Oliver Blower, CEO, VoxSmart, writes that for what seems like an eternity now, financial markets have operated in a strange parallel universe governed by their own unwritten rules and ways of working.
The 40th anniversary of the Big Bang brings back memories of various expletives that became synonymous with open outcry that, at the time, was just part of the flotsam and jetsam of life on a trading floor. Sure, things have changed considerably since then, but some of those attitudes have proved much harder to shake off.
Take insider dealing as a prime case in pont. Four decades on, it is still prevalent across our industry, only, instead of being carried out across dark smoke fumed rooms or over pay phones, regulators now need to piece together thousands of communications across email, Bloomberg, WhatsApp, and other channels, sometimes over several months.
In contrast, bullying and harassment are often much easier to identify, and in some cases. There could be, for example, instance at a bank where a single profanity appears more than 150,000 times in communications between two individuals. You don’t necessarily need advanced AI to identify that something warrants closer attention.
The end of the old guard?
These kind of behaviours risk going unchecked on asset managers, because the commercial relationship between fund managers and their brokers can be susceptible to intimidation tactics.
Back in the day, there were numerous instances of asset managers professionals putting pressure on sales traders to take losses, amend positions or accept unfavourable terms otherwise they would threaten to take their business elsewhere
Some would argue this is all part of the game that involves combative negotiation in a high-pressure environment. But negotiating firmly and threatening someone into doing something are two completely different things. When pressure is ramped up, a bank trader’s behaviour naturally changes which can have a knock-on-effect on fair dealing and what is deemed to be best execution. The same goes for a portfolio managers treatment of a junior analyst when they’re under the cosh on a day where prices are bouncing around all over the place.
These days, watchdogs are more and more interested in what certain behaviour says about an individual’s judgement and ability to perform their role. why should an asset manager assume one of their portfolio managers will behave appropriately when dealing with clients or counterparties if they have a tracked record of bullying colleagues?
Context is everything
Of course, identifying potentially inappropriate language is only half the battle as a heated back and forth between colleagues does not automatically necessarily indicate bullying or harassment.
This is where tech can really help compliance teams because, if the traditional way of monitoring behaviour relied heavily on specific keywords, AI can now analyse recurring patterns across conversations, as well as sentiment and tone, to helping asset manager being able to tell the difference between an isolated exchange and a sustained pattern of intimidation. If used in the right way, AI can genuinely help compliance teams access conversations and surrounding evidence so they can determine whether an alert represents genuine misconduct or not. This is key because asset managers need to identify inappropriate behaviour just as much as they need to be able to protect employees from allegations that fall apart once the full context is understood.
The behaviours once tolerated as part of trading-floor culture back in 1986 are increasingly being recognised as risks to their employees and their clients in 2026. For asset managers, while thanks to the growth of AI the tech to identify those behaviours exists, the challenge moving forward is in making sure they have the necessary oversight and willingness to act on what it reveals.
