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Manipulation cases and surveillance system settings

See here for an article on the Trillium web site, which reports on a fine imposed on JP Morgan Securities in the US  for the use of  improper configuration settings on their surveillance systems. The ruling can be found here. The story is also mentioned here on the Broadpeak blog, which also mentions the issue of seeing a surveillance system as a “black box”. A surveillance system will typically require calibration so that its parameters and settings are adequately configured to the appropriate risk level, for the specific situation of each market participant.

There is increased interest in surveillance systems in the energy and commodities section. This is partly due to the start of MAR last year, which requires more companies to improve their monitoring capability, and also because of the increased scrutiny  under the REMIT rules, with an increased number of investigations and cases across Europe (see here). This article on The Hindu Business Line also reports on an increased number of cases in India.

This article by David Woolcock on the Bobsguide web site looks at manipulation and conduct issues in the FX market. It refers to some of the requirements that a firm must satisfy in order to ensure effective monitoring, and also to the recent comment from the FCA that “Insider trading and market abuse is rampant across London, the U.K.”.

Given the increase in cases and regulation, we can expect the focus on monitoring, surveillance and conduct to continue over the coming period.

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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