As trade surveillance becomes an increasingly difficult task for firms, Eventus claims institutions are transforming their compliance processes to be more efficient.
Eventus has released a new whitepaper titled, ‘Conduct and Control: Centralising Trade Monitoring to Combat Market Misconduct.’ It explores how regulators approach market disruption in the digital era and how institutions are responding. The report also shows how institutions are breaking boundaries in trade compliance and how this affects operational efficiency.
It stated that trade monitoring is a tough task. Disruptive behaviours, like ‘pump and dump’ or quote stuffing, create unfair and artificial trading advantages that damage market efficiency and transparency. Market surveillance techniques are used to identify abusive or evasive practices, and institutions have internal trade controls to monitor transactions However, these are separate approaches to different forms of market manipulation, it said.
It said, “Both trade surveillance and trading controls seek to address market disruption. But in the digital era they should not require two separate business solutions to address what is effectively the same risk.”
The increasing volume and volatility in the markets, as well as tightening regulations, is encouraging firms to transform how they handle trade surveillance and controls. In tandem with this, risk and compliance officers need to manage rising levels of data across internal and external sources and there is a need to continuously update surveillance tools or processes.
As a result, firms will need to address markets more broadly, with fewer boundaries between trade controls and surveillance, Eventus said.
“In short, that means risk and compliance officers will increasingly own the task of spotting and stopping disruptive market conduct, irrespective of source or intent.”
To find out how firms are transforming their trade surveillance, read the full whitepaper here.
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