Behavox is transforming capital markets compliance with the introduction of the Conduct Risk Exchange (CRX), which facilitates the sharing of detection algorithms between institutions and regulators, creating the market standard to collaboratively protect against misconduct and other generic risks.
The approach is exactly equivalent to the development of anti-virus software; institutions with more learning and precedent in richer data sets contribute their algorithms and allow those with different experiences to benefit. Regulators can instantly distribute their own unique “knowledge” through the platform to the whole market for the first time. It is the perfect example of collaboration between regulated and regulators, in a non-competitive environment.
At no point does any institution reveal or share its underlying data.
Erkin Adylov, CEO and Founder of Behavox, stated: “CRX is all about sharing algorithms; we already have all the algorithms that clients need ready-to-go on day one when they install the software. This algorithm library is constantly updated so members of the CRX are always protected against new forms of misconduct. It’s a predictive and flexible system that works for clients without them having to think too much”.
No other provider in the market has the common language used by all participants to allow this collaboration and backtesting capability. The centralized defence created will become the market standard, tuned and perfected by the industry itself. Detection will be instant; regulatory liability for misconduct will be eradicated totally; and compliance cost will decrease exponentially.
“We are three years ahead of anything else in the market with this product and approach; our engineering team has created something magical that will change compliance practice forever”, added Erkin Adylov, Behavox’s CEO and Founder.
Key elements of the Behavox Conduct Risk Exchange:
- Aggregates surveillance algorithms across the industry;
- The cream rises to the top – the platform refines and promotes the best practices and approaches
to compliance surveillance by statistical backtesting and continuous evaluation by all members of
CRX to generate the ultimate network defence;
- The platform facilitates collaboration, sharing of ideas and knowledge across the industry;
- Regulators can get involved – it is the only practical way to deploy their unique knowledge to all or
the majority of the market in confidence, efficiently and fairly
How does CRX work?
Separate Behavox installations form the network defence that aggregates misconduct detection algorithms. The central repository is called the Conduct Risk Exchange, and it uses reinforcement learning to optimise existing misconduct detection algorithms, but also creates and suggests new ones. This innovation enables the distribution of new and optimised algorithms back to the network participants, where the “brains” to the system can be updated with one click. This allows Behavox customers to stay up-to-date with the most recent cases of misconduct, and to future-proof their organization for new regulations and changes in market practice.
Behavox uses machine learning to continuously fine-tune its algorithms that produce high-quality alerts with a significantly lower volume of false positives than legacy systems e.g. 99 per cent reduction of false positives in client deployments to date, 300 per cent increase in discovery of actionable incidents.
Our team is training a computer to recognise good and bad human behavior, which is fundamental to scientific advancement in the field of AI, but has also not been attempted on this scale before. Behavox stores and analyses all human communications within an enterprise environment, but importantly it ties each separate installation of the system into one network that uses reinforced learning to improve itself.