In Regulatory Wrap for the week to May 17, Rob Mason analyzes the FCA’s Market Watch 79 release and its observations about firms’ trade surveillance practices.
In this Regulatory Wrap, we consider the challenges that the Financial Conduct of Authority (FCA) has highlighted in its Market Watch 79 report, including the inadequacy of certain trade surveillance models meant to detect potential market abuse.
1. Per regulatory guidelines, firms are required to identify and report incidents of market abuse or suspicious activity
2. Faulty implementation, the introduction of software bugs when making changes to alerts, and processing insufficient data to perform monitoring have led firms to improperly flag or overlook characteristics of abuse
3. Due to lacking training pre and post-implementation, entire sections of firms’ activities have gone unmonitored
4. Certain times, firms assumed their software was working as intended since they did not receive any alerts, though this belief led to lost data
5. The FCA has recommended firms perform frequent and periodic alert testing, maintain stringent data governance, and consistently deploy new models that follow careful policy guidelines
This Regulatory Wrap is brought to you by Global Relay’s Director of Regulatory Intelligence, Rob Mason.
The FCA has set out its expectations for market abuse and surveillance, meaning firms need to remain as vigilant as ever in capturing critical data.
