Heads or Tails: Market Surveillance and Market Abuse
In 2016, two sets of financial regulations will dominate Financial Investment Firms: the second versions of both the Market Abuse Directive and the Markets in Financial Instruments Directive. Both sets of directives and their related regulations will be in force by July 2016 and January 2017 respectively. Both sets are rule based and sizeable, the total number of pages published so far exceeds 10.000.
In last edition (no. 49) of the UK Financial Conduct Authority (“FCA”) Market Watch publication, the FSA provides an overview of the review of commodities firms’ compliance and governance structures including market abuse controls. 12 firms, including brokers, interdealer brokers (IDBs), and commodities trading firms were reviewed.The review focused on firms trading and broking across the Oil, Energy,Metals and Soft commodities sectors.
Dutch regulators step up demanding pro-active approach on benchmark manipulation
In an interview by the Dutch financial newspaper “Het Financieele Dagblad” on February the 11th, the Dutch financial regulator AFM urges banks to take a more pro-active approach on implementing benchmark fixing controls to re-establish trust in benchmarks. The AFM has published a full report about the involvement of Dutch financials in relation to benchmarks.
Advantages of running Market Surveillance Software on web client
Changes in technologies during the last decade have also made changes in using client software. Opposite to running this client software on a (thin) client, using a web client has quite a lot of advantages. TradeWatcher has been using this technology right from the start and is therefore one of the rare 100% web developed market surveillance software tools available.
The growing importance of data mining in financial markets
Data, data, data. The most trending word in financial analyses these days, with big data as the Holy Grail. With the ever increasing importance of electronic trading and increasing speed in trading, the amount of available data is going through the roof. Traditional analyses are not sufficient anymore. Surveillance and compliance officers need intuitive tools to streamline the masses of raw data presented to them. Another trending word, though used in too many different ways, presents the solution to this: data mining.
Thursday Oct 2nd, Reuters reported that a US high-frequency trader, Michael Coscia who is the owner of the former high-speed trading firm Panther Energy Trading, was fined for almost $ 6 million by US and British regulators.
Coscia was charged with manipulating commodity futures prices, and making a profit of nearly $ 1.6 million as a result of this market manipulation.
This case is a textbook example that corresponds with the upcoming regulatory changes as proposed by the European Commission. Among other changes, the scope of the Market Abuse Regulation will be extended with spot and future commodities, which are related to or have an effect on financial or derivatives markets.
The manipulation practices as mentioned here are not easily detectable. However, with the TradeWatcher platform you can install Watchers (rulers) to identify, monitor and report different manipulative measures and suspicious trading patterns. With our keen dossier management and cutting-edge interface we offer a user-friendly market surveillance tool for brokers, traders, exchanges and regulators.
Contact us for more information about the TradeWatcher market monitoring platform!
ESMA hearing regarding the Market Abuse Regulation
On October 7th, the European Securities and Markets Authority (ESMA) will hold an open hearing on the questions posed in their latest Consultation Paper regarding the new Market Abuse Regulation (MAR).
The MAR was published in the European Union’s Official Journal on June 12th this year and will take effect in July 2016. The new regulation has been developed to ensure legislation keeps pace with current market developments, such as new trading platforms, cross-market manipulation, scope extension, commodities and derivatives inclusion and benchmark manipulation.
At ESMA’s HQ in Paris, stakeholders are requested to provide their input on the Consultation Paper, which will be considered by ESMA and later on incorporated into ESMA’s technical advice to the European Commission.
Which organisations constitute this stakeholder group? Following ESMA’s press release, ESMA calls “[…] input from investors that deal in financial instruments and emission allowances subject to the Market Abuse Regulation, issuers of instruments in the scope of the Regulation, financial intermediaries and operators of trading venues and participants in the emission allowances markets.”
One of the main sections of MAR’s Consultation Paper is the specification of market manipulation indicators. TradeWatcher has a clear focus on the indicators that might come out of MAR. Although the TradeWatcher platform already complies with ESMA Guidelines, we are committed to remaining up-to-date with the latest developments. We will, therefore, follow the ESMA hearing with a special interest.
TradeWatcher keeps track of EU’s financial regulatory requirements as set out by MAR, Markets in Financial Instruments Regulation and Directive (MiFIR and MiFID II) and ESMA Guidelines.
TradeWatcher is an independent financial technology developer. We have a proven track record in the financial industry and we are dedicated to making finance more accessible. TradeWatcher is all about taking the user’s point of view as a foundation for our products. Not only from a technical perspective, but above all from a practical standpoint, coated with sleek graphics and cutting-edge interfaces. At our HQ in Amsterdam, the Netherlands, we gladly welcome you as our partner in exploring and developing new and technologically advanced financial applications.