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Red alert: how Nasdaq’s Smarts became surveillance blind spot
Widely used software that looks for suspicious trades has not been alerting its users, potentially resulting in market abuse going unnoticed. After problems were first spotted for products that trade at Eurex earlier this year, the issue has “grown horns”, according to one affected customer, with users notified of new problems on a weekly basis. One US bank believes it has been incorrectly monitoring up to 200 products, ranging from Vix futures to coffee options.
Banks have been trying to backtest and backfill, but they could be in hot water even if no abuse is found: market participants in many jurisdictions are required to monitor for manipulation, and experts warn that those firms – not their vendors – could be held accountable for any blind spots.
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Artificial intelligence
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Risk Quantum
Data insights, delivered daily
Risk Quantum tracks thousands of data points across hundreds of metrics from organisations that represent a cross-section of the financial system. Published daily, articles are short and broken into chunks – the facts, the context and a brief commentary – and use data visualisations to get each story across.
US banks add $75 billion of CRE as concentration risks recede
Portfolios grow at fastest pace in nearly three years, while exposure above regulatory thresholds drops
Risk Benchmarking
Many banks do not document failure plans for Tier 1 models
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Basel III Endgame
US regulators throw banks a curveball on committed credit lines
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Clearing
CFTC backs clearing exemption for risk reduction runs
CCP sources concerned about switch to bilateral trades, as other regulators also soften rules
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