Originally published by Markets Media
Compliance in Focus is a content series on regulatory topics for financial markets and challenges compliance officers face in addressing surveillance and monitoring. Compliance in Focus is produced in collaboration with Eventus.
Modern Trade Surveillance: Smarter, More Flexible Regulatory Technology
A perspective from the highly fragmented, and rapidly evolving, European markets.
Nick Wallis offers views on trade surveillance needs after completing his first year as Managing Director for EMEA at Eventus, a regulatory technology company. Prior to Eventus, Nick gained experience in financial markets, energy derivatives, technology, and running surveillance sales teams.
What are the current themes in trade monitoring and surveillance in Europe?
In order to understand the evolution in regulatory technologies, it is important to reflect on how the markets themselves have evolved to meet trading needs. According to ESMA there are more than 450 venues (lit and dark) where firms can trade equity products in Europe, a substantial increase since the Market Abuse Requirement (MAR) mandated firms to monitor in 2016. Add to this new asset classes such as crypto, and it’s clear to see that the expectations have dramatically changed.
In reaction to this change the trade surveillance industry itself has become much more competitive, as providers look to address these challenges with efficiencies and greater insights. Legacy systems were built for a bygone era. In the prior framework, big banks bought three or four vertically integrated platforms that sought out abuse utilising static parameters and, in eComms, static lexicons.
It is therefore understandable why trading firms are looking for smarter technologies that can review increasing data sets much more quickly and garner insights more readily. Market fragmentation makes compliance harder, so systems need to evolve and be more flexible to meet those challenges. Heretofore there has been a void in the regulatory technology space for new entrants.
In summary, the trends are market fragmentation, a renewed focus on cost of ownership, and attention to data governance and efficient data utilisation.
What are the “pain points” customers are talking to you about in Europe, Middle East, and Africa (EMEA)?
In surveillance it’s hard not to talk about the ever-growing burden of false positives. Traditional systems were simply not designed for today’s markets. Often trade surveillance analysts are faced with an insurmountable number of surveillance alerts. The work is monotonous, often leading to staff turnover.
To overcome this, Eventus has developed a well-defined “waterfall” mechanism that incorporates tailored and specific parameters into the alerting process. This approach enables firms to efficiently identify and respond to exceptional activities and risks that require further investigation, while filtering out routine alerts.
How does trade monitoring and market surveillance in EMEA differ from the U.S.?
Unlike the United States, the EMEA region faces significant challenges related to market fragmentation. Despite ongoing discussions between regulators and market participants about the need for a consolidated tape, the challenges associated with achieving this goal persist and continue to intensify.
It is evident that although regulators share a common understanding of the patterns of abuse, different jurisdictions prioritise varying enforcement strategies. This has resulted in pan-European trading firms seeking regulatory technology solutions that are more comprehensive and flexible, in order to meet diverse regulatory requirements.
What are Eventus’ main initiatives in the EMEA region?
Our top priority is continued growth. We are dedicated to expanding our presence in the region with more clients in both traditional and digital asset spaces. To achieve this, we have increased our workforce across all departments to provide optimal support to our customers and enhance the efficiency of our technology. We remain committed to our clients and their regulatory compliance needs, regardless of their asset class or geographic location. Our mission is to enable our clients to enhance their monitoring capabilities and minimise regulatory risks through our cutting-edge solutions.
What themes are you picking up from discussions with clients and others in the industry?
The business landscape is witnessing a surge in discussions around partnerships, with a focus on collaborative efforts between multiple vendors to create more comprehensive and integrated offerings. It is becoming increasingly clear that the conventional approach of relying on a single vendor for all business needs is losing its appeal. Instead, companies are now looking for more flexible solutions that can only be achieved through partnership and collaboration among different vendors. This shift in mindset is indicative of the growing need for customised solutions that are tailored to meet the unique needs of each organisation.
Given current market conditions, it’s clear that having advanced regulatory technology and a risk-sensitive approach is a competitive advantage for businesses. By prioritising a culture of careful attention to risk and implementing smarter regulatory technology solutions, organisations can stay ahead of the curve and mitigate potential risks effectively.
About Eventus
Eventus is a leading global provider of multi-asset class trade surveillance, market risk and anti-money laundering (AML) solutions. Its powerful, award-winning Validus platform is easy to deploy, customize and operate across equities, options, futures, foreign exchange (FX), fixed income and digital asset markets.
Validus is proven in the most complex, high-volume and real-time environments of tier-1 banks, broker-dealers, futures commission merchants (FCMs), proprietary trading groups, market centers, buy-side institutions, energy and commodity trading firms, and regulators. The company’s rapidly growing client base relies on Validus and Eventus’ responsive support and product development teams to overcome its most pressing regulatory challenges. For more, visit www.eventus.com.