Market abuse rules spark tech spend
European market participants and
regulators are ramping up their surveillance systems in response to the
introduction of new rules and guidelines. But an opaque regulatory landscape
has meant buyers need to factor in further compliance requirements down the
In London, global principal trading firm and options market
maker Tibra has chosen Redkite Surveillance for its European compliance monitoring.
The move comes after new guidelines from the European Securities and
Markets Authority (ESMA) on ‘systems and controls in an automated trading
Matthew Coupe, sales director, EMEA, at Redkite said
principal trading firms such as Tibra now have the requirement for intelligent
and efficient market surveillance tools.
“To this end, Redkite Financial Markets has turned
algorithmic trading scenarios on their heads with a solution that reaches out
and detects trading anomalies and potentially abusive trading practices in
real-time, in the most accurate manner,” said Coupe.
This year has seen the introduction of a number of new or
updated regulations designed to curb market abuse. As well as the May
introduction of ESMA’s guidelines, MiFID II – which aims to restrict high-frequency and automated trading – and the Market Abuse Directive (MAD), are
currently being debated by the European Parliament. MiFID and MAD are expected
to be implemented in 2014.
In preparation, Irish financial services firm Davy has
chosen SunGard’s Protegent Market Abuse solution to manage market surveillance
across its global equity and bond trading operations.
Protegent Market Abuse provides Davy with graphical
visualisations of market events, news and market data as well as configurable
baseline rules and reports library to help the firm comply with the new regulations.
On the other side of the fence, UK watchdog, the Financial
Services Authority (FSA), will use Nasdaq OMX’s SMARTS Integrity market
surveillance system to help it monitor transaction reports across Britain’s
SMARTS Integrity gives the FSA a surveillance platform which
detects market abuse across financial instruments admitted to trading on
regulated or prescribed markets, including underlying derivatives. The system also
gives the regulator a way to meet future European legislation like the Markets
in Financial Instruments Regulation (MiFIR) and Market Abuse Regulation (MAR).
“More than 55% of all European equity trading [is] now being
monitored through our software,” said Paul McKeown, vice president of Market
Technology at Nasdaq OMX. “As regulatory issues and requirements continue to
evolve around the world, we look forward to working with other regulators like
the FSA to investigate market abuse through our best-in-class systems for