Global surveillance of securities traders is rising
The surveillance of securities traders is set to intensify worldwide with financial institutions increasing budgets to U$758 million by the end of 2017.
A report from EY says that increased resources are being allocated to prevent market abuse with a 5% rise from 2016 and 71% of firms indicating that they are upgrading current systems.
The bolstered safeguards should mean greater protection for investors but there is clearly a long way to go with the survey showing that just 7% of FIs have complete surveillance across all asset classes.
The biggest priority for firms is to avoid the scandals of recent years such as the rigging of the LIBOR and FX markets.
However, there will also be increases in surveillance of traders involved in fixed-income, commodities and other over-the-counter products. This is being driven by demands from regulators but there are competitive advantages for those firms that go beyond what is required.
“The research suggests that the default position for FIs has been to use systems designed primarily to meet the requirements of regulators. As a result, FIs have lost an opportunity by making only modest technical advancements within this space, wary of distinguishing themselves from their peers,” commented Glenn Perachio, Financial Crime Market Abuse and Trader Surveillance Solution Leader, Ernst & Young LLP.
Partner Michael Patterson added that traditional surveillance systems may not be sustainable for some FIs but tech advances mean they can improve systems.
“Moving forward, the key will be to ensure that these resources are used correctly to reduce costs and enhance efficiency by applying smart technologies including automation and AI, rather than simply adding more full-time employees,” he said.
A report from EY says that increased resources are being allocated to prevent market abuse with a 5% rise from 2016 and 71% of firms indicating that they are upgrading current systems.
The bolstered safeguards should mean greater protection for investors but there is clearly a long way to go with the survey showing that just 7% of FIs have complete surveillance across all asset classes.
The biggest priority for firms is to avoid the scandals of recent years such as the rigging of the LIBOR and FX markets.
However, there will also be increases in surveillance of traders involved in fixed-income, commodities and other over-the-counter products. This is being driven by demands from regulators but there are competitive advantages for those firms that go beyond what is required.
“The research suggests that the default position for FIs has been to use systems designed primarily to meet the requirements of regulators. As a result, FIs have lost an opportunity by making only modest technical advancements within this space, wary of distinguishing themselves from their peers,” commented Glenn Perachio, Financial Crime Market Abuse and Trader Surveillance Solution Leader, Ernst & Young LLP.
Partner Michael Patterson added that traditional surveillance systems may not be sustainable for some FIs but tech advances mean they can improve systems.
“Moving forward, the key will be to ensure that these resources are used correctly to reduce costs and enhance efficiency by applying smart technologies including automation and AI, rather than simply adding more full-time employees,” he said.
