Regulation and market surveillance: Challenging times for capital market firms
The recent resignation of the head of the integrity committee at Deutsche Bank has highlighted the complexity around the handling of regulatory requirements, and fines related to Benchmark Manipulation. Firms are struggling to find the right balance between putting checks and balances in place on the one hand and being able to keep the costs of implementing new processes and systems under control on the other. There is also the need to ensure that the surveillance capabilities of capital market participants, trading venues and regulators are able to deal with the possibility of market abuse and manipulation in the future. Regulations such as the upcoming Market Abuse Regulation (MAR) in Europe are placing a lot of emphasis on the intent of traders when it comes to analysing any suspected rogue activity. Surveillance systems need to overlay order and trade data with the related electronic and voice communication in a cross-asset, cross-market context. This is a tricky task at the best of times. To provide some insight into the recent industry trends and updates to the products of the leading vendors, Celent is coming out with a two report series on the topic in the month of May. The first report will look at the recent market trends, while the second one will discuss the updates to vendor products in the last year and the areas in which future development is expected to take place. This research builds upon our four report series from 2015.