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Paper on trade surveillance

See here for a paper by pwc on trade surveillance in the energy market. While the paper is directed at the US, we can expect an increasing focus on monitoring in Europe in the next months.

The Market Abuse Regulation (MAR) comes into force in July. MAR and MAD II widen the scope of the original MAD to include on venue commodity derivatives and any activity that may influence their price, including spot commodities. MAR includes an effective monitoring  requirement which casts its net widely.

At the same time, the second reporting deadline of REMIT is approaching. While the anti abuse provisions of REMIT are already in force, the fact that ACER and the National Regulatory Authorities(NRA) will soon have the ability to monitor activity could increase the urgency for some to tighten up monitoring, despite the fact that REMIT does not necessarily mandate monitoring for market participants who are not “Professional Persons Arranging Transactions” (PPAT). A recent large fine under REMIT in the European energy market is likely to further sharpen the focus on effective monitoring.

pwc’s paper takes a detailed look at some of the issues that are encountered when rolling out a comprehensive automated surveillance facility, and highlights the level of investment that can be required to make it effective. Such surveillance is only part of an holistic monitoring capability, which must include effective governance, processes and training as well as technology.

Those seeking to ensure that they have an effective anti abuse strategy over the coming months will need to be pragmatic in how they push forward their capability, balancing effectiveness with the level of investment.

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.


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