Regulation & compliance | Market surveillance
“Regulators and exchanges tend to want hosted solutions while banks prefer solutions that can be accessed in the cloud.”
Veronica Augustsson, Cinnober
for improved surveillance is even more critical. The result will be an ever-increasing pressure on fi nancial services fi rms to collate and analyse escalating data volumes in their legacy systems, just when budgets are being tightly squeezed and any available cash for investment in technology and back-offi ce services is evaporating.” Despite this, investment fi rms realise they must appear to be beyond reproach and invest in systems that will uphold their integrity. “Internal surveillance independent of external monitoring by the regulators is essential,” Healey notes. “By fi rms fi nding internal faults ahead of the game, the opportunity exists to fi nd solutions away from the glare of publicity and exercise successful damage control. In today’s high-scrutiny environment, market participants who implement effective surveillance programmes to uphold a vision of long-term integrity will differentiate themselves from the pack in a shrinking commission pool.”
Different solutions Healey says trading fi rms differ in their approach to surveillance systems. Some fi rms are now operating at a “higher level”, supplementing the standard checks and balances with searches for events considered to be abnormal (such as a trader not taking holidays for a year). “Firms
34
are beginning to talk about compliance as a new marketing tool – they are investing in surveillance systems not only for regulatory reasons, but also because they want to prove to their customers that they are whiter than white and can ensure that their clients are not at risk.” Technology is not an issue when it comes to surveillance – there are myriad solutions available that can crunch the numbers required to seek out market abuse. The traditional approach to surveillance – whereby compliance offi cers pored over spreadsheets after an event (akin to fi nding a needle in a haystack) – is giving way to technology and a change in business focus. Says Healey, “Risk and compliance offi cers are moving from the back offi ce on to the trading fl oor. Firms are addressing surveillance in real time, rather than waiting for a spreadsheet after the event.” Being able to extend surveillance systems to monitor actions beyond stereotypical market abuse such as insider trading and front running is also becoming a popular approach says Theo Hildyard, product manager, director capital markets at Progress Software. “Firms are now looking for systems that can also monitor for fraud, rogue trading and other abnormal behaviour. They want to tighten the controls on monitoring algorithmic trading to ensure there is no
Best Execution | Spring 2013
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100