adopt, whatever is available in the market. Cool. Cool. We’re gonna stop there. I’m I’m gonna remind the audience that anyone who does have questions, we have a few use cases we’re gonna talk to. I’m conscious that we might get through those use cases and find there isn’t that much time. But if there are questions, I can always cut a use case and kind of, open it up. Right? So if anyone does ask questions, now’s a great time to kind of put them, in the chat. And, I’m gonna go through just a few recent use cases as a way to kind of discuss risk across this space. Right? And so for the first one, we’re gonna talk, about, a fine Morgan Stanley got from Ofgem. Right? And this was, very straightforward in as much as it was wholesale energy traders on privately owned phones who were using, WhatsApp, to to discuss energy market transactions. Right? So, Aviv, do you wanna just kinda talk about that case really quickly? And then I think, Niv, you probably spent a fair amount of time talking about off channel communications as a risk. And and so maybe let’s just kinda talk about kinda controls people are putting in place and and and that kind of thing. So, Aviv, you first. Yeah. So so it’s this was an interesting find that that surprised the, European energy market because it’s a rule that was forgotten about. As as I mentioned, there isn’t a great requirement to record for the nonfinancial European firms. The only one that there is is in the UK version of the remit regulation. This isn’t a Brexit thing, by the way. This so each rule had bits of it transposed into local regulations, just how EU regulations work. And when the UK transposed that regulation, into the UK version, they added this requirement to record communications related to activity in UK wholesale energy products, WEPs as we call them. And it’s it’s a rule that many try to comply with. Actually, many energy firms do record, their voice lines anyway, but not under a regulatory banner, but they do. And some of them remember that the UK delivered deals need to be recorded anyway. But, I guess the market had forgotten about that. Suddenly, this fine came out, and people were reminded of the fact that this regulation has always existed, for UK firms. And it was interesting to look at that fine, a, because it’s new territory for Ofgem. It’s something that the likes of the FCA were defined for traditionally. So it’s new territory for Ofgem. But if you look at the reasoning and the penalty notice behind that fine for it being relatively high, it was it was a few million pounds, and that’s considered quite high, in the remit stakes. So that that quite high thing is going as the funds are going up in value. But, if you look at the reasoning, it was partly that as an investment bank, Morgan Stanley are also under this rule, that they would be expected to have a good stat that they’d be expected to have that infrastructure in place to make sure that off channel communication doesn’t occur. Now that’s not to say that the rules don’t apply to the others, because whether you’re regulated or not under remit, activity related to UK wholesale energy products has to be recorded under remit UK. But it’s interesting to see that that was mentioned in the penalty notice as well, and it’s woken the market up to the fact that this is required. And with REMIT two coming in with the requirement to monitor effectively, for wholesale energy products overall in the EU, I would expect people to have that in mind. Right. And so, Dave, do you anticipate then based on some of the context that you’ve get that we’ll that you’ve just gave that we’ll see more obligations to record, all approved channels, you know, all all channels where business is being conducted the way we’ve seen the SEC, the CFTC, and and the FCA to a lesser degree kind of in in the over the last few years. Yeah. I think this is a topic that, you know, it it’s not there there’s no way for it to be kind of forgiven anymore. It’s something that will just be, enforced more and more. If we read the details of of the case, it wasn’t only that, these business communications were not recorded. There was another element there where, essentially, off Ofgem Ofgem, were asking for information. Right? So as as part of an an examination or or a query. And, essentially, that flagged, that these communications were missing. And if you look at the, the JPMorgan Chase that that had started the whole SCC and CFTC kind of crackdown on this topic in in the US, that was one thing that they took very seriously. Right? When when you don’t have the actual communications that are needed for an examination or for an investigation, you’re impeding that investigation. And that makes it more more serious, definitely than than just the record keeping violation. And I think we’re going to see more more of that focus, across all the relevant markets as as well as just in definitely in Europe, but but in other, regions as well. So, yeah, this is yeah. I’ll go ahead quickly. So, Shlmit, you’ve developed kind of detections for off channel communications. How do we surface what we cannot see? Right? How do we, alert on what’s not there? I mean, how how do we tackle this this particular, risk? So, usually, there is a reference of channel communication. If it occurs in an undocumented, full, environment, you cannot monitor it. But, you know, people are are are talking. They they forget that they are constantly monitored because it is everywhere, or they, take into the account that, people will not look at it. So I would say that, it used to be that, WhatsApp, for example, was, for banks definitely an unauthorized channel, and it was enough, traders used to know that, even if they say the word WhatsApp somewhere, the compliance officer will, call them up to his office and ask what’s going on there and why are they, referring to this type of communications. So so they stopped using the word WhatsApp that, occurred in a few weeks after, the system was, applied. And they found more sophisticated way to talk around it or, keen for it. For example, it used to be a time that organization just kept chasing on different, ways to spell WhatsApp. But we know today with, the advanced, language detection that we have that we can actually see the hints of the trying to tell someone to talk about it offline. So it will be, let’s take it later or ping me on the using words that, under the number one. Directly. Yes. And, thinking that this will not be caught under the magnitude of the surveillance or the compliance view, but technology is catching up. And now, we can, catch that that up as well. This is definitely one of the big interests in the financial industry at this moment. Right. I have another use case, but before I jump to it, there’s a there’s a kind of broader one I wanted to address to Aviv really quickly, which is that we’ve seen, you know, as there have been these sort of bigger and bigger weather events, we’ve seen, regulators like the FERC conducting audits on the other side of big weather events to sort of gauge if, firms, had proper controls in place, were manipulating the market, or or or or even for general, reputational kind of risks, on the other side of these events. Do you see these events and the reviews that follow them as triggering a broader either, obligation to monitor. So, they’re looking across these communications, so we need to make make sure profanity, harassment, sort of non, so conduct risks, are are properly looked for as well, to say nothing of of your standard compliance for us, like gifts and entertainment or that kind of thing, sort of knowing that regulators may come in and look at these broad kind of reviews should, firms in the commodity space be beefing up their surveillance knowing that they may have more on the table. So, I mean, I I generally focus on, you know, market abuse and inside information. In terms of those other areas, I would say that’s not happening much now, for various reasons, partly to do with the fact that there are international and privacy laws can make that quite hard to do, particularly in certain jurisdictions in Europe and in South America and, places like that. I would say that people still, use traditional ways to make sure that those other areas are are enforced. So Okay. That like you mentioned. Yeah. Great. We’re gonna do one more. I don’t see any questions, so I’m just gonna kinda throw one throw one more at the audience. And then whoever wants to pick it up, we can kinda hash it through. Right? And this was the, so this was a a find that, dates back to March twenty two of of of, of March seven twenty twenty two. And the date is important, right, because this, had to do with an an echo energy trader, who added an extra zero to, the price they were offering during a transmission balance. And right so instead of, two hundred forty five euros for five hundred megawatt this sort of fat finger error. Right? But they didn’t report it, and they this sort of fat finger error. Right? But they didn’t report it, and then they traded on it. Right? So they were fined as a result. And so the reason I mentioned the date was this was in the context of right after Russia had invaded the Ukraine, so you would expect the market to be volatile. So the market sorta didn’t check itself. Right? So, what kind of behaviors might Aviv and then I think Shlomi quickly might we look for as we kinda consider how to police something like that? I mean, first of all, you so the interesting background is that in remit specifically, a fat finger error is now considered inside information and has to be disclosed on an inside information website, according to the guidance of many national regulatory authorities. And that practice is increasing. And there was another, case around that in Finland recently. Here, though, the reason for the fine isn’t only that that didn’t happen, and ACM, the national regulatory authority in question, the, Dutch energy regulator have issued guidance around this. But here, as you say, that not only did they not cancel the deal, remove it, or make a disclosure, but they acted upon it as well. It sent a misleading price signal to the market, which is a breach of agreement article five. And so that that’s exacerbated it a bit. In terms of controls, a yeah. Looking for fat finger errors and generally, yeah, orders that are misplaced. Yeah. In terms of transaction surveillance, we’d look at things like, yeah, sharp increases, yeah, big price differentials, big volat not big volatility, but placing an order that’s much larger than the best bid or best offer, you know, of of bid pricing and all of that sort of thing. There’s lots of behaviors that a traditional transaction surveillance system, would pick up on when you have one of those. Comms could look at it as well, see if it was accidental or not, I guess. Yeah. But, yeah, there there’s lots of ways of looking at price spikes and things like that. And, yes, you know, the market can be very volatile or not, you’d still always want to look at a big change compared to the previous best bid or offer or your previous best bid or offer placed. And I think from a comms perspective, that’s why I think firms should also emphasize language around mistakes, errors, don’t tell people, you know, hide in that kind of thing on top of their sort of regular front running spoof and that kind of thing. Guys, we are at time. It’s been a really great discussion, really nice back and forth. I think we did a good job of, I think, talking about, you know, setting the stage for what we’re talking about and really diving into some meaningful use cases across the behaviors themselves and across the detections. So thank you for your time. Thank you everyone online for your time, and have a lovely day. Thank you. Thank you. Alright. Bye.