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 track.
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 environment’.
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 financial markets.
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 market surveillance.”