The UK Financial Services Authority (FSA) has taken steps to ramp up its market-monitoring system in anticipation of the added complexity brought by the implementation of the Markets in Financial Instruments Directive (Mifid).
The regulator has chosen business and technology consultancy Detica Group in partnership with software provider SAS UK to deliver a system that will help the FSA to identify and pursue insider dealings and other market misconduct.
The new system will proactively detect and combat market abuse by analysing trading in a diverse range of financial instruments. It will also provide the FSA with intelligence on unusual and potentially unlawful activity on UK markets.
Once Mifid comes into force in November, brokers will have the ability to trade equities at multiple venues, which will make monitoring market abuse much more complicated for regulators. The FSA aims to significantly enhance its capability to fight market abuse with the new system, which will continue to evolve in the post-Mifid world.
“Mifid will make it more difficult for regulators to monitor the markets effectively with existing systems; higher-level analytics and data-cleansing tools are necessary to track any unusual or illegal trading on multiple venues,” says Mark Elkins, strategy manager at SAS UK.
“We are watching how the Mifid market develops, and our new software will evolve alongside any changes in the market.”
The FSA requires a holistic approach to market monitoring, which Detica and SAS are able to provide by integrating a range of business intelligence (BI) applications into a complete, user-friendly system.
SAS Enterprise Intelligence Platform has been chosen to form the data integration, BI and analytics part of the solution. The group has already begun work with the FSA on the final contract, spanning a seven-year period.