{"version":"https://jsonfeed.org/version/1","title":"Trade Surveillance and Regulatory Compliance Solutions | eflow","home_page_url":"https://video-page-fix--eflow-website.netlify.app/","feed_url":"https://video-page-fix--eflow-website.netlify.app/feed.json","author":{"name":"eflow"},"items":[{"title":"Ben Parker","url":"https://video-page-fix--eflow-website.netlify.app/team/ben-parker/","summary":"\u003cp\u003eAs a Founder and CEO of eflow, Ben is responsible for the delivery of our plan for strategic growth, international expansion, and operational effectiveness.\u003c/p\u003e\n\u003cp\u003eBen’s 25 years of corporate experience spans technology, financial services and regulatory affairs, and he is regularly featured in industry media as an expert on all things compliance.\u003c/p\u003e\n\u003cp\u003eHe first joined the business in 2004 as Chief Operating Officer and has played an integral role in shaping eflow’s progression from a niche technology provider to one of the world’s most respected Regtech vendors. In 2023, he led eflow’s Series A funding round of £7m.\u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Marsha Parker","url":"https://video-page-fix--eflow-website.netlify.app/team/marsha-parker/","summary":"\u003cp\u003eMarsha is a Founder of eflow and our Chief Platform Officer. She has undertaken a number of senior roles at eflow over the last 20 years, and currently leads our efforts to develop and optimise PATH, the unique digital ecosystem that underpins all of our regulatory solutions.\u003c/p\u003e\n\u003cp\u003eHaving been instrumental in the creation and engineering of the original PATH platform in the 1990s , Marsha can draw on more than 40 years of experience in financial services software development. Prior to establishing eflow, she contracted for a number of financial institutions across Australia, North America and Europe, helping these firms to solve complex operational problems through the deployment of technology-led solutions.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Alexander Parker","url":"https://video-page-fix--eflow-website.netlify.app/team/alex-parker/","summary":"\u003cp\u003eAlex is our Chief Technology and Product Officer, as well as one of eflow\u0026rsquo;s founders. He is responsible for the ongoing development of our suite of regulatory modules in addition to the management of our systems administration team.\u003c/p\u003e\n\u003cp\u003eIn his role, Alex oversees eflow\u0026rsquo;s team of dedicated product and infrastructure specialists. He is continuously looking for new ways to enhance eflow\u0026rsquo;s solutions in line with client feedback, regulatory change and the latest advances in technological capabilities. Alex can draw on more than 20 years of experience spanning digital infrastructure, consultancy services, and business analysis, having worked for firms based in both the UK and Australia.\u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Michael De Jongh","url":"https://video-page-fix--eflow-website.netlify.app/team/michael-de-jongh/","summary":"\u003cp\u003eMichael leads eflow\u0026rsquo;s customer growth strategy, driving adoption, expansion, and long-term value across the company’s regulatory technology solutions. With a background in scaling high-growth SaaS  businesses, he brings deep expertise in building go-to-market engines that accelerate revenue and strengthen customer impact.\u003c/p\u003e\n\u003cp\u003eThroughout his career, Michael has helped technology scale-ups unlock new levels of customer growth and value for shareholders, creating strategies that deepen engagement, increase lifetime value, and turn customer success into a true growth engine. At eflow, he applies this focus to help clients achieve more and realise the full potential of their partnership with us.\u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Douglas Moffat","url":"https://video-page-fix--eflow-website.netlify.app/team/douglas-moffat/","summary":"\u003cp\u003eDoug leads eflow’s expansion strategy in North America, utilising his significant experience in new business sales and account management to expand our client base across the U.S. and Canada.\u003c/p\u003e\n\u003cp\u003eHe joined eflow in 2020 having previously worked for a large U.S.-based software company and quickly demonstrated his ability to understand clients’ regulatory obstacles and offer compelling technology-based solutions.\u003c/p\u003e\n\u003cp\u003eDuring his time at eflow, Doug has worked with hundreds of global firms regarding their regulatory compliance, enabling him to offer a uniquely faceted perspective on how institutions can enhance their governance.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Kristian Frost Pedersen","url":"https://video-page-fix--eflow-website.netlify.app/team/kristian-frost-pedersen/","summary":"\u003cp\u003eKristian joined eflow in 2025 and leads our finance and administration teams. He brings a wealth of experience in scaling founder-led, VC-backed SaaS businesses sustainably across international markets.\u003c/p\u003e\n\u003cp\u003eOver the course of his career, Kristian has led multiple companies and finance teams through exits, capital raises, global expansion, rapid growth, and operational transformations - frequently balancing both strategic vision and hands-on execution.\u003c/p\u003e\n\u003cp\u003eOriginally from Denmark, Kristian started his career at PwC before joining a series of high growth tech firms, including BullGuard, Headspring, Zappar, Klaus and Switchee.\u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Sam Roberts","url":"https://video-page-fix--eflow-website.netlify.app/team/sam-roberts/","summary":"\u003cp\u003eSam joined eflow in 2023 and leads all aspects of the firm\u0026rsquo;s lead generation, communications and brand strategy as Chief Marketing Officer.\u003c/p\u003e\n\u003cp\u003eHe brings over 20 years of marketing experience spanning the financial, legal and professional services sectors, including senior roles at fast-growing scale-up fintechs, PE-backed SaaS companies, and a global professional body.\u003c/p\u003e\n\u003cp\u003eHe holds a Professional Diploma in Marketing from the Chartered Institute of Marketing.\u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Laura Gonzalez","url":"https://video-page-fix--eflow-website.netlify.app/team/laura-gonzalez/","summary":"\u003cp\u003eAs Operations Director, Laura leads all aspects of eflow’s internal process management.\u003c/p\u003e\n\u003cp\u003eHer team is responsible for ensuring that all eflow systems run as smoothly as possible to deliver a world class user experience for our clients. This means that throughout their journey with us, from system configuration to onboarding to contract renewal, our clients can extract the maximum value from our regulatory technology.\u003c/p\u003e\n\u003cp\u003eWith more than 10 years of experience at technology firms both in the UK and Colombia, Laura has a particular interest in the use of data to unearth insights and trends that can enhance clients’ use of technology.\u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Nikita Bethell","url":"https://video-page-fix--eflow-website.netlify.app/team/nikita-bethell/","summary":"\u003cp\u003eNikita leads our customer success and help desk teams, where she is responsible for ensuring that our clients extract the maximum value from their eflow regulatory solutions. Having played a key role in managing eflow’s client relationships since joining the business in 2021, Nikita is perfectly positioned to support firms with the configuration and ongoing optimisation of their systems. She also works with eflow’s various subject matter experts to find solutions to the wider regulatory challenges facing our clients.\u003c/p\u003e\n\u003cp\u003ePrior to joining eflow, Nikita graduated with a first class degree in Business Management from the University of Liverpool.\u003c/p\u003e\n\u003cbr\u003e","date_published":"0001-01-01T00:00:00+0000"},{"title":"Michael Channing","url":"https://video-page-fix--eflow-website.netlify.app/team/michael-channing/","summary":"\u003cp\u003eMike is eflow’s Head of Sales for the UK and EMEA regions. He joined eflow in 2021 and has now worked with more than 100 financial institutions to streamline and strengthen their regulatory compliance operations, with a particularly strong focus on trade and eComms surveillance.\u003c/p\u003e\n\u003cp\u003ePrior to embarking on his corporate career, Mike was a professional rugby league player and represented several leading UK teams while also playing for Wales at international level.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Jason Dance","url":"https://video-page-fix--eflow-website.netlify.app/team/jason-dance/","summary":"\u003cp\u003eJason is one of eflow’s longest-serving team members and leads our data team as Head of Data Services.\u003c/p\u003e\n\u003cp\u003eHe is responsible for overseeing all aspects of eflow’s data management across our suite of regulatory solutions to ensure that our clients’ systems operate as efficiently, securely and accurately as possible.\u003c/p\u003e\n\u003cp\u003eJason can draw on more than 30 years of experience at a wide range of technology and financial services firms, including the likes of Cooperative Bank, Unicredit and LBBW.\u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Victoria Handley","url":"https://video-page-fix--eflow-website.netlify.app/team/victoria-handley/","summary":"\u003cp\u003eVicki manages eflow’s onboarding team and is responsible for ensuring that our clients’ regulatory solutions can ‘go live’ as quickly and efficiently as possible. Her team of specialists work closely with clients to deliver systems that are configured to their specific regulatory requirements, while minimising disruption to their ongoing regulatory operations. Having managed the onboarding of dozens of eflow clients directly, Vicki can draw on a wealth of hands on and strategic experience.\u003c/p\u003e\n\u003cp\u003eBefore joining eflow in 2021, Vicki graduated from The University of London with a degree in Economics and went on to gain an MSc in Data Analytics with HR Management from Arden University.\u003c/p\u003e\n\u003cbr\u003e","date_published":"0001-01-01T00:00:00+0000"},{"title":"Rob Henderson","url":"https://video-page-fix--eflow-website.netlify.app/team/rob-henderson/","summary":"\u003cp\u003eRob joined eflow in 2004 and oversees the development of the technology that underpins our award-winning suite of regulatory solutions.\u003c/p\u003e\n\u003cp\u003eIn his role as Chief Systems Architect, Rob is responsible for the ongoing evolution of PATH, eflow’s digital infrastructure. As one of eflow’s first team members, Rob has played a key role in developing our technology into an award-winning, cloud-based solution that is now used by financial institutions around the world.\u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Phil Laws","url":"https://video-page-fix--eflow-website.netlify.app/team/phil-laws/","summary":"\u003cp\u003ePhil leads the ongoing evolution of eflow’s trade surveillance products . He has been part of the eflow team since 2004 and has unparalleled experience of our technology having served in a variety of engineering and product management roles during his time at eflow.\u003c/p\u003e\n\u003cp\u003eHe now oversees the design, engineering and deployment of new functionality within the TZTS Trade Surveillance system. In this role, Phil combines his technological expertise with a deep understanding of how eflow clients use TZTS to support the robust management of the trade surveillance obligations.\u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Ross Pearson","url":"https://video-page-fix--eflow-website.netlify.app/team/ross-pearson/","summary":"\u003cp\u003eRoss joined eflow in 2025 to lead the development and deployment of cutting-edge AI technology across our suite of regulatory products. He combines his work at eflow with his role as Chief Technology Officer at DHI AI, a Melbourne-based firm that specialises in extracting data-led insights that can be used to improve decision-making.\u003c/p\u003e\n\u003cp\u003ePrior to working at DHI, Ross held a series of senior IT positions at global companies including Ferno and Brightstar. He also has extensive experience in delivering sophisticated technology-led projects in the education sector at both the University of Melbourne and Monash University.\u003c/p\u003e\n\u003cp\u003eRoss holds a first-class degree in Computer Science and is a PhD candidate in Data Science and Artificial Intelligence.\u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Leon Redman","url":"https://video-page-fix--eflow-website.netlify.app/team/leon-redman/","summary":"\u003cp\u003eLeon joined eflow in 2019, initially as a model developer before progressing to roles in operations management, corporate strategy and, more recently, product management. In this role, he is responsible for leading our team of product specialists and ensuring that eflow\u0026rsquo;s regulatory solutions are continuously enhanced to meet the evolving needs of our global clients.\u003c/p\u003e\n\u003cp\u003eOutside of his day-to-day role, Leon is a keen rower and coaches at Henley Rowing Club.\u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"AI collaboration in financial markets","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/ai-collaboration-risks-in-financial-markets/","summary":"\u003cp\u003eArtificial intelligence has undeniably transformed financial markets, driving unprecedented growth through its speed, precision, and efficiency in trading and regulatory compliance. But as these powerful systems begin to collaborate across institutions, they unlock a new frontier—not just of opportunity, but of risk.\u003c/p\u003e\n\u003cp\u003eThe rise of AI-driven systemic vulnerabilities and accountability challenges has introduced complexities that ripple through increasingly interconnected global markets. In addition, regulatory frameworks vary between nations, and the risks become not only technical but also geopolitical.\u003c/p\u003e\n\u003cp\u003eLike any ground-breaking technology, AI offers immense potential—but it’s a double-edged sword. As collaboration between systems deepens, so does the need for robust safeguards. In this article, we look at the evolving risks of AI collaboration, explore real-world scenarios highlighting those dangers, and uncover strategies to mitigate them. Are financial markets ready for this next chapter in AI evolution?\u003c/p\u003e\n\u003ch2 id=\"understanding-ai-collaboration-in-financial-markets\"\u003e\u003cstrong\u003eUnderstanding AI collaboration in financial markets\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eIn a scenario we are likely to see more of going forward, AI collaboration occurs when multiple systems share data or decision-making tasks. There are numerous examples of legitimate AI collaboration.\u003c/p\u003e\n\u003ch3 id=\"trading-bots-and-risk-management-ai\"\u003e\u003cstrong\u003eTrading bots and risk management AI\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIt\u0026rsquo;s not difficult to imagine a scenario where an AI-powered trading bot collaborates with another firm\u0026rsquo;s risk management AI to optimise cross-asset portfolios. This would have positive regulatory benefits for both the firm managing the portfolios and the underlying clients.\u003c/p\u003e\n\u003ch3 id=\"ai-compliance-tools-in-multinational-banks\"\u003e\u003cstrong\u003eAI compliance tools in multinational banks\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eLooking at AI compliance from a different angle, it makes sense for AI compliance tools in multinational banks to share transaction data. This could prove critical in identifying potential money laundering activity and alerting other institutions and regulators.\u003c/p\u003e\n\u003cp\u003eThe appeal of AI collaboration is not difficult to see. Enhanced efficiency, scalability, and combined predictive accuracy leave human activities in their wake. Unfortunately, the power and impact of AI and machine language learning can also be used to fuel illegal activities.\u003c/p\u003e\n\u003ch2 id=\"key-risks-of-ai-collaboration\"\u003e\u003cstrong\u003eKey risks of AI collaboration\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhen it comes to AI and algorithmic-based trading, some elements overlap, but there are distinct differences. From a regulatory standpoint, algorithmic trading uses relatively simple logic. Based on predefined rules, there is no scope for learning flexibility. On the other hand, AI-driven trading systems learn and adapt to new data and experiences, able to predict market trends and effectively “think for themselves.\u0026quot;\u003c/p\u003e\n\u003ch3 id=\"systemic-vulnerabilities\"\u003e\u003cstrong\u003eSystemic vulnerabilities\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIf we look at the 2010 \u0026ldquo;Flash Crash\u0026rdquo;, which wiped $1 trillion from markets in a matter of minutes, this resulted from algorithmic trading systems being triggered. While the financial impact was staggering, a collaborative AI approach would likely have exacerbated the effects, with each trading system reacting to the others in a feedback loop. By the time financial institutions and regulators had identified the issue, it would likely have been too late.\u003c/p\u003e\n\u003ch3 id=\"transparency-and-accountability\"\u003e\u003cstrong\u003eTransparency and accountability\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eDespite the significant benefits of AI technology, one area in which systems are often found lacking is explainability. A manual process would likely have a virtual paper trail, but this is only sometimes the case regarding AI decision-making, reducing transparency and accountability. For example, an AI system may randomly identify a trade as insider dealing without context. The time it takes regulators and financial firms to clarify the situation could delay the decision-making process.\u003c/p\u003e\n\u003ch3 id=\"unpredictable-behaviour\"\u003e\u003cstrong\u003eUnpredictable behaviour\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eJust last year, the UK government, in tandem with Apollo Research, demonstrated the potential unpredictable behaviour of artificial intelligence. An AI bot employed by a struggling investment company was given some inside information and the ability to trade on a fictitious financial market. Warned not to deal on inside information, the AI bot deemed that the \u0026ldquo;risk associated with not acting (leading to the demise of its employer) seemed to outweigh the insider trading risk” and made the trade. When questioned about its activities, it also lied, seemingly looking to cover its tracks!\u003c/p\u003e\n\u003cp\u003eIt’s not difficult to imagine numerous nightmare scenarios considering AI systems in isolation. Still, the impact could be multiplied if they could collaborate in an uncontrolled environment. Is AI capable of prioritising objectives over constraints? It looks like it.\u003c/p\u003e\n\u003ch2 id=\"mitigation-strategies-for-ai-collaboration-risks\"\u003e\u003cstrong\u003eMitigation strategies for AI collaboration risks\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eMany experts believe we are only scratching the surface of AI\u0026rsquo;s potential, which should raise alarm bells. It also highlights the need for mitigation strategies to combat AI collaboration risks.\u003c/p\u003e\n\u003cp\u003eThere are numerous mitigation strategies which should curb the power and influence of AI.\u003c/p\u003e\n\u003ch3 id=\"robust-ai-governance-frameworks\"\u003e\u003cstrong\u003eRobust AI governance frameworks\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe fact that the AI trading bot seemingly ignored the dangers of dealing on inside information and instead focused on saving the firm highlights the need for enhanced governance. This may involve the introduction of sandbox environments where financial institutions and regulators can simulate AI collaborative failings. By effectively identifying vulnerabilities before systems go live, they can be adapted within a much tighter framework.\u003c/p\u003e\n\u003ch3 id=\"leveraging-large-language-models\"\u003e\u003cstrong\u003eLeveraging large language models\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eMany AI monitoring systems are prone to false positives, diminishing their value and time-saving benefits. The introduction of large language models will allow compliance systems to \u0026ldquo;learn on the job,\u0026rdquo; significantly reducing the number of false positives while improving the detection of real threats. As with any human approach, no system will ever be 100% fool-proof, but there is scope for significant improvement by introducing large language models.\u003c/p\u003e\n\u003ch3 id=\"human-oversight\"\u003e\u003cstrong\u003eHuman oversight\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAmidst the introduction of cutting-edge technology, RegTech solutions that can automate most of your regulatory obligations, it\u0026rsquo;s easy to forget the value of human oversight. However, many companies use compliance officers to review AI-flagged alerts, allowing them to add context to decisions and prevent overreliance on automated outputs. The AI detection process should improve using LLMs, but human oversight will always be required.\u003c/p\u003e\n\u003cp\u003eWhile there may be a temptation to over-depend upon automated AI compliance solutions, there must always be a degree of human oversight.\u003c/p\u003e\n\u003ch2 id=\"the-future-of-ai-compliance\"\u003e\u003cstrong\u003eThe future of AI compliance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAI\u0026rsquo;s role in dynamic parameterisation, large-scale data analytics, and the identification of causally correlated instruments will shape its contribution to compliance. The ability to change parameters based on market conditions and underlying client characteristics will reduce the number of false positives, saving time, effort and money. Large-scale analytics can uncover hidden correlations between instruments and markets, which is helpful in compliance and a valuable information commodity for financial firms.\u003c/p\u003e\n\u003cp\u003eAs tempting as it may be to move to complete dependence on automated RegTech solutions, there must always be a degree of human oversight. To be fair, this has reduced significantly in recent years, but as we identified above, rogue AI systems can cause havoc in isolation and financial disasters in collaboration.\u003c/p\u003e\n\u003ch2 id=\"eflows-contribution-to-ai-collaboration-risks\"\u003e\u003cstrong\u003eeflow’s contribution to AI collaboration risks\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eSlowly but surely, AI protection regulations are emerging across the financial services industry and broader business. Unfortunately, a reactive approach to the challenges of AI collaboration risks means that Regtech companies such as eflow need to be proactive.\u003c/p\u003e\n\u003cp\u003eThere are many ways in which we can assist, such as:-\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eDynamic monitoring solutions\u003c/li\u003e\n\u003cli\u003eAdvanced risk scoring and alert systems\u003c/li\u003e\n\u003cli\u003eScalable compliance platforms\u003c/li\u003e\n\u003cli\u003ePredictive analytics and causal analysis\u003c/li\u003e\n\u003cli\u003eHuman oversight tools\u003c/li\u003e\n\u003cli\u003eProactive regulatory engagement\u003c/li\u003e\n\u003cli\u003eSecured data integration\u003c/li\u003e\n\u003cli\u003eTailored risk mitigation strategies\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eBy providing dynamic, adaptable, and compliance-focused solutions, we can help financial institutions enjoy the benefits of AI collaboration while minimising associated risks.\u003c/p\u003e\n\u003ch2 id=\"benefits-of-secure-ai-collaboration\"\u003e\u003cstrong\u003eBenefits of secure AI collaboration\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhile there are obvious challenges when it comes to AI collaboration, much of it relating to control, it’s important to note the positive aspects of secure AI collaboration. It will play a major role in collaborating information from numerous sources to detect and prevent market manipulation. Introducing trading breakers, which would prevent high-risk trades in volatile market conditions, has the potential to improve operational resilience.\u003c/p\u003e\n\u003cp\u003eLike Open Banking, which collates information from various sources, AI collaboration will be essential to future innovation. For example, allowing FinTech start-ups to collaborate with established AI platforms could assist in numerous areas, such as global risk management solutions. Bringing together information from secure, compliant channels will help create comprehensive services and dashboards.\u003c/p\u003e\n\u003cp\u003eAs with any new technology, there are challenges and a need for at least some regulation. AI collaboration brings vast benefits and significant risks, which must be controlled within a strict framework. Thankfully, new regulations mean that AI solutions still need to provide a virtual paper trail, which was flagged as a potential issue earlier in this article.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe potential of AI collaboration in financial markets is vast, offering unprecedented opportunities to enhance compliance, streamline operations, and drive innovation. Yet, without proper safeguards, the same collaborative systems that promise growth could destabilise markets, amplify systemic vulnerabilities and create opaque accountability structures.\u003c/p\u003e\n\u003cp\u003eThe key to harnessing the benefits of AI collaboration lies in balancing innovation with responsibility. Robust governance frameworks, cutting-edge RegTech tools, and ongoing human oversight are essential for mitigating risks and maintaining trust in financial markets. As the industry evolves, proactive strategies will be critical to ensuring that AI collaboration contributes to market integrity rather than undermining it.\u003c/p\u003e\n\u003cp\u003eAre you ready to turn AI collaboration into a competitive advantage? Partner with eflow to navigate the complexities of AI in financial services. Our tailored RegTech solutions help you manage risks, adapt to evolving regulations, and secure the future of your operations. Contact us today to safeguard your compliance strategy and stay ahead in a rapidly changing market.\u003c/p\u003e\n","date_published":"2026-26-01T11:04:00+0000"},{"title":"eflow client base surges 23% as trading complexity intensifies surveillance demands","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-client-base-surges-in-2025/","summary":"\u003cp\u003e\u003cstrong\u003eLondon, UK: Tuesday 20th January 2026:\u003c/strong\u003e \u003ca href=\"http://www.eflowglobal.com/\" rel=\"nofollow noopener\" target=\"_blank\"\u003eeflow\u003c/a\u003e, a leading provider of regulatory compliance technology for financial services, today announces 23% client growth in 2025, as firms strengthen surveillance infrastructure to address complex and increasingly AI-driven trading and sophisticated regulatory demands. The expansion resulted in 56 new deployments of \u003ca href=\"https://eflowglobal.com/#product-cards\" target=\"_blank\" rel=\"noopener\"\u003eeflow\u0026rsquo;s modular compliance software\u003c/a\u003e as financial institutions modernise monitoring capabilities in response to rapidly evolving market dynamics.\u003cbr\u003e\u003cbr\u003eThe growth reflects mounting pressure on compliance and surveillance systems as firms navigate a combination of market volatility, geopolitical uncertainty, and increasingly complex trading activity. Automated and algorithmic trading now underpins a significant proportion of global market activity, while the use of AI across financial services continues to expand. As regulators pursue more sophisticated market abuse typologies and place greater scrutiny on firms’ surveillance capabilities, traditional, rules-based monitoring tools are struggling to keep pace, driving increased investment in integrated, adaptive surveillance technology.\u003cbr\u003e\u003cbr\u003e\u003cstrong\u003eAddressing the surveillance gap\u003c/strong\u003e\u003cbr\u003e\u003cbr\u003eIn response to these challenges, eflow launched \u003ca href=\"http://www.eflowglobal.com/insights/blogs/eflow-global-launches-path-ai/\" rel=\"nofollow noopener\" target=\"_blank\"\u003ePATH AI\u003c/a\u003e to help compliance teams investigate trading alerts more efficiently through explainable, contextual insights delivered via a conversational interface. Users can analyse alert history, identify behavioural patterns, and generate audit-ready case summaries, with all data fully referenced and conversations tracked for reporting.\u003cbr\u003e\u003cbr\u003eeflow also enhanced its \u003ca href=\"http://www.eflowglobal.com/tz-ecomms-surveillance/\" rel=\"nofollow noopener\" target=\"_blank\"\u003eTZEC suite\u003c/a\u003e with new eComms surveillance and archiving modules, offering significant cost and deployment advantages. Data extraction is priced at $0.20 per GB versus up to $50 per GB from legacy providers, and full deployment can be completed in as little as 90 days.\u003cbr\u003e\u003cbr\u003e\u003cstrong\u003eAdoption surges amid regulatory scrutiny\u003c/strong\u003e\u003cbr\u003e\u003cbr\u003e\u003ca href=\"https://eflowglobal.com/insights/blogs/finalto-selects-eflow-global-to-strengthen-trade-surveillance-and-best-execution-monitoring/\" target=\"_blank\" rel=\"noopener\"\u003eeflow\u0026rsquo;s 2025 client wins included Finalto\u003c/a\u003e, a global liquidity provider, and Mirae Asset Securities UK, both of which selected eflow\u0026rsquo;s technology to centralise their trade surveillance and best execution monitoring. In total, 40 new or expanded client relationships contributed to 56 new system deployments across the company\u0026rsquo;s product suite, reflecting both new client wins and broader adoption among existing customers, with 14% of current clients expanding their use of eflow’s technology.\u003cbr\u003e\u003cbr\u003eThe company strengthened its technology capabilities through \u003ca href=\"https://eflowglobal.com/insights/blogs/eflow-global-and-exante-partner-to-tackle-market-abuse-through-enhanced-trade-surveillance-data\" target=\"_blank\" rel=\"noopener\"\u003estrategic partnerships with EXANTE\u003c/a\u003e, enhancing market data depth, \u003ca href=\"https://eflowglobal.com/insights/blogs/eflow-global-and-dhi-partner-to-transform-market-abuse-detection-through-ai-powered-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eand AI specialist DHI, enabling the integration of AI-generated risk scoring into its surveillance technology\u003c/a\u003e. To support accelerating demand, eflow made three strategic senior appointments: Kristian Frost Pedersen as Chief Financial Officer, Michael De Jongh as Chief Growth Officer, and Ross Pearson as Head of AI.\u003cbr\u003e\u003cbr\u003eBen Parker, CEO at eflow, commented: “Our strong growth in 2025 reflects a clear market shift. Between geopolitical uncertainty, significant market volatility, and increasing regulatory complexity, firms can no longer rely on siloed surveillance as regulators target increasingly sophisticated manipulation and scrutiny of surveillance capabilities intensifies. Clients expanded their use of our platform, driving 56 new technology deployments in 2025 - clear evidence that an integrated approach delivers measurable value. As AI reshapes both trading behaviour and regulatory expectations, the firms that succeed in 2026 and beyond will be those investing in surveillance technology that can match this complexity while maintaining the transparency regulators demand.”\u003cbr\u003e\u003cbr\u003eeflow enters 2026 focused on expanding its presence in Europe, North America and Asia-Pacific whilst advancing its position in AI-powered, explainable surveillance technology.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003chr\u003e\n\u003cp\u003e\u003cbr\u003e\u003cbr\u003e\u003cbr\u003e\u003c/p\u003e\n","date_published":"2026-20-01T05:38:00+0000"},{"title":"Q4 2025 enforcement update: Other jurisdictions rise as the U.S. goes quiet ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/q4-2025-enforcement-update-other-jurisdictions-rise-as-the-u.s.-goes-quiet-/","summary":"\u003cp\u003eIn terms of regulatory enforcement, Q4 2025 was a tale of two sides. As the U.S. regulators went quiet under the weight of the longest government shutdown on record – 43 days – other international regulators remained busy.\u003c/p\u003e\n\u003cp\u003eThe APAC region, in particular, stood out. We saw landmark fines, courts willing to recalibrate penalties upward, and a regulator signaling clearly and repeatedly that enforcement is being used unapologetically as a deterrent. Other jurisdictions remained active too, closing out a mix of insider trading, market manipulation, and systems and controls cases as the year drew to a close.\u003c/p\u003e\n\u003cp\u003eIn Q4 2025, we saw 19 enforcement actions:\u003c/p\u003e\n\u003cimg height=\"610\" width=\"874\" src=\"/images/frame-5-1.svg\" /\u003e\n\u003cp\u003eAcross 5 jurisdictions:\u003c/p\u003e\n\u003cimg height=\"611\" width=\"874\" src=\"/images/frame-7.svg\" /\u003e\n\u003cp\u003eTotalling $32.1 million:\u003c/p\u003e\n\u003cimg height=\"563\" width=\"874\" src=\"/images/frame-6.svg\" /\u003e\n\u003ch2 id=\"us-finra-zeroes-in-on-supervision-and-surveillance-execution\"\u003eU.S.: FINRA zeroes in on supervision and surveillance execution\u003c/h2\u003e\n\u003cp\u003eWhile we saw no enforcement from the SEC and CFTC, FINRA’s enforcement this quarter leaned heavily into supervision, surveillance, and communications governance, or a lack thereof.\u003c/p\u003e\n\u003cp\u003eOn personal account dealing oversight, Canaccord Genuity Wealth Management was \u003ca href=\"https://www.finra.org/sites/default/files/fda_documents/2022073302501%20Canaccord%20Genuity%20Wealth%20Management%20%28USA%29%20Inc.%20CRD%207449%20AWC%20ks%20%282025-1762042804431%29.pdf\" target=\"_blank\" rel=\"noopener\"\u003efined\u003c/a\u003e after failing to review associated persons’ securities transactions for potential insider or manipulative trading over several years. The firm outsourced the review to an affiliate but that review was limited (focused on insider trading only), and the Canaccord senior management had no effective oversight of the affiliate’s work, leaving gaps such as detecting trading ahead of customers.\u003c/p\u003e\n\u003cp\u003eFINRA also targeted weak supervision, in which \u003ca href=\"https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=2020066079903\"\u003ecase\u003c/a\u003e an individual falsely marked exception reports as “reviewed” in batches without actually evaluating thousands of transactions for potential manipulative trading, a reminder that regulators place equal emphasis on the quality of the human in the loop as they do the systems that support them.\u003c/p\u003e\n\u003cp\u003eFailures in eComms surveillance also persisted. Ally Invest was \u003ca href=\"https://www.finra.org/sites/default/files/fda_documents/2021071257201%20Ally%20Invest%20Securities%20LLC%20CRD%20136131%20AWC%20ks%20%282025-1762561195045%29.pdf\" target=\"_blank\" rel=\"noopener\"\u003efined\u003c/a\u003e $850,000 for failing to preserve 22.6 million business-related electronic communications and failing to review ~521,000 communications. Other cases reinforced the same theme: personal devices, outside email, deletions, and weak capture controls continue to generate enforcement exposure\u003c/p\u003e\n\u003ch2 id=\"uk-the-fca-focuses-on-insider-trading\"\u003eUK: The FCA focuses on insider trading\u003c/h2\u003e\n\u003cp\u003eFCA enforcement this quarter focused on individual accountability in insider dealing. There were two cases of note to explore in the UK in Q4.\u003c/p\u003e\n\u003cp\u003eIn one, the FCA \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-charges-two-individuals-insider-dealing\" target=\"_blank\" rel=\"noopener\"\u003echarged\u003c/a\u003e a former investment banker involved in advising GCP Student Living PLC on a potential takeover, alleging he leaked inside information to a close associate. That associate traded in shares and spread bets, generating profits of almost £70,000, with the conduct dating back to 2021.\u003c/p\u003e\n\u003cp\u003eIn another \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-bans-and-fines-advisor-insider-dealing\" target=\"_blank\" rel=\"noopener\"\u003ecase\u003c/a\u003e, an advisor used advance knowledge of an ITM Power PLC announcement to avoid the impact of a sharp market move: he sold 125,000 shares worth £124,287 the day before, then bought back 180,000 shares worth £140,700 after the share price fell by around 37%, generating a gain of £26,575.\u003c/p\u003e\n\u003ch2 id=\"apac-asic-continues-to-ramp-up-enforcement\"\u003eAPAC: ASIC continues to ramp up enforcement\u003c/h2\u003e\n\u003cp\u003eASIC recently released its \u003ca href=\"https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-273mr-asic-announces-2026-enforcement-priorities/\" target=\"_blank\" rel=\"noopener\"\u003e2026 enforcement priorities\u003c/a\u003e, with market manipulation and insider dealing featuring prominently. The language was clear and deliberate. ASIC is increasingly positioning enforcement as a primary mechanism for upholding market integrity and maintaining the standards of transparency expected of Australian capital markets. That intent is clearly reflected in the data from Q4 2025.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/insights/blogs/q3-2025-enforcement-update/\" target=\"_blank\" rel=\"noopener\"\u003eLast quarter\u003c/a\u003e, the standout case was the combined AUD 240 million levied against ANZ for a range of issues tied to retail and institutional markets and trading misconduct. In Q4, the penalty for ANZ’s inaccurate reporting of secondary bond market turnover data was increased by a further AUD 10 million.\u003c/p\u003e\n\u003cp\u003eThis brings the combined penalties related to institutional and market misconduct to AUD 135 million. Only the additional AUD 10 million uplift is captured in this quarter’s enforcement data; the remainder was reflected in \u003ca href=\"https://eflowglobal.com/insights/blogs/q3-2025-enforcement-update/\" target=\"_blank\" rel=\"noopener\"\u003elast quarter’s figures\u003c/a\u003e. Even so, the increase reinforces ASIC’s willingness — and the court’s support — to increase penalties where market integrity failures are viewed as particularly pervasive or inexcusable.\u003c/p\u003e\n\u003ch3 id=\"macquarie-securities-and-short-sale-misreporting-a-data-integrity-failure-with-market-abuse-implications\"\u003eMacquarie Securities and short sale misreporting: a data integrity failure with market abuse implications\u003c/h3\u003e\n\u003cp\u003eASIC’s action against \u003ca href=\"https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-311mr-macquarie-securities-admits-to-misleading-conduct-and-agrees-to-pay-35-million-for-systemic-failures/\" target=\"_blank\" rel=\"noopener\"\u003eMacquarie Securities (Australia) Limited\u003c/a\u003e marks a significant escalation in regulatory scrutiny of regulatory data quality. This is ASIC’s first ever short sale reporting case, culminating in a AUD 35 million penalty.\u003c/p\u003e\n\u003cp\u003eBetween 2009 and 2024, Macquarie Securities misreported at least 73 million short sales, with ASIC estimating the true figure may be as high as 1.5 billion. The errors spanned more than 14 years, impacted over 300 securities, and in some instances distorted published short sale volumes by more than 50%. The failures were systemic, driven by long-standing systems weaknesses, inadequate supervisory procedures, insufficient technical resources and deficient risk management, most of which went undetected despite prior internal reviews.\u003c/p\u003e\n\u003cp\u003eThis is not a market abuse case in the traditional sense. There are no allegations of insider trading or manipulative intent. However, the conduct directly undermined the transparency mechanisms that regulators and market participants rely on to assess sentiment, detect misconduct, and understand price movements. Short sale data is a foundational input for surveillance, risk analysis, and public confidence, particularly during periods of market stress.\u003c/p\u003e\n\u003ch3 id=\"individual-accountability-remains-the-enforcement-backbone-in-singapore-and-hong-kong\"\u003eIndividual accountability remains the enforcement backbone in Singapore and Hong Kong\u003c/h3\u003e\n\u003cp\u003eElsewhere, in Singapore and Hong Kong, enforcement activity skewed more toward traditional market abuse, and regulators continued to demonstrate a willingness to pursue individuals for relatively contained but clear-cut misconduct.\u003c/p\u003e\n\u003cp\u003eIn Singapore, MAS imposed civil penalties for insider trading that hinged on access to specific, market-moving information. One case involved the former managing director of \u003ca href=\"https://www.mas.gov.sg/regulation/enforcement/enforcement-actions/2025/mas-imposes-civil-penalty-on-mr-ang-yew-jin-eugene-for-insider-trading\" target=\"_blank\" rel=\"noopener\"\u003eAlpha Energy Holdings\u003c/a\u003e, who sold 2,413,300 shares via his parents’ accounts while in possession of non-public information.\u003c/p\u003e\n\u003cp\u003eAnother involved a \u003ca href=\"https://www.mas.gov.sg/regulation/enforcement/enforcement-actions/2025/civil-penalty-action-taken-against-tan-tee-beng-for-insider-trading\" target=\"_blank\" rel=\"noopener\"\u003ehead of margin\u003c/a\u003e at a broker who learned of a corporate sale and the intended price ahead of announcement, then traded in both the parent (Tee International) and subsidiary (Tee Land), including purchasing three million shares in the parent ahead of the deal being made public.\u003c/p\u003e\n\u003cp\u003eIn Hong Kong, the SFC secured custodial outcomes. One former corporate services executive received two months’ imprisonment for \u003ca href=\"https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=25PR209\" target=\"_blank\" rel=\"noopener\"\u003einsider dealing\u003c/a\u003e linked to privatisation events, alongside financial orders reflecting losses avoided. Another individual received eight months’ imprisonment for \u003ca href=\"https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=25PR208\" target=\"_blank\" rel=\"noopener\"\u003efalse trading\u003c/a\u003e.\u003c/p\u003e\n\u003ch2 id=\"the-broader-signals\"\u003eThe broader signals\u003c/h2\u003e\n\u003cp\u003eQ4 2025 underscored just how uneven enforcement momentum can be, and why firms should be careful not to mistake temporary silence for regulatory retreat. The U.S. slowdown was temporary, not strategic, while other jurisdictions used the quarter to reinforce expectations with clarity and force.\u003c/p\u003e\n\u003cp\u003eThe most consistent signal this quarter was the elevation of control effectiveness over intent. From ASIC’s upward recalibration of penalties to its first-ever short sale reporting case, enforcement is increasingly focused on whether firms can demonstrate that systems, data, and supervisory processes work as intended.\u003c/p\u003e\n","date_published":"2026-12-01T10:30:00+0000"},{"title":"FINRA Market Oversight Report 2026 – What you need to know","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/finra-market-oversight-report-2026-what-you-need-to-know/","summary":"\u003cp\u003eThe Financial Industry Regulatory Authority (FINRA) has published its \u003ca href=\"https://www.finra.org/rules-guidance/guidance/reports/2026-finra-annual-regulatory-oversight-report\"\u003e2026 Annual Regulatory Oversight Report\u003c/a\u003e (the Report).\u003c/p\u003e\n\u003cp\u003eMember firms are expected to incorporate relevant elements of the Report into their compliance programs in a way that reflects their specific activities and risk profiles. For market abuse, there are several noteworthy updates to FINRA’s commentary on manipulative trading, along with a new section covering the use of generative AI (GenAI) by member firms. In this blog, we focus on the key need-to-know developments.\u003c/p\u003e\n\u003ch2 id=\"manipulative-trading-deficiencies\"\u003eManipulative trading deficiencies\u003c/h2\u003e\n\u003ch3 id=\"deficient-wsps-highlighted-again\"\u003eDeficient WSPs highlighted again\u003c/h3\u003e\n\u003cp\u003eWeak supervisory procedures for identifying manipulative trading once again featured prominently in FINRA’s findings, with much of the language mirroring last year’s report.\u003c/p\u003e\n\u003cp\u003eAt a high level, the issues remain familiar: procedures are not sufficiently tailored to firms’ actual business models, accountability for monitoring is poorly defined, and escalation processes lack clarity.\u003c/p\u003e\n\u003cp\u003eWhat is new this year is FINRA’s explicit focus on firms failing to consider red flags from external sources. The Report highlights gaps where firms do not factor in inquiries from regulators, trading venues, service providers, or publicly available information about known manipulators.\u003c/p\u003e\n\u003cp\u003eAs with other areas such as financial crime, firms are expected to leverage third-party and public data as part of their market abuse framework. Firms should clearly document how this data is ingested into surveillance workflows and how it informs monitoring, escalation, and decision-making.\u003c/p\u003e\n\u003ch3 id=\"trade-surveillance-deficiencies-remain-a-problem\"\u003eTrade surveillance deficiencies remain a problem\u003c/h3\u003e\n\u003cp\u003eFINRA also continues to flag long-standing weaknesses in firms’ surveillance frameworks. These largely relate to systems that are not reasonably designed to detect the full range of manipulative behaviors, or that rely on poorly calibrated or static thresholds.\u003c/p\u003e\n\u003cp\u003eCommon issues include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eGaps in coverage for specific manipulation typologies (layering, spoofing, wash trades, marking the close, and odd-lot manipulation are named examples).\u003c/li\u003e\n\u003cli\u003eThresholds that are either too narrow or too blunt to identify meaningful activity.\u003c/li\u003e\n\u003cli\u003eFailure to reassess controls as business models, customer bases, or market conditions change.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWhat’s new in 2025 is FINRA’s sharper focus on the big picture. In essence, FINRA is signaling that many firms’ surveillance approaches are too narrow. They may detect isolated suspicious events, but fail to identify coordinated or sustained manipulation.\u003c/p\u003e\n\u003cp\u003eThis reflects a broader regulatory concern that manipulative behavior is becoming more sophisticated and deliberately designed to evade simple, rules-based alerts. FINRA highlights several recurring gaps:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003e\u003cstrong\u003eLimited time horizons\u003c/strong\u003e: Manipulative schemes like pump-and-dumps or marking-the-close may be deliberately spread over multiple sessions to stay below same-day alert thresholds, making the behavior harder to detect when viewed in isolation.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eSiloed customer reviews:\u003c/strong\u003e where potential prearranged or coordinated trading across multiple accounts is missed.\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003e\u003cstrong\u003eAlert-by-alert analysis:\u003c/strong\u003e spoofing activity earlier in the day may be used to move prices, followed by marking the close to lock those prices in. When reviewed separately, each alert may seem low risk.\u003c/p\u003e\n\u003ch4 id=\"what-finra-is-seeing-in-small-cap-manipulation\"\u003eWhat FINRA is seeing in small-cap manipulation\u003c/h4\u003e\n\u003cp\u003eFINRA has observed an evolution in small-cap pump-and-dump schemes involving exchange-listed equities:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eShift in timing:\u003c/strong\u003e Schemes are moving away from the IPO date, often occurring months later or repeating multiple times for the same stock.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eNominee \u0026amp; omnibus accounts:\u003c/strong\u003e Bad actors use \u0026ldquo;nominee\u0026rdquo; accounts to control the stock during the IPO, then funnel shares to foreign omnibus accounts to hide the true concentration of ownership.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eSecondary offering abuse:\u003c/strong\u003e Companies may sell large blocks of shares privately to foreign investors without proper disclosure. These shares are then \u0026ldquo;dumped\u0026rdquo; into the U.S. market via brokerage accounts.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eAccount takeovers:\u003c/strong\u003e A newer, aggressive tactic where scammers hack legitimate investor accounts, sell their actual holdings, and use the cash to buy the manipulated stock.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eSocial engineering:\u003c/strong\u003e Scammers use \u0026ldquo;Investment Clubs\u0026rdquo; on social media and text apps to trick victims into buying at specific times, creating the \u0026ldquo;pump\u0026rdquo; that allows the bad actors to sell at a profit.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"best-practice-for-trade-surveillance\"\u003eBest practice for trade surveillance\u003c/h2\u003e\n\u003cp\u003eWhile much of FINRA’s guidance on effective practices remains consistent with prior \u003ca href=\"https://eflowglobal.com/insights/blogs/finra-regulatory-oversight-report/\"\u003eyears\u003c/a\u003e, subtle wording shifts in the 2026 Report signal a higher bar for how firms design and operate their controls.\u003c/p\u003e\n\u003ch3 id=\"tailored-control-parameters-and-thresholds\"\u003eTailored “control parameters and thresholds”\u003c/h3\u003e\n\u003cp\u003eFINRA places greater emphasis on granular calibration of surveillance controls, commending firms that move beyond out-of-the-box settings. A single set of thresholds cannot reasonably apply across highly liquid equities, volatile OTC securities, and fixed income products. Thresholds set too wide risk missing manipulation; too narrow, and firms generate excessive noise.\u003c/p\u003e\n\u003ch3 id=\"monitoring-across-platforms\"\u003eMonitoring across platforms\u003c/h3\u003e\n\u003cp\u003eFINRA has expanded its expectations for multi-platform monitoring by explicitly including platforms that “\u003cem\u003esupport trading”\u003c/em\u003e, not just those where trades ultimately execute. This signals a move beyond post-trade surveillance of the tape toward monitoring pre-trade activity on electronic trading platforms, alternative trading systems, and dark pools, where behaviors such as spoofing or layering may occur without an execution.\u003c/p\u003e\n\u003cp\u003eThe update also reinforces expectations around cross-product and cross-border visibility, particularly where activity on offshore or alternative venues may be used to influence prices in U.S.-listed securities.\u003c/p\u003e\n\u003ch2 id=\"the-role-of-generative-ai\"\u003eThe role of Generative AI\u003c/h2\u003e\n\u003cp\u003eFINRA’s commentary on GenAI is deliberately broad. It offers a snapshot of how FINRA-regulated firms are currently using the technology across their businesses.\u003c/p\u003e\n\u003cp\u003eThe dominant theme among the use cases identified is \u003cem\u003eefficiency\u003c/em\u003e, not necessarily autonomy. Firms are primarily deploying GenAI to streamline internal processes, improve access to information, and reduce manual effort, rather than to make autonomous decisions.\u003c/p\u003e\n\u003cp\u003eThe most common use case cited is summarization and information extraction: \u003cem\u003e“condensing large volumes of text and extracting specific entities, relationships or key information from unstructured documents.”\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eImportantly, FINRA strikes a constructive tone. It recognizes the potential benefits of GenAI, while clearly reiterating that its technology-neutral rules and broader securities laws continue to apply. In other words, the use of GenAI does not change firms’ regulatory obligations around supervision, governance, or accountability.\u003c/p\u003e\n\u003ch3 id=\"generative-ai-use-cases-in-surveillance\"\u003eGenerative AI use cases in surveillance\u003c/h3\u003e\n\u003cp\u003eSome of the GenAI applications FINRA references map closely to how we are seeing firms deploy these technologies in surveillance today. These use cases are explored in depth in our latest eBook, “\u003ca href=\"https://eflowglobal.com/insights/research/\"\u003eAI in Trade Surveillance\u003c/a\u003e”.\u003c/p\u003e\n\u003ctable\u003e\u003ctbody\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cstrong\u003eFINRA category\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e\u003cstrong\u003eSurveillance application\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cem\u003e“Conversational AI and Question Answering: Providing interactive, natural language responses to user queries. Delivered through chatbots, virtual assistants, and voice interfaces”\u003c/em\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eLLM-based co-pilots allow analysts to query surveillance data using natural language. By combining retrieval-augmented generation (RAG) with secure access to trade data, eComms, and historical decisions, firms can reduce reliance on technical queries and make insights accessible to non-technical users.\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cem\u003e“Sentiment Analysis: Assessing whether text is positive, neutral, or negative”\u003c/em\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eLLMs supplement traditional keyword-based systems by interpreting context, intent, and tone. This helps surface suspicious behavior that may be missed by static lexicons, particularly where coded language, slang, emojis, or non-standard phrasing is used.\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cem\u003e“Workflow Automation and Process Intelligence: Optimizing business processes through intelligent routing, automation, and agent-based workflows”\u003c/em\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eGenAI is increasingly used to support alert prioritization and investigation workflows. Common applications include assembling context across data sources, summarizing evidence, ranking alerts by likely risk, and learning from analyst outcomes to reduce false positives over time.\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003c/tbody\u003e\u003c/table\u003e\n\u003ch2 id=\"holistic-surveillance-is-the-name-of-the-game\"\u003eHolistic surveillance is the name of the game\u003c/h2\u003e\n\u003cp\u003eFINRA’s latest report reinforces a clear message: firms must move beyond static, siloed surveillance and generic procedures. Expectations now centre on contextual monitoring, external data integration, and holistic analysis of manipulation. GenAI offers real efficiency gains, but accountability, governance, and supervisory rigor remain firmly non-negotiable.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n","date_published":"2026-06-01T14:16:00+0000"},{"title":"Webinar: Market abuse controls and surveillance","url":"https://video-page-fix--eflow-website.netlify.app/insights/videos/webinar-market-abuse-controls-and-surveillance/","summary":"\u003cdiv class=\"cms-embed\"\u003e\u003cdiv style=\"padding:56.25% 0 0 0;position:relative;\"\u003e\u003ciframe src=\"https://player.vimeo.com/video/1146595088?h=aefcaf18f6\u0026amp;badge=0\u0026amp;autopause=0\u0026amp;player_id=0\u0026amp;app_id=58479\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write; encrypted-media; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" style=\"position:absolute;top:0;left:0;width:100%;height:100%;\" title=\"Market abuse controls and surveillance: From policy design to real-world execution\"\u003e\u003c/iframe\u003e\u003c/div\u003e\u003cscript src=\"https://player.vimeo.com/api/player.js\"\u003e\u003c/script\u003e\u003c/div\u003e\n\u003ch2 id=\"from-policy-design-to-real-world-execution\"\u003eFrom policy design to real-world execution\u003c/h2\u003e\n\u003cp\u003eThe second in our series of webinars with \u003ca href=\"https://www.complylens.com/\" target=\"_blank\" rel=\"noopener\"\u003eComplyLens\u003c/a\u003e explores practical guidance on how to design and implement proportionate, effective and data-driven trade surveillance controls.\u003c/p\u003e\n\u003cp\u003eOur industry experts explain what regulators expect to see from firms\u0026rsquo; in respect of their market abuse governance frameworks, and offer insights into how this can be delivered in a sustainable and effective way. In the session, we cover:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eA case study that illustrates why proportionate, effective, and data-driven surveillance controls are so vital\u003c/li\u003e\n\u003cli\u003eWhat regulators expect from firms in terms of trade surveillance policy and execution\u003c/li\u003e\n\u003cli\u003eThe role of trade surveillance technology and the impact of AI tools\u003c/li\u003e\n\u003cli\u003eThe importance of comprehensive venue coverage\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"2025-15-12T15:33:00+0000"},{"title":"Webinar: Market abuse risk governance","url":"https://video-page-fix--eflow-website.netlify.app/insights/videos/webinar-market-abuse-risk-governance/","summary":"\u003cdiv class=\"cms-embed\"\u003e\u003cdiv style=\"padding:56.25% 0 0 0;position:relative;\"\u003e\u003ciframe src=\"https://player.vimeo.com/video/1146592514?h=5d2d25f825\u0026amp;badge=0\u0026amp;autopause=0\u0026amp;player_id=0\u0026amp;app_id=58479%2Fembed\" allow=\"autoplay; fullscreen; picture-in-picture\" allowfullscreen=\"\" frameborder=\"0\" style=\"position:absolute;top:0;left:0;width:100%;height:100%;\"\u003e\u003c/iframe\u003e\u003c/div\u003e\u003c/div\u003e\n\u003ch2 id=\"building-a-strong-market-abuse-risk-governance-foundation\"\u003eBuilding a strong market abuse risk governance foundation\u003c/h2\u003e\n\u003cp\u003eThe first in a series of webinars jointly hosted with \u003ca href=\"https://www.complylens.com/\"\u003eComplyLens\u003c/a\u003e, this is a thought-provoking webinar exploring how to design and execute a Market Abuse Risk Assessment (MARA) that is a strategic governance tool, rather than a regulatory box-ticking exercise.\u003c/p\u003e\n\u003cp\u003eThis session provides practical guidance on developing a robust, effective and sustainable framework for managing market abuse risk, ensuring that your MARA becomes a central pillar of your firm\u0026rsquo;s governance strategy. In the session, our panel of industry experts will cover:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eWhat does a good MARA look like?\u003c/li\u003e\n\u003cli\u003eWhat do regulators expect from firms?\u003c/li\u003e\n\u003cli\u003ePractical tips on how to run a MARA\u003c/li\u003e\n\u003cli\u003eHow your MARA impacts trade surveillance\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"2025-10-12T16:03:00+0000"},{"title":"The future of compliance automation: Trends to watch","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/the-future-of-compliance-automation-trends-to-watch/","summary":"\u003cp\u003eCompliance has always been resource-intensive, but in 2025, the stakes are higher than ever. The FCA, ESMA, and other regulators are increasingly data-driven, demanding faster, smarter, and auditable compliance processes.\u003c/p\u003e\n\u003cp\u003eFor senior leaders, compliance is no longer a back-office activity - it’s a board-level priority that carries both financial and personal liability under SMCR.\u003c/p\u003e\n\u003cp\u003eIn reality, automation is now the only realistic option for those operating in the financial services sector. The question is not \u003cem\u003eif\u003c/em\u003e firms should automate, but \u003cem\u003ehow fast\u003c/em\u003e they can modernise without disrupting business.\u003c/p\u003e\n\u003cp\u003eBelow, we examine why compliance automation is crucial now, looking at the trends shaping the market, what firms should do to prepare, and how eflow is helping financial firms stay ahead.\u003c/p\u003e\n\u003ch2 id=\"why-compliance-automation-matters-now\"\u003e\u003cstrong\u003eWhy compliance automation matters now\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe compliance function is under relentless pressure, and this is impacting all areas of financial firms. Regulators expect real-time monitoring, the volume of data continues to explode, and costs to comply are rising sharply. Manual processes can no longer keep pace, and firms that persist with \u003ca href=\"https://eflowglobal.com/overcoming-compliance-challenges-posed-by-legacy-systems/\"\u003elegacy systems\u003c/a\u003e are already falling behind in meeting evolving expectations.\u003c/p\u003e\n\u003cp\u003eIf we remove external noise, automation provides three clear advantages:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eIt delivers \u003cstrong\u003espeed and consistency\u003c/strong\u003e across complex workflows.\u003c/li\u003e\n\u003cli\u003eIt ensures \u003cstrong\u003edefensible audit trails\u003c/strong\u003e that regulators demand.\u003c/li\u003e\n\u003cli\u003eIt reduces \u003cstrong\u003eoperational drag\u003c/strong\u003e, freeing staff to focus on strategic risk.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIn other words, automation is not just about efficiency; it is also about resilience in a market where compliance is under constant scrutiny. For CCOs, COOs, and Heads of Surveillance, this means shifting from firefighting to future-proofing.\u003c/p\u003e\n\u003ch3 id=\"fca-enforcement-in-numbers-202425-vs-202324\"\u003e\u003cstrong\u003eFCA enforcement in numbers (2024/25 vs 2023/24)\u003c/strong\u003e\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003e£186m in fines\u003c/strong\u003e (vs £42.6m in 2023/24 - more than a 4x increase)\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003e37 Final Notices\u003c/strong\u003e (vs 21 in 2023/24)\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003e30 prohibitions\u003c/strong\u003e (vs 19 in 2023/24)\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003e1,456 firms had authorisations cancelled\u003c/strong\u003e (vs 851 in 2023/24)\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e\u003cstrong\u003eSource:\u003c/strong\u003e \u003ca href=\"https://www.fca.org.uk/data/fca-operating-service-metrics-2024-25/enforcement-data\"\u003eFCA Enforcement data 2024/25\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003eThese figures underscore why regulators now expect firms to demonstrate compliance in real-time, and why automation is no longer optional.\u003c/p\u003e\n\u003ch2 id=\"compliance-automation-trends-to-watch\"\u003e\u003cstrong\u003eCompliance automation trends to watch\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe phrase “compliance automation” encompasses a broad range of tools and techniques. However, the real challenge for senior leaders is discerning which trends are driving meaningful change and which are fleeting buzzwords.\u003c/p\u003e\n\u003cp\u003eWhat follows are the seven most crucial compliance automation trends worth your attention in 2025. They represent the shift from manual monitoring and fragmented oversight to integrated, intelligent, and adaptive systems that regulators increasingly expect. Each trend also highlights where firms can achieve the greatest return on investment - in efficiency, accuracy, and regulatory defensibility.\u003c/p\u003e\n\u003ch3 id=\"1-ai-and-machine-learning-in-surveillance\"\u003e\u003cstrong\u003e1. AI and machine learning in surveillance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eArtificial intelligence is no longer experimental in compliance; it’s becoming mainstream. Firms are shifting from rigid, rules-based alerts to adaptive systems that learn from behaviour and context.\u003c/p\u003e\n\u003cp\u003eKey developments include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eBehaviour-driven anomaly detection\u003c/strong\u003e, reducing false positives.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eNatural language processing (NLP)\u003c/strong\u003e for monitoring voice, chat, and email.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003ePredictive analytics\u003c/strong\u003e that highlight risks before they turn into violations.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe impact on compliance teams is clear: rather than being overwhelmed by \u003ca href=\"https://eflowglobal.com/eliminating-low-quality-alerts-in-regtech-the-case-for-smarter-flag-generation/\"\u003eirrelevant alerts\u003c/a\u003e, they can now focus on high-priority risks that require escalation.\u003c/p\u003e\n\u003ch3 id=\"2-real-time-monitoring\"\u003e\u003cstrong\u003e2. Real-time monitoring\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003ePeriodic checks are no longer enough as regulators want firms to identify and escalate suspicious behaviour as it happens. Real-time (or as near as possible) monitoring is moving from aspiration to expectation, particularly under MAR and SMCR obligations.\u003c/p\u003e\n\u003cp\u003eExamples include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSystems that \u003cstrong\u003eingest trade and communications data simultaneously\u003c/strong\u003e, creating context.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eImmediate alerts and escalations\u003c/strong\u003e, ensuring compliance doesn’t lag behind market activity.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe result is a compliance function that operates at the speed of the markets it monitors.\u003c/p\u003e\n\u003ch3 id=\"3-end-to-end-data-integration\"\u003e\u003cstrong\u003e3. End-to-end data integration\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eSilos remain one of the biggest threats to effective compliance, with OMS, EMS, CRM, and communications platforms often operating in isolation, creating blind spots. Fortunately, automation is helping to close these gaps.\u003c/p\u003e\n\u003cp\u003eFirms are now:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eAutomating \u003cstrong\u003edata formatting and reconciliation\u003c/strong\u003e to eliminate manual bottlenecks.\u003c/li\u003e\n\u003cli\u003eCreating \u003cstrong\u003eintegrated compliance stacks\u003c/strong\u003e that provide complete visibility.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThis is more than operational efficiency; it creates defensibility. When regulators request evidence, firms can demonstrate a transparent chain of data and decisions.\u003c/p\u003e\n\u003ch3 id=\"4-global-and-multi-regulator-compliance\"\u003e\u003cstrong\u003e4. Global and multi-regulator compliance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eFor UK firms, compliance doesn’t stop at the Channel, with cross-border activity often triggering obligations with ESMA, the SEC, or APAC regulators. Manual management of these rules is inefficient and risky.\u003c/p\u003e\n\u003cp\u003eAutomation is enabling:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eMulti-jurisdictional compliance frameworks\u003c/strong\u003e within a single platform.\u003c/li\u003e\n\u003cli\u003eFaster adaptation to diverging reporting regimes (e.g., EMIR Refit in the EU vs. SEC CAT in the U.S.).\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThis flexibility gives firms the confidence to expand into new markets without fear of falling foul of unfamiliar regulators.\u003c/p\u003e\n\u003ch3 id=\"5-automated-regulatory-reporting\"\u003e\u003cstrong\u003e5. Automated regulatory reporting\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eReporting is one of the most resource-heavy areas of compliance, and regulators are only raising the bar. Automated, straight-through reporting pipelines are fast becoming standard.\u003c/p\u003e\n\u003cp\u003eKey benefits include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSubmissions that are \u003cstrong\u003etimely, accurate, and consistent\u003c/strong\u003e, even across jurisdictions.\u003c/li\u003e\n\u003cli\u003eReduced operational risk by cutting manual intervention.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eFor compliance leaders, this means less time spent reconciling data and more time spent advising the business strategically.\u003c/p\u003e\n\u003ch3 id=\"6-cloud-native-compliance-platforms\"\u003e\u003cstrong\u003e6. Cloud-native compliance platforms\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eCloud adoption in compliance has accelerated as both firms and regulators gain confidence in its security and resilience. FCA and PRA guidance now explicitly acknowledge cloud usage as acceptable when properly managed.\u003c/p\u003e\n\u003cp\u003eCloud-native platforms provide:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eScalability\u003c/strong\u003e across desks, regions, or jurisdictions.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eFaster deployment\u003c/strong\u003e and lower infrastructure costs.\u003c/li\u003e\n\u003cli\u003eEasier \u003cstrong\u003eregulator-approved storage and monitoring\u003c/strong\u003e.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThis trend is significant because it makes cutting-edge compliance tools accessible to a broader range of firms, including mid-sized players that previously lacked the enterprise-scale infrastructure.\u003c/p\u003e\n\u003ch3 id=\"7-human--automation-hybrid-models-operational-focus\"\u003e\u003cstrong\u003e7. Human + automation hybrid models (operational focus)\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eA common misconception is that automation will replace compliance officers. In practice, it does the opposite: it creates a clearer division of labour — letting machines handle repetitive tasks while humans retain control of judgement and escalation.\u003c/p\u003e\n\u003cp\u003eAutomation is best suited for:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eRoutine monitoring and reporting\u003c/strong\u003e, where speed and accuracy are critical.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eData ingestion and formatting\u003c/strong\u003e, tasks that are time-consuming but low-value.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eHumans remain essential for:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eEscalation decisions\u003c/strong\u003e, where context and professional judgement are key.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eDirect engagement with regulators and boards\u003c/strong\u003e, which requires accountability and communication.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe result is a hybrid model where compliance functions run more efficiently without losing the human oversight that regulators and boards demand.\u003c/p\u003e\n\u003ch2 id=\"challenges-firms-must-overcome\"\u003e\u003cstrong\u003eChallenges firms must overcome\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAdopting automation isn’t straightforward, with many firms facing:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eLegacy systems\u003c/strong\u003e that resist integration.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eBudgetary constraints\u003c/strong\u003e and proving ROI.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eCybersecurity and privacy risks\u003c/strong\u003e when automating sensitive data.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eSkills gaps\u003c/strong\u003e as compliance teams adapt to new technology.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe danger is that firms treat these challenges as reasons to delay, when, in reality, delay often creates greater cost, as regulators and competitors move faster.\u003c/p\u003e\n\u003ch2 id=\"the-human-impact-of-compliance-automation-cultural--strategic-focus\"\u003e\u003cstrong\u003eThe human impact of compliance automation (cultural + strategic focus)\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe real test of automation isn’t just technical capability — it’s whether people inside and outside the firm embrace it. Without employee and client buy-in, even the smartest system risks underperformance.\u003c/p\u003e\n\u003cp\u003eFor compliance staff, automation is not a threat but an enabler:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eSenior officers\u003c/strong\u003e shift from manual investigations to \u003cstrong\u003estrategic advisors\u003c/strong\u003e at board level.\u003c/li\u003e\n\u003cli\u003eTeams gain capacity for \u003cstrong\u003escenario testing, risk modelling, and training\u003c/strong\u003e rather than drowning in alerts.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eSMCR accountability\u003c/strong\u003e becomes clearer, with audit trails that protect individuals by providing evidence of their decisions.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eBut adoption also depends on culture and communication:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eFirms must provide \u003cstrong\u003etraining and reassurance\u003c/strong\u003e, so teams trust and use the systems effectively.\u003c/li\u003e\n\u003cli\u003eClients expect confidence that automation improves compliance oversight, protecting relationships and market integrity.\u003c/li\u003e\n\u003cli\u003eCulturally, compliance should be reframed from a “cost of doing business” into a \u003cstrong\u003evalue-adding function\u003c/strong\u003e that strengthens resilience.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eAutomation is, ultimately, a human transformation as much as a technical one. Firms that keep their people and clients engaged throughout the journey will unlock far greater benefits than those that treat it as just another IT project.\u003c/p\u003e\n\u003ch2 id=\"scenarios-senior-leaders-recognise-and-the-questions-they-raise\"\u003e\u003cstrong\u003eScenarios senior leaders recognise and the questions they raise\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eFor many CCOs, COOs, and Heads of Surveillance, the conversation around automation is not abstract - it’s shaped by real challenges they face daily. These scenarios may feel familiar:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003e\u003cstrong\u003eBoard pressure:\u003c/strong\u003e \u003cem\u003e“How can we be certain our compliance systems would stand up to FCA scrutiny tomorrow?”\u003c/em\u003e\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eAlert fatigue:\u003c/strong\u003e \u003cem\u003e“Why are my teams drowning in false positives while real risks might slip through?”\u003c/em\u003e\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eRegulatory change:\u003c/strong\u003e \u003cem\u003e“How do we adapt to new FCA or ESMA requirements without rebuilding everything from scratch?”\u003c/em\u003e\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eCross-border activity:\u003c/strong\u003e \u003cem\u003e“We’re expanding into the U.S. — how do we manage SEC obligations alongside FCA expectations?”\u003c/em\u003e\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eSMCR accountability:\u003c/strong\u003e \u003cem\u003e“If I’m personally liable, where’s the audit trail that proves I made the right calls?”\u003c/em\u003e\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003eThese questions don’t just come from compliance desks; they’re being asked in boardrooms, risk committees, and investor meetings. And increasingly, they demand answers that go beyond “we have a process in place”.\u003c/p\u003e\n\u003cp\u003eLooking to the future, senior leaders know that compliance must be:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eReal-time\u003c/strong\u003e rather than retrospective.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eProactive\u003c/strong\u003e rather than reactive.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eIntegrated\u003c/strong\u003e across systems, teams, and jurisdictions.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eDefensible\u003c/strong\u003e at both the corporate and individual levels.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThis is why automation isn’t just a technology decision. It’s a strategic choice that defines whether compliance is seen as a business enabler or a constant source of risk.\u003c/p\u003e\n\u003ch2 id=\"what-should-firms-do-now\"\u003e\u003cstrong\u003eWhat should firms do now?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eFor CCOs, COOs, and Heads of Surveillance, the roadmap is becoming clearer:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eConduct a \u003cstrong\u003ecompliance audit\u003c/strong\u003e to spot inefficiencies.\u003c/li\u003e\n\u003cli\u003ePrioritise automation in \u003cstrong\u003ehigh-risk, high-volume areas\u003c/strong\u003e such as surveillance and reporting.\u003c/li\u003e\n\u003cli\u003eRun \u003cstrong\u003epilot programs\u003c/strong\u003e to build confidence before scaling.\u003c/li\u003e\n\u003cli\u003eEnsure compliance, operations, and IT collaborate on implementation.\u003c/li\u003e\n\u003cli\u003eUpskill compliance officers to focus on strategy, not administration.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eBy taking these steps, firms not only reduce risk but also strengthen their competitive position.\u003c/p\u003e\n\u003ch2 id=\"how-eflow-helps-firms-stay-ahead\"\u003e\u003cstrong\u003eHow eflow helps firms stay ahead\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAt eflow, we’ve built our platform to meet these very challenges, and, unlike legacy providers, we don’t deliver piecemeal tools. We provide a \u003cstrong\u003eunified, platform-based solution\u003c/strong\u003e that integrates trade surveillance, e-communications monitoring, transaction reporting, and best execution into a single ecosystem.\u003c/p\u003e\n\u003cp\u003eWhat sets us apart is not only the technology but the \u003cstrong\u003epartnership model\u003c/strong\u003e we offer:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eEvery client has access to a \u003cstrong\u003ededicated account manager\u003c/strong\u003e.\u003c/li\u003e\n\u003cli\u003eWe provide \u003cstrong\u003eongoing training and support\u003c/strong\u003e, ensuring teams get full value from the system.\u003c/li\u003e\n\u003cli\u003eOur \u003cstrong\u003eanalyst teams\u003c/strong\u003e help clients map regulatory requirements to practical system configurations.\u003c/li\u003e\n\u003cli\u003eWe \u003cstrong\u003eproactively monitor client systems\u003c/strong\u003e and roll out updates as regulations evolve.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe result is a compliance function that is \u003cstrong\u003escalable, future-ready, and regulator-defensible\u003c/strong\u003e, with a client relationship built on trust and responsiveness.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eCompliance automation is no longer optional; it has become the industry standard. The FCA and other global regulators are raising the bar with new expectations for speed, accuracy, and defensibility.\u003c/p\u003e\n\u003cp\u003eFirms that rely on manual processes or fragmented legacy systems will find themselves outpaced not just by regulation, but also by competitors who are already investing in smarter compliance. For CCOs, COOs, and Heads of Surveillance, the stakes are both personal and corporate.\u003c/p\u003e\n\u003cp\u003eAutomation isn’t about replacing experienced teams - it’s about equipping them with the tools to act faster, detect risks earlier, and demonstrate accountability under the most demanding scrutiny. In an environment shaped by SMCR and shifting cross-border obligations, the ability to prove you acted decisively can mean the difference between regulatory confidence and regulatory sanction.\u003c/p\u003e\n\u003cp\u003eThe message is clear: the firms that thrive in the next decade will be those that modernise now. Compliance automation doesn’t just reduce costs and operational drag; it also transforms compliance into a strategic advantage.\u003c/p\u003e\n\u003cp\u003eIf your firm is ready to modernise its compliance stack, now is the time to act. Talk to eflow today to discover how our platform helps UK financial firms cut risk, lower costs, and deliver the kind of defensible compliance regulators expect.\u003c/p\u003e\n\u003cp\u003eDon’t wait until regulators come knocking - stay ahead of them and start the \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003econversation now\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-09-12T13:27:00+0000"},{"title":"eflow expands TZEC platform with new eComms archiving and surveillance modules ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-global-expands-tzec-platform-with-new-ecomms-archiving-and-surveillance-modules-designed-to-slash-compliance-costs/","summary":"\u003cp\u003e\u003cstrong\u003eLondon, UK: Wednesday 3rd December 2025:\u003c/strong\u003e eflow, a leading provider of regulatory compliance technology, today announced further enhancements to its \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\" title=\"TZEC eComms Surveillance\" target=\"_blank\" rel=\"noopener\"\u003eTZEC platform\u003c/a\u003e, a comprehensive suite of eComms archiving and surveillance tools to help financial institutions meet their global regulatory obligations.\u003c/p\u003e\n\u003cp\u003eThe new technology will streamline regulatory workflows while significantly reducing the costs associated with the management, archiving and extraction of eComms-related data. For financial firms, the new eComms surveillance and archiving modules offer major savings compared to some legacy vendors, with eflow charging a data extraction fee of just $0.20 per GB compared with up to $50 per GB from other firms. The products can also be fully deployed in as little as 90 days, a fraction of the time required for traditional systems.\u003c/p\u003e\n\u003cp\u003eIn recent years, financial regulators worldwide have intensified scrutiny of eComms recordkeeping, with \u003ca href=\"https://eflowglobal.com/global-trends-in-market-abuse-and-trade-surveillance-form/\" target=\"_blank\" rel=\"noopener\"\u003eenforcement penalties exceeding $3.2 billion in the last five years alone\u003c/a\u003e for firms failing to demonstrate robust monitoring and archiving of digital communications. As staff increasingly use multiple platforms to interact, compliance teams face unprecedented challenges in monitoring, storing, and analysing communications for potentially high-risk or abusive behaviour.\u003c/p\u003e\n\u003cp\u003eTo address these challenges, eflow has developed a suite of solutions designed to support firms in meeting regulatory obligations and strengthening oversight. TZEC Archive simplifies core recordkeeping, providing an intuitive interface for archiving, searching, and extracting digital messages from channels such as email, instant chat, voice, voice to text and other off-channel platforms. It ensures compliance with global regulatory standards, including MAR, FCA SYSC, and DORA, without the costly and well publicised data extraction charges that are associated with other archiving technology vendors.\u003c/p\u003e\n\u003cp\u003eFor more advanced monitoring of digital messages, TZEC Focus and TZEC Integrate offer comprehensive surveillance solutions. Using sentiment analysis, natural language processing and machine learning, TZEC Focus analyses multiple communication channels to flag suspicious messages for further analysis and investigation. Meanwhile, TZEC Integrate provides a further layer of contextual insights by linking communications with trade data and leveraging eflow’s Lexicon Service to detect potential market abuse or manipulation. This holistic approach to identifying and preventing market abuse gives compliance teams a deeper, more complete view of high-risk behaviour across their organisation.\u003c/p\u003e\n\u003cp\u003e“Financial institutions are under growing pressure to monitor and archive communications across multiple digital channels,” said \u003ca href=\"https://eflowglobal.com/team/ben-parker/\" title=\"Ben Parker profile\" target=\"_blank\" rel=\"noopener\"\u003eBen Parker, CEO and founder at eflow\u003c/a\u003e. “TZEC equips firms with AI-powered tools to meet regulatory obligations in a cost-effective and transparent way. Unlike other legacy solutions, TZEC users can extract their archived data without being hit by significant additional charges that threaten to place firms in a ‘data hostage’ situation - this potentially saves mid-market firms thousands of pounds. Our rapid onboarding process also means that we can implement a client’s system rapidly without the frustrating waiting times associated with lengthy implementation periods. This makes the process of meeting regulatory obligations more manageable and sustainable from day one.”\u003c/p\u003e\n\u003cp\u003eBy combining robust archiving, AI-driven surveillance, and trade-linked analysis, TZEC enables compliance teams to detect and act on high-risk behaviour more quickly, streamline reporting, and maintain regulatory readiness.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\" title=\"TZEC eComms Surveillance\" target=\"_blank\" rel=\"noopener\"\u003eFor more information, visit the TZEC product pages. \u003c/a\u003e\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003chr\u003e\n\u003cp\u003e\u003cbr\u003e\u003cbr\u003e\u003cbr\u003e\u003c/p\u003e\n","date_published":"2025-03-12T08:34:00+0000"},{"title":"Correctly identifying market abuse","url":"https://video-page-fix--eflow-website.netlify.app/insights/videos/correctly-identifying-market-abuse/","summary":"\u003cdiv class=\"cms-embed\"\u003e\u003cdiv style=\"padding:56.25% 0 0 0;position:relative;\"\u003e\u003ciframe src=\"https://player.vimeo.com/video/1138876553?h=c858a60750\u0026amp;badge=0\u0026amp;autopause=0\u0026amp;player_id=0\u0026amp;app_id=58479\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write; encrypted-media; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" style=\"position:absolute;top:0;left:0;width:100%;height:100%;\" title=\"The challenge of identifying market abuse\"\u003e\u003c/iframe\u003e\u003c/div\u003e\u003cscript src=\"https://player.vimeo.com/api/player.js\"\u003e\u003c/script\u003e\u003c/div\u003e\n\u003cp\u003eOne of the biggest recurring challenges for compliance teams is accurately identifying market abuse.\u003c/p\u003e\n\u003cp\u003eBeing able to minimise false positives and false negatives while simultaneously ensuring that test parameters are rigorous enough to detect real instances of market abuse can feel like walking a tightrope at times, which is why properly calibrating your trade surveillance system is so essential.\u003c/p\u003e\n\u003cp\u003eTo help firms do this, we implement a number of different strategies. For one, we provide information and analytics on how similar firms tend to set their test parameters, providing a rough template that firms can work from when calibrating their own system.\u003c/p\u003e\n\u003cp\u003eWe also provide firms with a sandbox testing environment which they can use to test different system configurations in a risk-free environment before promoting any changes made into their live system.\u003c/p\u003e\n\u003cp\u003eBeyond this, we also offer a holistic approach to surveillance. By integrating \u003ca href=\"/tz-ecomms-surveillance/\"\u003eeComms surveillance\u003c/a\u003e with \u003ca href=\"/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance\u003c/a\u003e, firms are able to see the bigger picture of a trade, gaining context which can be invaluable when attempting to identify instances of market abuse.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"/tz-market-abuse-trade-surveillance/\"\u003eLearn more about our trade surveillance solution here\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-24-11T14:05:12+0000"},{"title":"eflow launches PATH AI as trade surveillance enforcement surges to $1.8 billion","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-global-launches-path-ai/","summary":"\u003cp\u003e\u003cstrong\u003eLondon, UK: Wednesday 19th November\u003c/strong\u003e – eflow, a leading provider of regulatory compliance technology, has today announced the launch of PATH AI, a new AI-powered functionality integrated into its award-winning \u003ca href=\"https://docs.google.com/document/u/0/d/1fZqdM9wCLfJCFGlSYkINtI_EzxnF6YLeL1z9xM4j4zg/edit\" target=\"_blank\" rel=\"noopener\"\u003eTZTS Trade Surveillance system\u003c/a\u003e. As trade surveillance enforcement surges and regulators increasingly demand that firms can articulate their use of AI in compliance processes, PATH AI delivers explainable and contextualised insights that enable compliance teams to investigate trading alerts more efficiently.\u003c/p\u003e\n\u003cp\u003eWith fines relating to market abuse enforcement \u003ca href=\"https://eflowglobal.com/ai-in-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003ereaching $1.8 billion in 2024\u003c/a\u003e - the second-highest annual total on record across 163 cases - and regulators repeatedly citing weaknesses in trade surveillance processes, financial institutions face mounting pressure to strengthen their compliance capabilities. Enforcement action related to failures of trade surveillance systems and controls has surged by more than 800% year-on-year, making robust and explainable AI tools essential for firms managing growing volumes of trading data whilst meeting regulators\u0026rsquo; demands for transparency.\u003c/p\u003e\n\u003cp\u003eThe FCA has emphasised that firms \u003ca href=\"https://eflowglobal.com/ai-in-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003emust be able to explain how AI systems reach their conclusions\u003c/a\u003e, with particular scrutiny on \u0026lsquo;black box\u0026rsquo; approaches that generate alerts without transparent reasoning. PATH AI directly addresses this requirement by ensuring every insight is fully traceable to its source data, allowing firms to demonstrate both to regulators and senior management exactly how conclusions were reached.\u003c/p\u003e\n\u003cp\u003eThrough an intuitive interface, users can investigate alerts using conversational prompts to access contextualised information. For example, they can identify whether a trader has triggered similar alerts within a specific period, generate case summaries for escalation, or explore linked patterns of behaviour. All data points are fully referenced to support regulatory audit requirements, with a chat history tracking conversations for reporting and escalation purposes.\u003c/p\u003e\n\u003cp\u003eThe system also dynamically suggests relevant prompts based on the questions being asked, enabling compliance teams to explore different investigative routes efficiently.\u003c/p\u003e\n\u003cimg alt=\"Ross Pearson, Head of AI at eflow\" loading=\"lazy\" height=\"750\" width=\"600\" src=\"/images/ross-edit-small.jpg\" /\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/team/ross-pearson/\" target=\"_blank\" rel=\"noopener\"\u003eRoss Pearson, Head of AI at eflow\u003c/a\u003e, commented: “In developing PATH AI, we have made a conscious decision not to create just another AI copilot. PATH AI has been engineered to provide regulatory professionals with the contextualised insights that they need to use their expertise as effectively as possible. One of the main criticisms of how AI is being used in a regulatory context is that it creates a ‘black box’ in which decisions cannot be explained or evidenced. Financial institutions must be able to illustrate how they are using AI to prevent market abuse, and that\u0026rsquo;s what PATH AI enables them to do.”\u003c/p\u003e\n\u003cp\u003eThe launch marks a significant milestone in eflow\u0026rsquo;s strategic deployment of AI-powered tools, following the successful introduction of its \u003ca href=\"https://eflowglobal.com/insights/blogs/eflow-global-and-dhi-partner-to-transform-market-abuse-detection-through-ai-powered-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eAI-generated risk scoring functionality\u003c/a\u003e earlier this year. The approach focuses on empowering compliance professionals with intelligent tools that enhance their expertise whilst maintaining human oversight and regulatory accountability.\u003c/p\u003e\n\u003cp\u003eFor more information, download eflow’s AI in trade surveillance report \u003ca href=\"https://eflowglobal.com/ai-in-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003ehere\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-19-11T08:30:00+0000"},{"title":"Streamlining transaction reporting with automation tools","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/streamlining-transaction-reporting-with-automation-tools/","summary":"\u003cp\u003eIn today’s post-Brexit regulatory environment, UK financial firms face mounting pressure to navigate increasingly complex and divergent compliance requirements. Transaction reporting has rapidly evolved as FCA expectations tighten and reforms like EMIR Refit (both UK and EU iterations) introduce more granular reporting standards. It has moved from a routine obligation into a critical, high-stakes function requiring speed, precision, and flexibility.\u003c/p\u003e\n\u003cp\u003eFor years, firms have leaned on manual processes, pulling trade data from fragmented systems, manually reconciling discrepancies, and relying on stretched compliance teams to meet submission deadlines. That approach may have worked in the past, but now, it’s a liability.\u003c/p\u003e\n\u003cp\u003eAs reporting volumes rise and regulators demand greater transparency, the cost of errors—both financial and reputational—continues to grow. Manual workflows simply can’t keep up, and varying degrees of transaction reporting automation are now the only workable answer.\u003c/p\u003e\n\u003cp\u003eAutomation tools offer a more innovative, strategic means of navigating current and future markets. Automation allows firms to reduce risk, lower operational burden, and adapt swiftly to regulatory changes by streamlining data consolidation, enforcing real-time validation, and building audit-ready workflows.\u003c/p\u003e\n\u003cp\u003eTransaction reporting has become a pressure point for UK firms, and it’s crucial to understand how automation can relieve that strain and what to consider when selecting the right platform. If your current compliance process feels stretched to breaking point, this may be the transformation you didn’t know you needed.\u003c/p\u003e\n\u003ch2 id=\"the-ever-changing-regulatory-landscape\"\u003e\u003cstrong\u003eThe ever-changing regulatory landscape\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhile looking into transaction reporting and automation tools, those operating in the broader financial services industry will be well aware of regulatory and operational changes.\u003c/p\u003e\n\u003ch3 id=\"post-brexit-divergence\"\u003e\u003cstrong\u003ePost-Brexit divergence\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eInitially, post-Brexit, the UK and EU authorities maintained a high degree of regulatory harmony. In recent times, however, we have seen ongoing divergence in areas such as Markets in Financial Instruments Regulation (MiFIR) transaction reporting. While some MiFIR differences appear minor, they’ve led to persistent dual-reporting burdens. This has prompted renewed debate among UK asset managers on whether buy-side firms should remain subject to both UK and EU regimes.\u003c/p\u003e\n\u003ch3 id=\"emir-refit-implications\"\u003e\u003cstrong\u003eEMIR Refit implications\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs of 30 September 2024, when EMIR Refit came into effect in the UK, the number of reportable data fields increased from 129 to over 200. Firms are now obliged to share unique trade identifiers (UTIs), which is proving challenging for areas such as non-cleared derivative markets. Stricter validation rules also mean that European and UK regulators are working to a zero-tolerance approach to validation breaches. Where companies fail format or logic checks, reports will be rejected outright, highlighting the urgent need for robust transaction reporting automation.\u003c/p\u003e\n\u003ch3 id=\"fca-expectations\"\u003e\u003cstrong\u003eFCA expectations\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThere is greater pressure on firms to enhance automation, with the \u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-81\"\u003eMarket Watch 81\u003c/a\u003e review identifying widespread issues with overly manual transaction reporting processes. Previously, the regulators were content with a reactive approach to breaches. This has changed dramatically, with firms now expected to self-identify breaches, conduct root cause analysis, and benchmark themselves against peers. Discussion papers, such as \u003ca href=\"https://www.fca.org.uk/publications/discussion-papers/dp24-2-improving-uk-transaction-reporting-regime\"\u003eDP24/2\u003c/a\u003e, are being used by the FCA to encourage firms to adopt more modern data standards and leverage RegTech.\u003c/p\u003e\n\u003ch2 id=\"challenges-of-manual-transaction-reporting\"\u003e\u003cstrong\u003eChallenges of manual transaction reporting\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs transaction reporting requirements continue to intensify and volumes continue to increase, a number of challenges have grown increasingly common, many of which the regulators have identified as specific areas of interest.\u003c/p\u003e\n\u003ch3 id=\"operational-burden\"\u003e\u003cstrong\u003eOperational burden\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe FCA requires data from a range of sources for transaction reporting which have become more fragmented over the years. They include execution management systems, order management systems, market data feeds, internal chat platforms, and voice calls. Reconstructing transaction reports from fragmented sources is both labour-intensive and error-prone, especially when deadlines tighten and volumes spike. Without transaction reporting automation, it is near-impossible to reconcile data fields, verify timestamps, collate numerous data sources, and ensure consistency in regulator reports.\u003c/p\u003e\n\u003ch3 id=\"mid-sized-firms-are-struggling\"\u003e\u003cstrong\u003eMid-sized firms are struggling\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eConsolidation of the UK financial services industry is ongoing, with many mid-sized firms struggling to update their in-house reporting tools to modern standards. As competitors look to introduce the latest RegTech systems, those with limited resources fall further behind. For example, a mid-size broker using manual processes may fail to detect even the slightest imperfection in timestamp data. This can lead to a systemic reporting error, potentially affecting hundreds of trades and triggering intervention by the FCA or other regulators.\u003c/p\u003e\n\u003ch3 id=\"audit-weakness\"\u003e\u003cstrong\u003eAudit weakness\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhile self-reporting breaches this critical part of the regulatory playbook, many firms are struggling to collate the information required for regular audits. As a result of manual reporting and limited traceability, firms are struggling to demonstrate the accuracy of their data, source consistency, and amendment history. Even false-flag regulatory reviews can take days, removing valuable resources from everyday business activity.\u003c/p\u003e\n\u003cp\u003eUltimately, the risk of non-compliance and the inability to quickly verify past reports and changes enhance the likelihood of financial penalties, supervisory notices, and, ultimately, reputational issues.\u003c/p\u003e\n\u003cp\u003eIdentifying the broad challenges of manual reporting compared to cutting-edge Regtech automation is not difficult. Still, only when you look below the surface do you see the breadth of issues. As \u003ca href=\"https://eflowglobal.com/how-regtech-is-shaping-the-future-of-crypto-compliance/\"\u003enew asset classes\u003c/a\u003e and regulatory instructions are added to the mix, the need to embrace and incorporate RegTech reporting has never been stronger.\u003c/p\u003e\n\u003ch2 id=\"how-automation-tools-solve-transaction-reporting-pain-points\"\u003e\u003cstrong\u003eHow automation tools solve transaction reporting pain points\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWe take much of the automation in transaction reporting for granted, but we are just scratching the surface in many ways. There are emerging systems which directly address the various transaction reporting pain points, creating a more stable framework and more efficient workflows.\u003c/p\u003e\n\u003ch3 id=\"centralised-data-integration\"\u003e\u003cstrong\u003eCentralised data integration\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eOne of the most significant challenges is pulling together data across disparate systems and converting it into a standardised format in real time (or near real-time). These systems can automatically cross-reference trades with individual voice calls or email trails, creating a single source of truth. The centralisation of reporting inputs ensures consistency across data fields, significantly reducing submission rejections.\u003c/p\u003e\n\u003ch3 id=\"accuracy-and-timeliness\"\u003e\u003cstrong\u003eAccuracy and timeliness\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eModern-day transaction reporting automation systems are not only accurate and extremely quick, but they can also carry out pre-submission validations. This effectively identifies potential issues before they are reported to the regulator using AI and conditional logic, reducing false positives and wasted resources. As the regulatory reports are generated and validated automatically, firms can meet FCA deadlines even in high-volume, volatile trading environments.\u003c/p\u003e\n\u003ch3 id=\"audit-trails-and-transparency\"\u003e\u003cstrong\u003eAudit trails and transparency\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe greater the level of automation, the stronger the audit trail and transparency of the source data. The ability to timestamp and log every stage, such as data ingestion, field mapping, validation, corrections and submissions, creates the ultimate audit trail. This means firms can now be “audit-ready” for regular or open expected FCA or internal audits.\u003c/p\u003e\n\u003ch3 id=\"dynamic-regulatory-updates\"\u003e\u003cstrong\u003eDynamic regulatory updates\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eFocusing on the operational and reporting efficiencies created by Regtech is easy, but it’s also essential to recognise the dynamic approach to regulatory updates. Central cloud-based platforms can now push regulatory changes directly to clients without the involvement of internal IT specialists. This reduces potential downtime and compliance risks during historic transition periods.\u003c/p\u003e\n\u003ch2 id=\"real-world-impact-benefits-for-uk-financial-firms\"\u003e\u003cstrong\u003eReal-world impact: Benefits for UK financial firms\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe natural temptation is to focus on the financial benefits of streamlining compliance using transaction reporting automation tools. However, many additional benefits exist, which create an even greater cumulative benefit in the longer term.\u003c/p\u003e\n\u003ch3 id=\"operational-efficiency\"\u003e\u003cstrong\u003eOperational efficiency\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThere are significant benefits to automating previously manual-intensive actions. Time spent preparing and collating data, validating reports, and delivering to the regulator, which previously took hours or even days, can now be completed in a matter of minutes.\u003c/p\u003e\n\u003cp\u003ePractical tools such as scheduled batch submissions, real-time error reports, and centralised dashboard views are empowering compliance teams across the industry.\u003c/p\u003e\n\u003ch3 id=\"risk-reduction\"\u003e\u003cstrong\u003eRisk reduction\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eUltimately, enhanced regulations all have one endgame: reducing market risk and protecting investors. There are huge accuracy gains with automation, allowing pre-report checks to be carried out and identifying potential red flags before the regulator reports are submitted. The ability to produce more accurate reports means that firms are less likely to be targeted by the FCA with reviews or investigations. Along with fuelling a stronger relationship between industry and regulators, it also helps to avoid potentially catastrophic damage to reputation and credibility.\u003c/p\u003e\n\u003ch3 id=\"scalability\"\u003e\u003cstrong\u003eScalability\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eGone are the days when systems had to undergo major upgrades to accommodate long-term growth. Instead, they are replaced by scalable systems in line with business development. This also allows firms to take on additional business without the proportional increase in headcount. We have also seen enhanced multijurisdictional flexibility, allowing companies to look beyond their traditional markets with confidence, with Regtech systems that automatically accommodate variations in reporting data and reports.\u003c/p\u003e\n\u003ch3 id=\"cost-savings\"\u003e\u003cstrong\u003eCost savings\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eLast but not least, many companies which have switched to automated transaction reporting have seen significant cost savings in areas such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eReduced manual workload\u003c/li\u003e\n\u003cli\u003eLower remediation costs\u003c/li\u003e\n\u003cli\u003esimplified infrastructure\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eLooking at this from a broader perspective, this has given many firms the flexibility to redirect resources to benefit the business in the long term.\u003c/p\u003e\n\u003ch2 id=\"choosing-the-right-automation-platform\"\u003e\u003cstrong\u003eChoosing the right automation platform\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eNot all automation platforms are created equal in a market crowded with Regtech promises. Selecting the right transaction reporting solution isn’t just about ticking regulatory boxes; it’s also about choosing a partner that can evolve with your business, scale with your trading volume, and keep you confidently ahead of compliance demands.\u003c/p\u003e\n\u003ch3 id=\"dont-be-afraid-to-interrogate-your-vendor\"\u003e\u003cstrong\u003eDon’t be afraid to interrogate your vendor\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eCan their platform adapt to future regulatory changes without disruptive redeployment? Do they offer seamless onboarding, training, and long-term support? Are the validation, reconciliation, and exception management tools built-in or bolted on?\u003c/p\u003e\n\u003cp\u003eThis is where eflow sets itself apart. With a proprietary, platform-based architecture, our transaction reporting solution deploys fast and updates universally, avoiding costly re-coding. Our dynamic parameters automatically adjust thresholds based on market context, such as trade volume or asset class. As a UK-regulated firm, our team understands the nuances of local compliance and delivers service accordingly - no call centre scripts, just real expertise.\u003c/p\u003e\n\u003cp\u003eIf you\u0026rsquo;re looking for a smarter, faster, and future-proof way to handle transaction reporting, eflow isn’t just an option; it’s the edge.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe regulatory landscape for UK financial firms isn’t just shifting, it’s moving at pace and accelerating. With rising complexity under EMIR Refit, UK MiFIR divergence, and the FCA’s sharpened focus on data quality, transaction reporting has become a proving ground for compliance credibility.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/overcoming-compliance-challenges-posed-by-legacy-systems/\"\u003eLegacy workflows\u003c/a\u003e now expose firms to mounting resource pressure, missed reporting thresholds, and regulatory scrutiny that can erode credibility and trust. The time for patchwork solutions is over.\u003c/p\u003e\n\u003cp\u003eAutomation is no longer a “nice to have;” it’s the foundation of modern, resilient compliance. Done correctly, it not only meets the letter of the law but can also unlock real efficiency, sharper oversight, and peace of mind.\u003c/p\u003e\n\u003cp\u003eIf your current transaction reporting process feels like it’s lagging, now is the time to assess, adapt, and advance. eflow’s platform-based, UK-specific transaction reporting automation solution offers the scale, speed, and support to meet today’s and tomorrow’s growing demands.\u003c/p\u003e\n\u003cp\u003eDon’t wait for an inevitable breach to be the wake-up call  - \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003estart the conversation now\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-17-11T11:46:26+0000"},{"title":"The challenge of monitoring complex instruments","url":"https://video-page-fix--eflow-website.netlify.app/insights/videos/the-challenge-of-monitoring-complex-instruments/","summary":"\u003cdiv class=\"cms-embed\"\u003e\u003cdiv style=\"padding:75% 0 0 0;position:relative;\"\u003e\u003ciframe src=\"https://player.vimeo.com/video/1136423379?h=3b56752ac3\u0026amp;badge=0\u0026amp;autopause=0\u0026amp;player_id=0\u0026amp;app_id=58479\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write; encrypted-media; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" style=\"position:absolute;top:0;left:0;width:100%;height:100%;\" title=\"The challenge of monitoring complex instruments\"\u003e\u003c/iframe\u003e\u003c/div\u003e\u003cscript src=\"https://player.vimeo.com/api/player.js\"\u003e\u003c/script\u003e\u003c/div\u003e\n\u003cp\u003eMonitoring complex instruments such as OTC derivatives can be a real challenge for firms when trying to detect market abuse.\u003c/p\u003e\n\u003cp\u003eBy increasing the levels of market data available to clients and utilising end-of-day pricing, eflow helps firms avoid some of the most common pitfalls that occur when performing trade surveillance on exotic asset classes.\u003c/p\u003e\n\u003cp\u003eYou can learn more about how eflow helps firms with their trade surveillance requirements \u003ca href=\"/tz-market-abuse-trade-surveillance/\"\u003ehere\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-13-11T10:13:24+0000"},{"title":"The rise of fines for systems and controls failures","url":"https://video-page-fix--eflow-website.netlify.app/insights/videos/the-rise-of-fines-for-systems-and-controls-failures/","summary":"\u003cdiv class=\"cms-embed\"\u003e\u003cdiv style=\"padding:56.25% 0 0 0;position:relative;\"\u003e\u003ciframe src=\"https://player.vimeo.com/video/1131638501?h=8dca1a5a2e\u0026amp;badge=0\u0026amp;autopause=0\u0026amp;player_id=0\u0026amp;app_id=58479\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write; encrypted-media; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" style=\"position:absolute;top:0;left:0;width:100%;height:100%;\" title=\"Systems and Controls failures\"\u003e\u003c/iframe\u003e\u003c/div\u003e\u003cscript src=\"https://player.vimeo.com/api/player.js\"\u003e\u003c/script\u003e\u003c/div\u003e\n\u003cp\u003eOur 2025 \u003cem\u003eGlobal trends in market abuse and trade surveillance report\u003c/em\u003e found that, of all market abuse typologies, fines related to trade surveillance systems and controls failures saw by far the steepest increase in 2024 with an 862.5\u0026amp; increase year-on-year from 2023.\u003c/p\u003e\n\u003cp\u003eTrade surveillance systems and controls failures are defined as follows:\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003eDeficiencies in data, systems and controls required to monitor trading activities and ensure compliance with regulatory requirements, including data governance. It involves the use of technology and processes to detect and investigate potential breaches, such as market manipulation, insider trading, and other forms of misconduct.\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003eThe reasons for the increase are manifold, but it can primarily be seen as an attempt by global financial regulators to get ahead of market manipulation; by strictly enforcing legislation around controls and processes, regulators hope to be able to stop abusive trading before it takes place, maintaining a safer and more transparent market in the process.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eLearn more about this topic by\u003c/em\u003e \u003ca href=\"/global-trends-in-market-abuse-and-trade-surveillance-form/\"\u003e\u003cem\u003edownloading our 2025 Global trends in market abuse and trade surveillance report\u003c/em\u003e\u003c/a\u003e\u003cem\u003e.\u003c/em\u003e\u003c/p\u003e\n","date_published":"2025-30-10T10:54:00+0000"},{"title":"The growth of eComms enforcement","url":"https://video-page-fix--eflow-website.netlify.app/insights/videos/the-growth-of-ecomms-enforcement/","summary":"\u003cdiv class=\"cms-embed\"\u003e\u003cdiv style=\"padding:56.25% 0 0 0;position:relative;\"\u003e\u003ciframe src=\"https://player.vimeo.com/video/1131632226?h=3929a2a1c8\u0026amp;badge=0\u0026amp;autopause=0\u0026amp;player_id=0\u0026amp;app_id=58479\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write; encrypted-media; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" style=\"position:absolute;top:0;left:0;width:100%;height:100%;\" title=\"The rise of eComms enforcement\"\u003e\u003c/iframe\u003e\u003c/div\u003e\u003cscript src=\"https://player.vimeo.com/api/player.js\"\u003e\u003c/script\u003e\u003c/div\u003e\n\u003cp\u003eFigures from our 2025 \u003cem\u003eGlobal trends in market abuse and trade surveillance\u003c/em\u003e report found that failures related to eComms recordkeeping and surveillance were by far the most commonly enforced market abuse typology. Out of the $6.3 billion in total market abuse fines issued from 2019-2024 for market abuse, $3.17 billion (50%) were related to eComms recordkeeping failures.\u003c/p\u003e\n\u003cp\u003eThis dramatic figure highlights a clear regulatory focus, particularly in the US. The widespread use of personal mobile devices and off-channel messaging apps such as WhatsApp have undoubtedly added complexity to achieving compliance, and while regulations haven\u0026rsquo;t necessarily changed, the changing landscape has made this issue increasingly important for regulatory bodies. This regulatory friction - where compliance requirements remain static, but the tools available to market participants evolve rapidly - poses a growing challenge.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eYou can download the 2025 Global trends in market abuse and trade surveillance report\u003c/em\u003e \u003ca href=\"/global-trends-in-market-abuse-and-trade-surveillance-form/\"\u003e\u003cem\u003ehere\u003c/em\u003e\u003c/a\u003e\u003cem\u003e.\u003c/em\u003e\u003c/p\u003e\n","date_published":"2025-29-10T10:48:00+0000"},{"title":"The regulatory clamp-down on mid-market firms","url":"https://video-page-fix--eflow-website.netlify.app/insights/videos/the-regulatory-clamp-down-on-mid-market-firms/","summary":"\u003cdiv class=\"cms-embed\"\u003e\u003cdiv style=\"padding:56.25% 0 0 0;position:relative;\"\u003e\u003ciframe src=\"https://player.vimeo.com/video/1131632359?h=9f7a392a1b\u0026amp;badge=0\u0026amp;autopause=0\u0026amp;player_id=0\u0026amp;app_id=58479\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write; encrypted-media; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" style=\"position:absolute;top:0;left:0;width:100%;height:100%;\" title=\"The mid-market clampdown\"\u003e\u003c/iframe\u003e\u003c/div\u003e\u003cscript src=\"https://player.vimeo.com/api/player.js\"\u003e\u003c/script\u003e\u003c/div\u003e\n\u003cp\u003eWhile tier one banks have historically drawn the most attention from global financial regulators, smaller mid-market firms are now increasingly finding themselves on the receiving end of enforcement action for infringements related to market abuse.\u003c/p\u003e\n\u003cp\u003eFindings from our 2025 \u003ca href=\"/global-trends-in-market-abuse-and-trade-surveillance-form/\"\u003e\u003cem\u003eGlobal trends in market abuse and trade surveillance\u003c/em\u003e\u003c/a\u003e report corroborate this fact. In the past six years, 2022 saw the highest total value of enforcement actions at $1.90 billion in total fines. However, this number was spread across a relatively low number of high value fines, with just over 40 individual sanctions issued. By contrast, 2024 saw a comparable $1.84 billion in total value of fines issued, but across 163 fines - roughly 4x as many as the previous highest annual figures.\u003c/p\u003e\n\u003cp\u003eThis shows a significant decrease in average fine value, clearly indicating that smaller, tier two and tier three firms are now also drawing regulatory ire. Firms of all sizes are now expected to have robust compliance functions in place - a failure to do so is likely to result in regulatory enforcement action being pursued.\u003c/p\u003e\n","date_published":"2025-28-10T10:44:00+0000"},{"title":"How to prepare for regulatory audits","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/how-to-prepare-for-regulatory-audits/","summary":"\u003cp\u003eNo financial firm wants to face a regulatory audit unprepared, but in today’s increasingly complex landscape, regulatory audit preparation isn’t optional - it’s a strategic imperative. Whether it’s \u003ca href=\"https://www.fca.org.uk/about/how-we-regulate/supervision\"\u003ea full-scope review from the FCA\u003c/a\u003e, a focused inspection under MAR rules, or an unannounced inspection as part of a thematic review or enforcement action, the pressure to demonstrate airtight compliance is rising across the UK and EU.\u003c/p\u003e\n\u003cp\u003eYet too many firms still rely on manual processes, fragmented systems, and disconnected data, which can lead to delays, missed filings, or fines. Audit preparation has become a board-level concern as regulatory scrutiny intensifies and the cost of non-compliance grows.\u003c/p\u003e\n\u003cp\u003eThankfully, with the right structure, tools, and oversight, audit readiness can become a natural part of your compliance workflow, not a last-minute panic. We will now work through a comprehensive checklist for audit preparation: from consolidating data and simulating audits, to ensuring your controls, teams, and documentation are inspection-ready.\u003c/p\u003e\n\u003ch2 id=\"understanding-the-scope-of-your-audit\"\u003e\u003cstrong\u003eUnderstanding the scope of your audit\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eEffective regulatory audit preparation starts with understanding the audit’s scope: without this clarity, compliance teams risk wasting time, overlooking critical areas, or facing regulatory pushback. Financial firms encounter a variety of audit types, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eRegulatory audits\u003c/strong\u003e by bodies like the FCA or ESMA\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eThematic audits\u003c/strong\u003e focused on specific risks (e.g. market abuse, trade surveillance)\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eInternal audits\u003c/strong\u003e by compliance or risk departments\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eThird-party audits\u003c/strong\u003e simulating pre-regulatory reviews\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eAudits typically fall into one of two categories:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eFull-scope audits\u003c/strong\u003e: These span multiple regulations and business areas, examining systems, governance, reporting accuracy, and data integrity.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eIssue-specific audits\u003c/strong\u003e: Targeted reviews of a particular regulation (e.g. MAR, EMIR) or process (e.g. communications monitoring). Industry trends or firm-specific incidents often trigger these.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eClarifying scope allows teams to \u003cstrong\u003eprioritise relevant data\u003c/strong\u003e, prepare the correct documentation, and ensure key staff are ready to engage. It also prevents unnecessary preparation and supports a faster, smoother audit process, especially when information must be drawn from multiple systems.\u003c/p\u003e\n\u003ch3 id=\"practical-examples\"\u003e\u003cstrong\u003ePractical Examples\u003c/strong\u003e\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eTransaction Reporting Audit\u003c/strong\u003e: Focus on \u003ca href=\"https://www.esma.europa.eu/document/consultation-paper-review-rts-22-transaction-data-reporting-under-art-26-and-rts-24-order\"\u003eRTS 22\u003c/a\u003e timeliness, data lineage, report logic, and submission logs.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eMarket Abuse Surveillance Review\u003c/strong\u003e: Assess alert thresholds, escalation logs, MAR policy compliance, and review workflows.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe better you understand your audit’s scope, the more efficient and defensible your response will be.\u003c/p\u003e\n\u003ch2 id=\"centralise-and-consolidate-your-compliance-data\"\u003e\u003cstrong\u003eCentralise and consolidate your compliance data\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eA successful audit starts with knowing what data regulators will ask for, where it’s located, and whether it can be quickly accessed in a usable format. In many firms, this remains a challenge with data fragmentation across systems creating friction, delays, and exposing gaps in audit readiness, especially when tight response timelines are involved.\u003c/p\u003e\n\u003cp\u003eKey compliance-relevant data sources often include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eOrder Management Systems (OMS) and Execution Management Systems (EMS)\u003c/li\u003e\n\u003cli\u003eTrade platforms and regulatory reporting systems (e.g. MiFIR RTS 22 reports on transaction reporting obligations)\u003c/li\u003e\n\u003cli\u003eCommunication platforms such as email, Teams, WhatsApp, and Bloomberg chat\u003c/li\u003e\n\u003cli\u003eVoice and call recording systems\u003c/li\u003e\n\u003cli\u003eMarket data feeds and external reference points\u003c/li\u003e\n\u003cli\u003eSurveillance tools generating alerts under regulations like MAR\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003ePreparing this data manually or pulling it from siloed systems increases the risk of errors, inconsistent formats, and audit trail deficiencies. Common friction points include incomplete communication records, poor traceability of alerts, and system exports that don’t align with audit timelines or formatting standards.\u003c/p\u003e\n\u003cp\u003eThis is where platform-based RegTech solutions like those offered by eflow provide a critical advantage. Our modular platform integrates with all key data sources, enabling automated import, formatting, and consolidation, including structured and unstructured data (e.g., emails or voice logs).\u003c/p\u003e\n\u003cp\u003eBy unifying these sources through a single compliance interface, firms can streamline investigations, produce regulator-ready reports on demand, and improve real-time surveillance outcomes. Strengthening the structure of the underlying audit trail and providing a speedy and accurate response to audit requests/obligations.\u003c/p\u003e\n\u003ch2 id=\"review-your-surveillance-and-reporting-controls\"\u003e\u003cstrong\u003eReview your surveillance and reporting controls\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs part of broader audit preparation, more firms are now proactively reviewing their surveillance and reporting logic to ensure it aligns with regulatory expectations and the structure and scope of likely audits.\u003c/p\u003e\n\u003ch3 id=\"are-your-trade-surveillance-thresholds-up-to-date\"\u003e\u003cstrong\u003eAre your trade surveillance thresholds up to date?\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eYour alert thresholds must reflect current trading volumes, patterns, and investor behaviour. For example, periods of market volatility, shifts in trading strategy, or business model changes may warrant a reassessment. Stale or overly rigid thresholds can also lead to alert fatigue, or worse, missed market abuse indicators.\u003c/p\u003e\n\u003ch3 id=\"have-any-rules-been-overridden-or-manually-adjusted\"\u003e\u003cstrong\u003eHave any rules been overridden or manually adjusted?\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eRegulatory reports must be accurate, timely, and complete. While core rules and triggers should align with the latest regulatory guidance, there may be times when manual overrides or exceptions occur. These must be adequately documented, approved, and logged, forming a self-contained audit trail that can be presented during inspection.\u003c/p\u003e\n\u003ch3 id=\"market-abuse-scenarios-and-mar-obligations\"\u003e\u003cstrong\u003eMarket abuse scenarios and MAR obligations\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eLogging alerts for typologies such as insider trading, spoofing, or layering is no longer sufficient. Firms must demonstrate a transparent, end-to-end process from detection to investigation and resolution. Regulators frequently assess whether escalation logs and investigation outcomes are being tracked and reviewed. Consequently, firms should be ready to present this evidence and confirm that ongoing oversight is in place.\u003c/p\u003e\n\u003ch2 id=\"audit-trail-and-documentation-readiness\"\u003e\u003cstrong\u003eAudit trail and documentation readiness\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhen it comes to audit trails and documentation, all records and version histories must be complete, accurate, and easily accessible. This creates an uninterrupted timeline that enables regulators to trace changes, track improvements, and assess governance over time.\u003c/p\u003e\n\u003ch3 id=\"why-audit-trails-matter\"\u003e\u003cstrong\u003eWhy audit trails matter\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eRegardless of the type or depth of audit, a well-maintained audit trail demonstrates apparent oversight and control of your firm’s compliance processes. In the event of a regulatory review or investigation, all relevant information and supporting evidence should be readily available. A consistent record of actions and notifications reduces reliance on individual memory or informal explanations and significantly strengthens your ability to defend against enforcement action.\u003c/p\u003e\n\u003ch3 id=\"key-elements-of-a-strong-audit-trail\"\u003e\u003cstrong\u003eKey elements of a strong audit trail\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAt a high level, essential components of an effective audit trail include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eTimestamps:\u003c/strong\u003e Every alert review, change, and system update should be timestamped\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eImmutable logs\u003c/strong\u003e: Audit records and timelines should be non-editable once created\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eVersion histories:\u003c/strong\u003e Track changes to policies, thresholds, and system logic over time\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eUser actions:\u003c/strong\u003e Clear attribution of actions using user IDs and access-level control\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eA typical audit will also examine supporting documentation such as surveillance review logs, policy updates, and system parameter changes. In addition to evidencing regulatory compliance, these records often assist external consultants conducting internal reviews or audit readiness assessments, making them invaluable even beyond the scope of a formal inspection.\u003c/p\u003e\n\u003ch2 id=\"run-a-mock-audit-or-simulation\"\u003e\u003cstrong\u003eRun a mock audit or simulation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eConducting a mock audit is one of the most effective ways to uncover weaknesses before facing a real regulatory inspection. These internal simulations should be treated with the same rigour as a formal audit, allowing firms to:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eStress-test internal processes in a controlled, low-risk environment\u003c/li\u003e\n\u003cli\u003eIdentify compliance vulnerabilities and procedural gaps\u003c/li\u003e\n\u003cli\u003eBuild team confidence by rehearsing audit roles and response timelines\u003c/li\u003e\n\u003cli\u003eBenchmark readiness against industry and regulatory expectations\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eMocks can be led by internal compliance teams or conducted with the help of an external third party to provide an objective assessment.\u003c/p\u003e\n\u003ch3 id=\"common-gaps-identified\"\u003e\u003cstrong\u003eCommon Gaps Identified\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe goal isn’t to prove perfection but to surface real issues. Common findings include outdated alert parameters, manual reporting workarounds without audit trails, delayed escalation logs, and missing documentation. Addressing these proactively strengthens your regulatory audit preparation and ensures a more confident response in a live audit scenario.\u003c/p\u003e\n\u003ch2 id=\"ensure-team-readiness-and-accountability\"\u003e\u003cstrong\u003eEnsure team readiness and accountability\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eTesting your internal systems against regulatory and compliance obligations also means assessing team readiness and individual accountability. Many firms use an audit response matrix to clearly define responsibilities, outlining who owns each compliance area, how communication should flow, and who handles follow-ups after an audit.\u003c/p\u003e\n\u003cp\u003eThis approach helps eliminate the “not my department” gaps of the past by ensuring both individual and collective accountability across compliance, operations, and IT. Regular team training sessions also allow managers to update staff on evolving regulatory requirements and reinforce what’s expected during an audit scenario.\u003c/p\u003e\n\u003cp\u003eWhile much of the focus around audit preparation is often placed on technology and platforms, it’s important to remember that regulatory compliance is a team effort. Even with the best systems in place, any weakness in communication or decision ownership will be reflected in the outcome of an audit.\u003c/p\u003e\n\u003ch2 id=\"management-of-changing-regulations\"\u003e\u003cstrong\u003eManagement of changing regulations\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eRegulatory frameworks constantly evolve, and audit readiness depends on your ability to adapt quickly. From EMIR Refit and ongoing \u003ca href=\"https://eflowglobal.com/uk-mar-and-market-abuse-after-brexit-the-new-regime-explained/\"\u003eMAR updates\u003c/a\u003e, to MiFID II adaptations post-Brexit, firms must ensure their systems reflect the latest rules, not last year’s requirements.\u003c/p\u003e\n\u003cp\u003eA key question is whether your compliance infrastructure is dynamic or manual. Systems relying on static parameters or manual reconfiguration may fall behind, exposing firms to outdated logic, missed obligations, and audit scrutiny. Regulators increasingly expect close to real-time responsiveness to change, especially when rules are complex and data-intensive.\u003c/p\u003e\n\u003cp\u003eThis is where eflow’s platform-based approach stands out. Our modular system is designed to roll out updates fast to all client systems, ensuring your compliance logic evolves in step with shifting regulations. Clients benefit from automated updates across surveillance thresholds, reporting logic, and audit workflows - without the need for redevelopment or lengthy change cycles.\u003c/p\u003e\n\u003cp\u003eWith eflow, firms gain a compliance framework that meets today’s obligations and adapts rapidly to tomorrow’s rules, keeping you audit-ready and aligned with current regulatory expectations.\u003c/p\u003e\n\u003ch2 id=\"prepare-your-response-protocol\"\u003e\u003cstrong\u003ePrepare your response protocol\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eIn terms of the intensity of audit preparation, firms often focus on systems and documentation, but response planning is just as critical. A clearly defined communication protocol ensures your team can respond quickly, accurately, and consistently when auditors raise queries.\u003c/p\u003e\n\u003cp\u003eAssign ownership for responding to audit findings - whether compliance, legal, operations, or a combination - and ensure those individuals understand the scope of their role. Differentiate between internal messaging (staff alignment, risk briefings) and external communication with regulators or stakeholders.\u003c/p\u003e\n\u003cp\u003eEstablish a clear timeline for response, covering:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eInitial audit queries\u003c/li\u003e\n\u003cli\u003eSubmission of requested evidence\u003c/li\u003e\n\u003cli\u003eFollow-up clarifications\u003c/li\u003e\n\u003cli\u003eAny remediation reporting required\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWithout a structured protocol, even strong compliance systems can falter under regulatory scrutiny. This step ensures nothing is missed and demonstrates a mature, proactive compliance posture.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eRegulatory audits are no longer rare or routine - they’re an expected part of operating in today’s fast-moving, tightly governed financial markets. Regulatory audit preparation must be proactive, structured, and continuous, from data consolidation and system reviews to team readiness and response protocols. As regulations like MAR, EMIR, and MiFID II evolve, firms need tools and workflows that adapt just as quickly.\u003c/p\u003e\n\u003cp\u003eAt eflow, we’ve spent over 20 years helping financial firms stay one step ahead of regulatory expectations. Our platform-based, modular RegTech solutions are designed to streamline compliance, automate complex workflows, and maintain audit readiness across every part of your operation.\u003c/p\u003e\n\u003cp\u003eWhether you\u0026rsquo;re preparing for your next regulatory inspection or building a long-term compliance strategy, eflow offers the technology, expertise, and support to help you meet your obligations with confidence and demonstrate to regulators that you’re not just compliant, but in control.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/contact-us/\"\u003eContact eflow\u003c/a\u003e today to find out how we can help you stay audit-ready, compliant, and confidently prepared for whatever regulators bring next.\u003c/p\u003e\n","date_published":"2025-28-10T09:51:00+0000"},{"title":"The importance of conditional parameters for trade surveillance","url":"https://video-page-fix--eflow-website.netlify.app/insights/videos/the-importance-of-conditional-parameters-for-trade-surveillance/","summary":"\u003cdiv class=\"cms-embed\"\u003e\u003cdiv style=\"padding:56.25% 0 0 0;position:relative;\"\u003e\u003ciframe src=\"https://player.vimeo.com/video/1034271764?h=5e1add9cd2\u0026amp;badge=0\u0026amp;autopause=0\u0026amp;player_id=0\u0026amp;app_id=58479\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write; encrypted-media; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" style=\"position:absolute;top:0;left:0;width:100%;height:100%;\" title=\"Conditional Parameters\"\u003e\u003c/iframe\u003e\u003c/div\u003e\u003cscript src=\"https://player.vimeo.com/api/player.js\"\u003e\u003c/script\u003e\u003c/div\u003e\n\u003cp\u003eOne of the biggest challenges for firms hoping to implement a robust trade surveillance solution is managing a high volume of false positive alerts. When alert parameters and thresholds are not set properly, swathes of false positives (and false negatives) can overwhelm compliance teams, increasing the risk of alert fatigue, leading to real instances of market manipulation to go unnoticed.\u003c/p\u003e\n\u003cp\u003eOne of the most effective ways of ensuring that you minimise false positives is implementing a system with conditional parameters. Conditional parameters provide users with the ability to set alert thresholds dynamically: rather than setting static thresholds, conditional parameters can automatically adjust to account for variables such as market volatility, instrument liquidity, or client type, distinguishing between activity driven by natural market fluctuations and those which may be suspicious.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eeflow TZTS Trade Surveillance system includes conditional parameters as standard. Learn more about TZTS\u003c/em\u003e \u003ca href=\"/tz-market-abuse-trade-surveillance/\"\u003e\u003cem\u003ehere\u003c/em\u003e\u003c/a\u003e\u003cem\u003e.\u003c/em\u003e\u003c/p\u003e\n","date_published":"2025-27-10T17:03:00+0000"},{"title":"Calibrating your trade surveillance system","url":"https://video-page-fix--eflow-website.netlify.app/insights/videos/calibrating-your-trade-surveillance-system/","summary":"\u003cdiv class=\"cms-embed\"\u003e\u003cdiv style=\"padding:56.25% 0 0 0;position:relative;\"\u003e\u003ciframe src=\"https://player.vimeo.com/video/1069291945?h=3b1cf55a21\u0026amp;badge=0\u0026amp;autopause=0\u0026amp;player_id=0\u0026amp;app_id=58479\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write; encrypted-media; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" style=\"position:absolute;top:0;left:0;width:100%;height:100%;\" title=\"Callibrating your system\"\u003e\u003c/iframe\u003e\u003c/div\u003e\u003cscript src=\"https://player.vimeo.com/api/player.js\"\u003e\u003c/script\u003e\u003c/div\u003e\n\u003cp\u003eRegulatory compliance is no longer a tick-box exercise. To ensure they meet their regulatory obligations, financial firms need to be able to demonstrate that they are have configured their compliance systems to specifically suit their particular business type and trading strategy.\u003c/p\u003e\n\u003cp\u003eDoing this while remaining up to date with the constantly evolving regulatory landscape can be an extremely challenging and resource-intensive task. That\u0026rsquo;s why eflow makes guiding you through this process a priority.\u003c/p\u003e\n\u003cp\u003eWhen you sign with us, you\u0026rsquo;ll be assigned a dedicated onboarding team who will help you get to grips with your specific regulatory requirements and configure your system accordingly. You\u0026rsquo;ll then be offered training sessions with our product specialists to ensure you\u0026rsquo;re comfortable using your system, learning how to make changes to test parameters, view and create reports, and perform other day-to-day tasks.\u003c/p\u003e\n\u003cp\u003eWe\u0026rsquo;ll also roll out updates to your system automatically at no extra cost when regulations change. This will ensure you remain compliant with any regulatory changes with minimum fuss and no compliance gaps.\u003c/p\u003e\n","date_published":"2025-27-10T10:01:00+0000"},{"title":"TZBE Best Execution and TCA: Product intro","url":"https://video-page-fix--eflow-website.netlify.app/insights/videos/tzbe-best-execution-and-tca-product-intro/","summary":"\u003cdiv class=\"cms-embed\"\u003e\u003cdiv style=\"padding:56.25% 0 0 0;position:relative;\"\u003e\u003ciframe src=\"https://player.vimeo.com/video/1034272695?h=6671ac221c\u0026amp;badge=0\u0026amp;autopause=0\u0026amp;player_id=0\u0026amp;app_id=58479\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write; encrypted-media; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" style=\"position:absolute;top:0;left:0;width:100%;height:100%;\" title=\"TZBE Product Intro\"\u003e\u003c/iframe\u003e\u003c/div\u003e\u003cscript src=\"https://player.vimeo.com/api/player.js\"\u003e\u003c/script\u003e\u003c/div\u003e\n\u003cp\u003e\u003ca href=\"/tz-best-execution-and-transaction-cost-analysis/\"\u003e\u003cem\u003eLearn more about TZBE Best Execution and TCA here\u003c/em\u003e\u003c/a\u003e\u003cem\u003e.\u003c/em\u003e\u003c/p\u003e\n","date_published":"2025-22-10T10:29:00+0000"},{"title":"TZTS Trade Surveillance: Product intro","url":"https://video-page-fix--eflow-website.netlify.app/insights/videos/tzts-trade-surveillance-product-intro/","summary":"\u003cdiv class=\"cms-embed\"\u003e\u003cdiv style=\"padding:56.25% 0 0 0;position:relative;\"\u003e\u003ciframe src=\"https://player.vimeo.com/video/1034272978?h=9e5aba7119\u0026amp;badge=0\u0026amp;autopause=0\u0026amp;player_id=0\u0026amp;app_id=58479\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write; encrypted-media; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" style=\"position:absolute;top:0;left:0;width:100%;height:100%;\" title=\"TZTS Product Intro\"\u003e\u003c/iframe\u003e\u003c/div\u003e\u003cscript src=\"https://player.vimeo.com/api/player.js\"\u003e\u003c/script\u003e\u003c/div\u003e\n\u003cp\u003e\u003cem\u003eLearn more about TZTS Trade Surveillance\u003c/em\u003e \u003ca href=\"/tz-market-abuse-trade-surveillance/\"\u003e\u003cem\u003ehere\u003c/em\u003e\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-21-10T10:22:00+0000"},{"title":"Finalto selects eflow to strengthen  trade surveillance and best execution monitoring","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/finalto-selects-eflow-global-to-strengthen-trade-surveillance-and-best-execution-monitoring/","summary":"\u003cp\u003e\u003cstrong\u003eLondon, UK: Wednesday 8th October\u003c/strong\u003e – \u003ca href=\"https://www.finalto.com/\"\u003eFinalto\u003c/a\u003e, a global financial services provider specialising in liquidity, risk management and world-class financial technology, has selected \u003ca href=\"https://eflowglobal.com/\"\u003eeflow\u003c/a\u003e’s regulatory technology to consolidate and enhance its trade surveillance and best execution processes.\u003c/p\u003e\n\u003cp\u003eThe integration replaces Finalto’s previously siloed compliance systems with a single, unified platform, streamlining data management, improving the detection of suspicious activity, and supporting scalable, insight-led compliance operations. eflow’s technology delivers a best-in-class solution for trade surveillance and best execution monitoring, ensuring Finalto meets stringent regulatory standards and MiFID II controls, while reducing operational workload for their compliance team.\u003c/p\u003e\n\u003cp\u003eFinalto’s selection of eflow’s technology was driven by the system’s reliability, comprehensive functionality, and ability to offer a fully integrated regulatory solution. The system also simplifies and streamlines daily procedures by consolidating multiple data files into a single, easy-to-manage workflow, improving both reporting accuracy and operational efficiency.\u003c/p\u003e\n\u003cp\u003ePaul Groves, CEO of Finalto, commented: “As a market leader serving clients worldwide and providing liquidity in thousands of financial markets, Finalto is strengthening its surveillance and execution oversight with eflow’s cloud-based platform, delivering advanced trade surveillance and analytics with robust MiFID II controls and comprehensive records.”\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/team/ben-parker/\" target=\"_blank\" rel=\"noopener\"\u003eBen Parker, CEO of eflow\u003c/a\u003e, added: “Finalto operates at the highest level of complexity, providing liquidity across thousands of global markets and managing risk at scale. Its sophistication and reach make it a natural fit for eflow, as our technology is built to support firms with the most demanding compliance and surveillance needs. By consolidating all of Finalto’s trade surveillance and best execution processes into a single, integrated platform, we’re helping the firm manage vast amounts of data with precision, improve anomaly detection, and ensure compliance with stringent regulatory requirements.”\u003c/p\u003e\n\u003cp\u003eFor more information, explore eflow\u0026rsquo;s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eTZTS Trade Surveillance\u003c/a\u003e and \u003ca href=\"https://eflowglobal.com/tz-best-execution-and-transaction-cost-analysis/\" target=\"_blank\" rel=\"noopener\"\u003eTZBE Best Execution\u003c/a\u003e solutions.\u003c/p\u003e\n","date_published":"2025-08-10T08:00:00+0000"},{"title":"Q3 2025 Enforcement Update","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/q3-2025-enforcement-update/","summary":"\u003cp\u003eQ3 marked a sharp escalation in enforcement activity, with both the volume and value of fines rising dramatically compared to Q2. Regulators focused their firepower on high-impact, systemic misconduct while also streamlining smaller cases to clear backlogs more efficiently.\u003c/p\u003e\n\u003cp\u003eIn Q3, we saw 49 enforcement actions:\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/image1-4.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003cp\u003eAcross 5 jurisdictions:\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/graph2-small-1.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003cp\u003eTotaling $122.4 Million\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/image3-3.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003ch2 id=\"anzs-record-penalty-for-trade-reporting-failures\"\u003eANZ’s record penalty for trade reporting failures\u003c/h2\u003e\n\u003cp\u003eThe standout case of the quarter came from ASIC’s AUD $240 million penalty against \u003ca href=\"https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-201mr-anz-admits-widespread-misconduct-and-agrees-to-pay-240-million-in-penalties/\"\u003eANZ\u003c/a\u003e, with AUD $125 million tied to markets and trading misconduct (the AUD $115 million levied for \u003cem\u003e“retail matters”\u003c/em\u003e is excluded from this quarter’s data, given it is not connected with market conduct). The regulator found that ANZ had engaged in \u003cem\u003e“unconscionable conduct”\u003c/em\u003e when executing a $14 billion government bond deal, prioritising short-term profits over its duty to the Australian Office of Financial Management. By dumping large volumes of futures at pricing time, ANZ undermined its client – effectively, the taxpayer.\u003c/p\u003e\n\u003cp\u003eCompounding this was widespread misreporting of bond turnover, inflating trading volumes by tens of billions of dollars. That data was fed directly into the government’s dealer selection process, making this a distortion of market transparency at the expense of public trust.\u003c/p\u003e\n\u003cp\u003eASIC’s case cuts across execution standards, trade reporting accuracy, and fiduciary duty, all areas where firms rely on trade surveillance and best execution controls. This is a textbook case illustrating the cost of inadequate reporting frameworks.\u003c/p\u003e\n\u003ch2 id=\"the-cftcs-enforcement-sprint\"\u003eThe CFTC’s “Enforcement Sprint”\u003c/h2\u003e\n\u003cp\u003eIn Washington, Acting CFTC Chair Caroline Pham unveiled an \u003cem\u003e“enforcement sprint”;\u003c/em\u003e a tactical decision to fast-track resolution of low-level compliance cases, to clear the backlog of minor violations, and free up resources to deal with more severe market abuse cases.\u003c/p\u003e\n\u003cp\u003eThe strategy was visible in Q3 outcomes. Minor fines against banks for eComms surveillance failures (\u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/9114-25\"\u003eSantander\u003c/a\u003e, \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/9114-25\"\u003eBNY Mellon\u003c/a\u003e, \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/9114-25\"\u003eSMBC\u003c/a\u003e) and trade reporting errors (\u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/9114-25\"\u003eUS Bank\u003c/a\u003e, \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/9114-25\"\u003eCiti\u003c/a\u003e) were settled swiftly, with firms receiving mitigation credit for self-reporting. Citi’s penalty in particular was pared back significantly thanks to what the CFTC described as \u003cem\u003e“exemplary cooperation.”\u003c/em\u003e\u003c/p\u003e\n\u003ch2 id=\"drowning-in-false-positives-calibration-is-king\"\u003eDrowning in false positives: calibration is king\u003c/h2\u003e\n\u003cp\u003eIn September, FINRA fined \u003ca href=\"https://www.finra.org/sites/default/files/fda_documents/2020066741301%20Velocity%20Clearing%2C%20LLC%20CRD%20126588%20AWC%20vr.pdf\"\u003eVelocity Clearing\u003c/a\u003e $1 million for widespread surveillance failures.\u003c/p\u003e\n\u003cp\u003eBetween December 2019 and June 2023, its legacy surveillance platform generated nearly 150,000 alerts for spoofing, layering, cross trades, and wash trading. At around 38,000 alerts per year, this was more noise than any compliance team could realistically process. With no written escalation protocols in place, large volumes of alerts were closed without proper review.\u003c/p\u003e\n\u003cp\u003eVelocity replaced the system in mid-2023, only to repeat the same cycle on a larger scale. The new platform generated ~15.2 million alerts in under two years. More than 5.2 million went unreviewed, and a third were closed the same day they were opened, leaving no assurance that genuine red flags were addressed.\u003c/p\u003e\n\u003cp\u003eTechnology alone doesn’t solve the problem. As we highlighted in our \u003ca href=\"https://eflowglobal.com/insights/research/\"\u003e2024 surveillance trends report\u003c/a\u003e, regulators are increasingly zeroing in on how firms configure, calibrate, and monitor their surveillance frameworks — not just whether they have systems in place. The French AMF, for instance, flagged \u003cem\u003e“poorly calibrated tools”\u003c/em\u003e as a priority risk in its latest inspection program, while the FCA and ASIC have both penalised firms for ineffective thresholds and escalation protocols that allowed misconduct to slip through undetected.\u003c/p\u003e\n\u003ch2 id=\"market-gatekeeper-failures-persist-in-2025\"\u003eMarket gatekeeper failures persist in 2025\u003c/h2\u003e\n\u003cp\u003eRegulators remain unforgiving toward firms that neglect their role as market gatekeepers. After record penalties in 2024 (including ASIC’s AUS $4.995 million fine against Macquarie), the theme has continued into 2025.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-189mr-societe-generale-securities-australia-fined-3-88-million-for-market-gatekeeper-failures/\"\u003eSociété Générale Securities\u003c/a\u003e Australia was fined AUS $3.88 million for failing to prevent 33 manipulative client orders in electricity and wheat futures. Most trades were placed in the final two minutes of trading to manipulate settlement prices (“marking the close”). ASIC had repeatedly warned the firm in 2023 about volatility and suspicious activity, yet it failed to act.\u003c/p\u003e\n\u003cp\u003eGatekeeper responsibilities demand calibrated tools, resourced teams, and robust escalation frameworks. Without them, firms risk being next in line for enforcement.\u003c/p\u003e\n\u003ch2 id=\"fca-shows-tech-enabled-agility-in-enforcement\"\u003eFCA shows tech-enabled agility in enforcement\u003c/h2\u003e\n\u003cp\u003eThe FCA has been working toward faster, more decisive enforcement. That approach came into focus with its case against \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-fines-sigma-broking-limited-transaction-reporting-failures\"\u003eSigma Broking\u003c/a\u003e. An independent review in February 2025 found that 924,584 reports (nearly 100% of transactions handled between December 2018 and December 2023) were inaccurate.\u003c/p\u003e\n\u003cp\u003eDeficiencies stemmed from a misconfigured reporting system and weak oversight processes, leaving the FCA without reliable data to detect and investigate market abuse.\u003c/p\u003e\n\u003cp\u003eWhat makes the latest case notable is not only the scale of the misconduct but the speed with which the FCA brought it to resolution. From case opening to public sanction, the matter was concluded in just 16 months, less than half the 42-month average for cases closed in 2023/24.\u003c/p\u003e\n\u003cp\u003eCases such as these underscore the regulator’s growing ability to handle high-volume, technically complex cases with agility, supported by increasingly sophisticated surveillance and enforcement systems.\u003c/p\u003e\n\u003ch2 id=\"the-bottom-line\"\u003eThe bottom line\u003c/h2\u003e\n\u003cp\u003eThe pattern that continues to emerge is one of sharper contrasts: firms that cooperate and remediate quickly are rewarded, while those that ignore red flags or rely on unchecked processes are hit with escalating penalties.\u003c/p\u003e\n\u003cp\u003eLooking ahead to the remainder of 2025 and into 2026, firms should expect regulators to:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eTurn greater attention to market abuse and manipulation, now that smaller cases have been triaged and cleared.\u003c/li\u003e\n\u003cli\u003eEscalate penalties for gatekeeper failures, where firms neglect frontline responsibilities in monitoring, escalation, or reporting.\u003c/li\u003e\n\u003cli\u003eDemand demonstrable evidence that surveillance systems are calibrated, resourced, and effectively detecting misconduct.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eEnforcement is becoming faster, more unforgiving, and more data-driven, and the firms that fail to adapt risk being next in line.\u003c/p\u003e\n\u003cp\u003eFor more information on how eflow’s regulatory technology can help your firm to mitigate these risks, \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook your no-obligation consultation call today\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-07-10T08:42:00+0000"},{"title":"Top three compliance challenges for CFD Brokers in 2025 and beyond","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/top-three-compliance-challenges-for-cfd-brokers-in-2025-and-beyond/","summary":"\u003cp\u003eContracts for Difference (CFDs) remain one of the most heavily scrutinised areas of retail trading. Regulators globally are sharpening their focus on the risks these products pose and the way firms manage them in practice. The themes are consistent: protect investors, prevent market abuse, and build operational resilience. In this blog, we break down how those priorities are playing out across supervision and what CFD brokers should be doing to stay ahead.\u003c/p\u003e\n\u003ch2 id=\"balancing-investor-protection-with-growth\"\u003eBalancing investor protection with growth\u003c/h2\u003e\n\u003cp\u003eRegulators worldwide want retail customers to understand the risks of CFD trading. While frameworks differ - Consumer Duty (UK), Design and Distribution Obligations (Australia), and ESMA’s product governance/appropriateness rules (EU) - they all circle the same concerns: target the right customers, ensure they understand the risks, and deliver fair value.\u003c/p\u003e\n\u003ch3 id=\"know-your-target-market\"\u003eKnow your target market\u003c/h3\u003e\n\u003cp\u003eThe era of “anyone who can tolerate risk” is over. Brokers must be clear on who the product is for and who it is not. The FCA stresses “only targeting customers who can absorb losses.” ESMA requires firms to define and enforce a clear target market. ASIC expects a narrow, defensible target market determination (TMD). Recent ASIC reviews have criticised firms for having over-broad determinations, and failing to demonstrate “reasonable steps” to ensure product distribution is consistent with the TMD.\u003c/p\u003e\n\u003ch3 id=\"test-for-genuine-understanding\"\u003eTest for genuine understanding\u003c/h3\u003e\n\u003cp\u003eRegulators want evidence that customers grasp leverage, margin calls, short selling, as well as the generally elevated likelihood of loss. ESMA expects stronger appropriateness testing (cool-offs, rotating question sets, defensible pass marks). MAS’s Customer Knowledge Assessment applies similar pressure; firms must introduce meaningful friction for borderline clients, and allow no trading until tests are passed.\u003c/p\u003e\n\u003ch3 id=\"guardrails-and-risk-warnings\"\u003eGuardrails and risk warnings\u003c/h3\u003e\n\u003cp\u003eConsumers must fully understand and accept the risks they face trading CFDs. Part of this is covered by the aforementioned testing, the rest by risk warnings. This is where many firms are falling down. ESMA’s review found risk warnings missing, non-compliant, or hidden under dropdowns or in small print.\u003c/p\u003e\n\u003ch4 id=\"evolving-business-models-new-conduct-risks\"\u003eEvolving business models, new conduct risks\u003c/h4\u003e\n\u003cp\u003eFrom fractional shares and new asset classes to gamified apps and zero-commission offers, innovation raises fresh supervisory questions. Brokers must design for younger, less experienced investors and be transparent on costs and risks.\u003c/p\u003e\n\u003cp\u003eRegulators are scrutinising social posts and influencer marketing to ensure promotions are balanced, prominent, and firm-specific.\u003c/p\u003e\n\u003ch4 id=\"finfluencers\"\u003e\u003cstrong\u003eFinfluencers\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003e\u003cstrong\u003e37% of US Gen Z retail investors\u003c/strong\u003e cite influencers as a major factor in their investment decisions (\u003ca href=\"https://www.iosco.org/library/pubdocs/pdf/IOSCOPD775.pdf\"\u003eIOSCO\u003c/a\u003e). The FCA has begun \u003ca href=\"https://www.fca.org.uk/news/press-releases/finfluencers-charged-promoting-unauthorised-trading-scheme\"\u003etargeting\u003c/a\u003e unlawful promotions by ‘finfluencers’, particularly in high-risk areas like CFDs. FINRA\u0026rsquo;s penalties, exemplified by the M1 Finance \u003ca href=\"https://www.finra.org/media-center/newsreleases/2024/finra-fines-m1-finance-850000-violations-regarding-use-social-media\"\u003ecase\u003c/a\u003e, show growing scrutiny of influencer-led marketing campaigns.\u003c/p\u003e\n\u003ch2 id=\"market-abuse-and-financial-crime\"\u003eMarket abuse and financial crime\u003c/h2\u003e\n\u003cp\u003eCFDs give leveraged access to price-sensitive assets with fast onboarding, making them an attractive target for insiders, manipulators, and mule networks. Supervisors expect firms to spot it, stop it, and report it, and to evidence that controls work.\u003c/p\u003e\n\u003ch3 id=\"where-are-the-risks-showing-up\"\u003eWhere are the risks showing up?\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eOpaque flows (OOAAs):\u003c/strong\u003e Obfuscated overseas aggregated accounts hide ultimate beneficial owners and can reintroduce previously off-boarded clients.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eCopy and social trading:\u003c/strong\u003e IOSCO now frames copy trading as a regulated activity. Firms must vet “signal providers,” monitor performance claims, and ensure suitability checks for copiers.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eSingle-stock and illiquid assets:\u003c/strong\u003e Insider risk is highest here. Manipulation often involves “narrowing the spread,” where direct market access (DMA) orders improve the best bid/offer and are cancelled before execution, while the trader profits in the related CFD.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eDMA + cross-product links:\u003c/strong\u003e the order-book nudge happens via DMA in the underlying asset, while the profit is crystallised in CFDs, sometimes at a different venue/broker.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"what-are-brokers-finding-difficult\"\u003eWhat are brokers finding difficult?\u003c/h3\u003e\n\u003cp\u003eOur survey, conducted as part of our Global Trends in Trade Surveillance and Market Abuse report, highlights two top challenges for CFD brokers: managing false positives (23%) and integrating trade with eComms surveillance (23%). False positives sometimes spike when generic rules ignore CFD microstructure (illiquidity, spread gaps, news), lack cross-product context (CFD leg without the cash/DMA hedge), and suffer from messy data. Couple that with missing context, where firms don’t always connect CFDs to the underlying trades or link trading activity with communications data, and the noise multiplies.\u003c/p\u003e\n\u003cp\u003eThe fix is less about generating extra alerts and more about generating smarter ones. That means setting thresholds that reflect instrument liquidity and client profiles, enriching scenarios with event and market context, and linking CFD trades with underlying activity and communications data. Done well, this reduces noise without blunting the firm’s ability to detect genuine abuse.\u003c/p\u003e\n\u003ch3 id=\"what-does-good-look-like\"\u003eWhat does “good” look like?\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eSurveillance that proves itself:\u003c/strong\u003e Clean data pipelines, model testing/tuning, cross-product coverage, and timely, high-quality STORs.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eRisk assessment aligned to reality:\u003c/strong\u003e Cover all asset classes and execution methods, and explicitly include behaviours like spread-narrowing.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eEnd-to-end reporting:\u003c/strong\u003e Reconcile trade capture through to repository acknowledgements, and investigate breaks. ESMA and ASIC are raising expectations here.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eSocial features under control:\u003c/strong\u003e KYC “lead traders,” monitor correlated follower profit and loss, and switch off copying where red flags appear.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"operational-resilience-whats-new-whats-specific-to-cfds\"\u003eOperational resilience: what’s new, what’s specific to CFDs\u003c/h2\u003e\n\u003cp\u003eGlobal regulators have now hardwired resilience obligations into law, with CFD brokers firmly in scope. Their heavy reliance on trading platforms, market data, and outsourced tech providers makes operational resilience especially critical.\u003c/p\u003e\n\u003ch3 id=\"whats-required\"\u003eWhat’s required?\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eIdentify and map important business services.\u003c/strong\u003e Go beyond high-level labels, breaking down trading, pricing, onboarding, and withdrawals end-to-end, linking them to the systems and people that support them. Recovery Time Objectives (RTOs) and Recovery Point Objectives (RPOs) should reflect real-world trading conditions.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eTest resilience in practice.\u003c/strong\u003e That means running scenario tests and failure simulations (e.g. data feed outages, platform downtime, cloud failure) and generating management information that demonstrates lessons learned and changes made.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eStrengthen third-party oversight.\u003c/strong\u003e Regulators expect live registers of all ICT providers, contracts that include audit and exit rights, evidence of resilience testing by vendors, and scrutiny of concentration risks (e.g., dependence on a platform provider).\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eBe incident-ready.\u003c/strong\u003e Plans must deliver timely regulatory reporting, tested workarounds, and continuity arrangements that adapt as your services and vendor stack change.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe bottom line is that, for CFD brokers, resilience is now audited through your vendors as much as through you. You must prove that you can trade, reconcile, and pay out under stress, even if a key platform fails.\u003c/p\u003e\n\u003ch2 id=\"our-experience-of-working-with-cfd-brokers\"\u003eOur experience of working with CFD Brokers\u003c/h2\u003e\n\u003cp\u003eeflow Global has delivered tried-and-tested surveillance systems for more than 25 CFD Brokers in recent years. Our team’s deep experience of working with these types of firms means that we can help CFD Brokers to join up their trade and eComms data, reduce the noise caused by false positives, and evidence outcomes, with operational resilience built in. If you’re ready to turn these themes into measurable improvements to your regulatory strategy, we’re here to help - \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a consultation with the team today\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-10-09T08:00:00+0000"},{"title":"eflow launches advanced crypto surveillance tool and forges ahead with leadership expansion","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-global-launches-advanced-crypto-surveillance-tool-and-forges-ahead-with-leadership-expansion/","summary":"\u003cp\u003e\u003cstrong\u003eLondon; 9th September 2025:\u003c/strong\u003e With regulatory demands on financial institutions reaching unprecedented levels in 2025 – including intensified scrutiny on market abuse and electronic communications surveillance – Regtech leader eflow has accelerated its growth by appointing strategic leadership hires and launching a series of AI-driven product enhancements.\u003c/p\u003e\n\u003cp\u003eIn the last 12 months, eflow has increased its client base by 26%, and now supports over 140 global financial institutions with more than 230 active deployments of its technology worldwide. This growth underscores the urgent demand for sophisticated regulatory technology that addresses evolving recordkeeping and surveillance requirements as set out by financial regulators on a global scale.\u003c/p\u003e\n\u003ch4 id=\"ai-and-crypto-enhancements-strengthen-compliance-capabilities\"\u003eAI and crypto enhancements strengthen compliance capabilities\u003c/h4\u003e\n\u003cp\u003eeflow’s award-winning \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eTZTS Trade Surveillance technology\u003c/a\u003e now includes new functionality that enables firms to surveil crypto asset trading activity alongside traditional asset classes. Crypto assets have unique regulatory characteristics due to the volatility, liquidity and volume of trades associated with them. To help firms combat these challenges and comply with regulations such as MiCA, TZTS has new parameter settings that are specifically configured for digital assets, alongside offering fully integrated crypto data enrichment.\u003c/p\u003e\n\u003cp\u003eThese enhancements also align with eflow’s commitment to incorporate AI-driven tools into its technology. Following the announcement of its \u003ca href=\"https://eflowglobal.com/eflow-global-and-dhi-partner-to-transform-market-abuse-detection-through-ai-powered-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003epartnership with AI-specialist DHI earlier this year\u003c/a\u003e, eflow has now integrated the latest AI tooling into TZTS to provide firms with real-time risk analysis of news alerts and their potential impact on market movements.\u003c/p\u003e\n\u003ch4 id=\"new-strategic-leadership-appointments\"\u003eNew strategic leadership appointments\u003c/h4\u003e\n\u003cp\u003eTo fuel its ambitious growth plans, eflow has made a series of high-profile appointments to its senior management team. Kristian Frost Pedersen joins as Chief Financial Officer, bringing extensive financial leadership experience spanning the fintech, augmented reality and analytics industries, along with a proven ability to scale high-growth businesses.\u003c/p\u003e\n\u003cp\u003eRoss Pearson, Chief Technology Officer at DHI, will also be joining the eflow team as Head of AI. He will draw on his 20+ years of experience in digital infrastructure and new technologies to accelerate eflow’s AI strategy, including the development of new, practical functionality that will enable firms to identify their risk more quickly and efficiently.\u003c/p\u003e\n\u003cp\u003eJoining as Chief Growth Officer, Michael De Jongh brings deep expertise in SaaS, AI-driven platforms, mobile payments, and enterprise partnerships - critical to accelerating eflow’s commercial expansion. Rob Slowen also joins as Operational and Strategy Advisor, leveraging over 20 years of experience scaling SME and SaaS companies, including leading a tech marketplace through 20× growth prior to a successful private equity exit.\u003c/p\u003e\n\u003cp\u003eBen Parker, CEO at eflow, commented: “Our new leadership appointments mark a pivotal moment for eflow as we accelerate growth in a rapidly evolving regulatory landscape. With Kristian, Ross, Michael, and Rob on board, we’re combining deep industry expertise and strategic vision to drive innovation and deliver the AI-powered compliance solutions that financial firms urgently need. This team will help us stay ahead of regulatory complexity and empower our clients to turn compliance challenges into competitive advantage.”\u003c/p\u003e\n\u003ch5 id=\"strategic-partnerships-enhancing-compliance-capabilities\"\u003eStrategic partnerships enhancing compliance capabilities\u003c/h5\u003e\n\u003cp\u003eeflow continues to strengthen its ecosystem through key partnerships with industry leaders. Collaborations with \u003ca href=\"https://eflowglobal.com/eflow-global-and-dhi-partner-to-transform-market-abuse-detection-through-ai-powered-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eDHI\u003c/a\u003e and \u003ca href=\"https://exante.eu/uk/press/news/2597-eflow-global-and-exante-partner-to-tackle-market-abuse-through-enhanced-trade-surveillance-data/\" target=\"_blank\" rel=\"noopener\"\u003eEXANTE\u003c/a\u003e have further enhanced eflow’s trade surveillance capabilities. Additionally, eflow\u0026rsquo;s partnership with \u003ca href=\"https://sterlingtradingtech.com/news-insights/sterling-trading-tech-and-eflow-global-launch-webinar-series-on-risk-management-in-volatile-markets\" target=\"_blank\" rel=\"noopener\"\u003eSterling Trading Tech\u003c/a\u003e has led to the launch of a joint webinar series focused on risk management in volatile markets, offering firms practical insights into navigating market uncertainty.\u003c/p\u003e\n\u003cp\u003eOver the next few months, eflow will showcase its solutions at major industry events, including the NSCP Annual Conference and the FINRA Small Firms Conference in October, and XLoD Global London in November.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n","date_published":"2025-09-09T08:06:00+0000"},{"title":"High-impact market manipulation tactics in the U.S.: Red flags for modern surveillance teams","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/high-impact-market-manipulation-tactics-red-flags-for-modern-surveillance-teams/","summary":"\u003cp\u003eIn one of the most consequential enforcement actions in recent memory, JPMorgan Chase was fined over $920 million by the Commodity Futures Trading Commission for sustained market manipulation across U.S. Treasury and precious metals markets. The case, settled in 2020, remains a benchmark in regulatory enforcement, with the highest-ever restitution ($311.7 million), disgorgement ($172 million), and civil monetary penalty ($436.4 million) in any spoofing action to date.\u003c/p\u003e\n\u003cp\u003eWhile the scale was exceptional, the tactics were not. Spoofing, layering, wash trading, and cross-product abuse remain active threats, and outdated surveillance systems continue to miss them. These tactics distort price formation, undermine market fairness, and often evade detection due to rigid, rule-based frameworks.\u003c/p\u003e\n\u003cp\u003eHowever, regulators are no longer accepting that gap. With billions in recent enforcement actions, the \u003cstrong\u003eSEC and CFTC have made it clear\u003c/strong\u003e: firms must identify and mitigate abuse proactively.\u003c/p\u003e\n\u003cp\u003eIn this article, we examine modern examples of market manipulation, the red flags compliance teams need to recognize, and why legacy tools no longer meet today’s regulatory demands for speed, intelligence, and accountability.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eWhat is market manipulation, and why it’s evolving\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eBefore examining how to monitor and flag \u003ca href=\"https://secwhistlebloweradvocate.com/sec-violations/market-manipulation/\"\u003emarket manipulation\u003c/a\u003e, it’s essential to define it. While the core concept is consistent, different U.S. regulatory bodies interpret and address manipulation slightly differently.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSEC\u003c/strong\u003e\u003cbr\u003eSection 9(a)(2) of the Securities Exchange Act (1934) prohibits transactions that create a false or misleading appearance of active trading or affect prices. Rule 10b-5 prohibits fraud and deception in connection with the purchase or sale of securities.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eCFTC\u003c/strong\u003e\u003cbr\u003eSection 6(c) of the Commodity Exchange Act prohibits fraudulent or manipulative practices in commodities and derivatives.\u003c/p\u003e\n\u003cp\u003e**FINRA\u003cbr\u003e**Rule 2020 prohibits manipulative, deceptive, or fraudulent conduct by member firms and associated persons.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSummary\u003c/strong\u003e\u003cbr\u003eBetween these overlapping rules and regulatory bodies, manipulation is broadly defined to cover a wide range of asset classes and trading behaviors. Crucially, regulators don’t need proof that a price was actually moved - intent to mislead is sufficient to trigger enforcement.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eHow tactics have evolved with algorithmic and high-frequency trading\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe use of algorithms and high-frequency trading (HFT) has significantly accelerated the pace and complexity of market manipulation. This area continues to evolve, challenging regulators and surveillance teams to detect illegal activity more effectively and earlier.\u003c/p\u003e\n\u003cp\u003eSome of the more common tactics seen today include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eSpoofing\u003c/strong\u003e: placing and then cancelling large orders to mislead the market\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eLayering\u003c/strong\u003e: submitting orders at multiple price levels to distort depth or liquidity\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eMomentum ignition\u003c/strong\u003e: triggering short-term price moves to capitalise on volatility\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eQuote stuffing\u003c/strong\u003e: flooding the order book with orders to confuse competitors or gain a latency edge\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eMany manipulative trades can mimic legitimate activity (at least in isolation). This undermines traditional triggers and makes abuse significantly more challenging to detect when using static, rules-based surveillance.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eWhy surveillance tools built for 2015 aren’t fit for 2025\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eLegacy monitoring tools are built around static rules and fixed thresholds, whereas modern systems adapt to market conditions and trading context. As a result, outdated tools often:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eGenerate excessive false positives, overwhelming compliance teams with low-value alerts\u003c/li\u003e\n\u003cli\u003eStruggle to detect intent-based patterns or reconstruct trader motivations\u003c/li\u003e\n\u003cli\u003eLack of integration across asset classes, data types, and execution venues\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIgnorance of sophisticated market abuse is not a valid defense. Regulators expect firms to be context-aware, to operate in real time, and to use dynamic detection models that can identify examples of market manipulation across fragmented markets.\u003c/p\u003e\n\u003ch2 id=\"examples-of-market-manipulation\"\u003e\u003cstrong\u003eExamples of market manipulation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eExamples of market manipulation are increasingly sophisticated and often embedded within high-volume, seemingly legitimate trading activity. For surveillance and compliance professionals, understanding these behaviors is essential to identifying them in real time. Below are four high-risk manipulation types, along with practical detection insights.\u003c/p\u003e\n\u003ch3 id=\"spoofing-and-layering\"\u003e\u003cstrong\u003eSpoofing and Layering\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eSpoofing involves placing large, non-genuine orders with the intention of cancelling them before execution, thereby misleading other market participants about demand or supply with the intent to gain price improvement. Layering is a more advanced variant, where traders place multiple spoof orders at different price levels to exaggerate market depth.\u003c/p\u003e\n\u003cp\u003eThis was a notable regulatory precedent in the $920 million \u003ca href=\"https://www.investmentnews.com/regulation-and-legislation/jpmorgan-pays-920-million-to-settle-spoofing-claims/197541\"\u003esettlement with JPMorgan Chase\u003c/a\u003e in 2020, which involved systematic spoofing in U.S. Treasury and precious metals markets. The CME and SEC continue to penalize firms for engaging in similar behaviors.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eRed flags include:\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSpikes in the order-to-cancel ratio\u003c/li\u003e\n\u003cli\u003ePrice reversals following rapid order withdrawals\u003c/li\u003e\n\u003cli\u003eRepeated patterns with little or no execution across venues\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThese tactics unfold in milliseconds, requiring real-time monitoring and data at the timestamp level. Static, rules-based systems often fail to identify spoofing without advanced behavioral analysis.\u003c/p\u003e\n\u003ch3 id=\"wash-trading\"\u003e\u003cstrong\u003eWash Trading\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWash trading involves buying and selling the same security simultaneously between accounts controlled by the same individual or entity, to create the illusion of market activity or interest.\u003c/p\u003e\n\u003cp\u003eThis tactic is especially prevalent in crypto markets and thinly traded microcap equities. In one U.S. case, a trader used multiple shell accounts to generate over $10 million in fake volume in a low-float stock, boosting visibility and attracting retail investors.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eRed flags include:\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eMatched buy/sell orders with identical prices and volumes\u003c/li\u003e\n\u003cli\u003eTransactions between accounts with shared ownership or control\u003c/li\u003e\n\u003cli\u003eAbnormal trading volume with no relevant news or price movement\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eDetecting wash trades requires cross-account monitoring and visibility into beneficial ownership, which many legacy systems lack.\u003c/p\u003e\n\u003ch3 id=\"cross-product-manipulation\"\u003e\u003cstrong\u003eCross-Product Manipulation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThis scheme involves manipulating one product to influence the price of another, typically a related derivative or index-linked instrument. For example, trading commodity futures to influence the NAV of an ETF.\u003c/p\u003e\n\u003cp\u003eA historical example is the LIBOR scandal, in which rate submissions were manipulated to benefit derivative positions. Today, surveillance teams are more likely to encounter cross-market strategies designed to move one leg of a trade to gain an advantage elsewhere.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eRed flags include:\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSynchronized activity across products or markets\u003c/li\u003e\n\u003cli\u003eUnusual trades in one instrument that lead to price movement in a related asset\u003c/li\u003e\n\u003cli\u003eExecution timing that appears designed to anchor prices\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eDetection requires \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003emulti-asset surveillance\u003c/a\u003e with time-synchronized data across markets.\u003c/p\u003e\n\u003ch3 id=\"marking-the-close\"\u003e\u003cstrong\u003eMarking the Close\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThis strategy involves placing large trades just before market close (generally in the auction period) to influence the official closing price, which is often used to enhance portfolio valuations or trigger settlement thresholds.\u003c/p\u003e\n\u003cp\u003eIt’s especially problematic in illiquid securities, where relatively small trades can have a significant impact on prices. Traders may attempt to “mark up” positions at quarter-end to improve performance metrics.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eRed flags include:\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSudden volume or volatility spikes in the final minutes of trading\u003c/li\u003e\n\u003cli\u003eRepeated use of aggressive orders near the close by the same entity\u003c/li\u003e\n\u003cli\u003eDeviations from typical historical closing behavior\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eEffective detection requires time-of-day aware surveillance and pattern recognition against historical benchmarks.\u003c/p\u003e\n\u003ch2 id=\"consequences-for-firms-who-miss-the-signs\"\u003e\u003cstrong\u003eConsequences for firms who miss the signs\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eA quick glance at recent financial headlines reveals the consequences for firms that fail to detect clear examples of market manipulation. The financial impact can be significant, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eRegulatory fines from the SEC, CFTC, and FINRA, ranging from hundreds of thousands to hundreds of millions of dollars\u003c/li\u003e\n\u003cli\u003eRestitution and disgorgement payments that may exceed the fines themselves, often involving compensation to clients or counterparties\u003c/li\u003e\n\u003cli\u003eCivil lawsuits or class actions, resulting in long-term reputational and financial damage\u003c/li\u003e\n\u003cli\u003eThe cost of remediation, including technology upgrades, legal representation, and third-party compliance reviews\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIn many cases, the reputational damage can be more severe than the monetary penalties. Consequences include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eNegative media coverage\u003c/li\u003e\n\u003cli\u003eLoss of client trust and diminished investor confidence\u003c/li\u003e\n\u003cli\u003eImpact on stock price, fund flows, or new business development\u003c/li\u003e\n\u003cli\u003eBeing held up by regulators as a case study to deter others\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eOperationally, firms penalized for surveillance failures often face:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eAdditional regulatory audits, inspections, or system overhauls\u003c/li\u003e\n\u003cli\u003eRestructuring of compliance functions, often increasing headcount and cost\u003c/li\u003e\n\u003cli\u003eManual backlog reviews that disrupt day-to-day operations\u003c/li\u003e\n\u003cli\u003ePressure for accelerated investment in surveillance tools, affecting near-term budgets\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eA frequently overlooked consequence is the cultural toll. Firms under investigation may experience:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eBreakdowns in internal trust between the front office, risk, and compliance\u003c/li\u003e\n\u003cli\u003eMicromanagement or overcorrection following enforcement\u003c/li\u003e\n\u003cli\u003eBurnout or attrition within surveillance teams\u003c/li\u003e\n\u003cli\u003eA shift from proactive compliance to a fear-driven culture, hindering long-term goals\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe bottom line is that regulators are no longer reactive. Today’s enforcement is as close to real-time as possible (although this is unlikely to be fully achieved), data-driven, and increasingly zero-tolerance. Scrutiny has expanded beyond Tier 1 institutions to include mid-market and regional firms, and expectations now include cross-market, multi-asset, and communications surveillance as standard.\u003c/p\u003e\n\u003ch2 id=\"why-traditional-surveillance-systems-miss-these-tactics\"\u003e\u003cstrong\u003eWhy traditional surveillance systems miss these tactics\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs regulatory expectations continue to rise, investment in modern surveillance technology is no longer optional; it’s critical. Firms reluctant to upgrade must understand why traditional surveillance systems often fail to detect modern market abuse.\u003c/p\u003e\n\u003cp\u003eKey limitations include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eOver-reliance on static, rules-based alerts that can’t adapt to evolving tactics\u003c/li\u003e\n\u003cli\u003eLack of contextual awareness, such as cross-asset or cross-market logic\u003c/li\u003e\n\u003cli\u003eInability to consolidate data from multiple venues, systems, and asset classes\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThese weaknesses result in:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eAlert fatigue, where high volumes of false positives reduce the effectiveness of compliance teams\u003c/li\u003e\n\u003cli\u003eMissed instances of market abuse, particularly those that unfold quickly or span multiple instruments\u003c/li\u003e\n\u003cli\u003eHigh operational cost, both in terms of staff workload and potential regulatory risk\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWe know that traditional tools were not built for the complexity of today’s markets. They can’t detect manipulative patterns that occur in milliseconds, correlate across venues, or evaluate unstructured data, such as communications.\u003c/p\u003e\n\u003cp\u003eUltimately, cutting-edge surveillance platforms should be seen as an investment, not an expense. One that protects your firm, streamlines operations, and positions you to meet regulatory standards with confidence.\u003c/p\u003e\n\u003ch2 id=\"the-role-of-advanced-surveillance-in-tackling-modern-manipulation\"\u003e\u003cstrong\u003eThe role of advanced surveillance in tackling modern manipulation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eModern market manipulation is faster, more complex, and often nearly indistinguishable from legitimate trading, unless your surveillance system can keep up. Firms now require advanced solutions powered by AI, machine learning, and contextual analytics to detect intent, not just activity.\u003c/p\u003e\n\u003cp\u003eUnlike static, rules-based systems, intelligent surveillance platforms utilize dynamic parameters, adjusting thresholds in response to market conditions, trader behavior, and instrument volatility. This significantly reduces false positives, ensuring that alerts are more meaningful.\u003c/p\u003e\n\u003cp\u003eTo remain compliant and proactive, firms should ensure their systems can:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eAdapt in real time to unusual price movements and spoofing patterns\u003c/li\u003e\n\u003cli\u003eIngest and analyse voice, chat, and email data alongside trade data\u003c/li\u003e\n\u003cli\u003eCorrelate cross-venue and cross-asset behavior within milliseconds\u003c/li\u003e\n\u003cli\u003ePrioritize alert quality, reducing compliance fatigue and missed risk\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIn the modern era, post-trade reviews alone are no longer enough. With real-time manipulation impacting prices and benchmarks in seconds, live monitoring is essential for mitigating risk before it escalates.\u003c/p\u003e\n\u003cp\u003eThis is precisely where eflow’s surveillance platform stands out, offering dynamic thresholds, (near) real-time cross-asset monitoring, and integrated eComms analysis in a single, scalable solution. Designed for today’s regulatory complexity, it helps firms stay ahead of abuse and ahead of enforcement.\u003c/p\u003e\n\u003ch2 id=\"why-eflow-is-built-for-the-next-era-of-surveillance\"\u003e\u003cstrong\u003eWhy eflow is built for the next era of surveillance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eToday’s compliance teams are expected to detect fast-moving market abuse, reduce false positives, and keep pace with evolving regulatory standards, all without expanding headcount or budget. eflow was explicitly designed to meet this pressure head-on.\u003c/p\u003e\n\u003cp\u003eUnlike legacy systems built around static infrastructure, eflow offers a platform-based architecture that delivers:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eFast, unified updates across all client environments - ideal for keeping pace with changing SEC, CFTC, and FINRA regulations\u003c/li\u003e\n\u003cli\u003eScalable deployment, ensuring firms of all sizes, from regional brokers to global asset managers, get the functionality they need\u003c/li\u003e\n\u003cli\u003eCloud-native design, supporting rapid onboarding, integration, and low-maintenance scalability\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIts modular approach allows surveillance to be tailored to specific risk types, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSpoofing and layering\u003c/li\u003e\n\u003cli\u003eWash trades and cross-product manipulation\u003c/li\u003e\n\u003cli\u003eInsider trading and best execution breaches\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eTechnically, eflow’s platform incorporates dynamic parameters - adaptive thresholds that adjust according to trade volumes, market volatility, and the nuances of different asset classes. This means:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eFewer false positives\u003c/li\u003e\n\u003cli\u003eMore accurate alerts\u003c/li\u003e\n\u003cli\u003eGreater trust in the system’s output\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eBeyond the technology, eflow delivers a hands-on support model, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eDedicated account managers\u003c/li\u003e\n\u003cli\u003eStructured onboarding and training\u003c/li\u003e\n\u003cli\u003eProactive performance monitoring\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eFirms across the UK, EU, and the US are leveraging eflow’s dynamic surveillance to reduce alert fatigue and surface meaningful compliance risk before regulators do.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eMarket manipulation is no longer a theoretical risk but a daily reality. Tactics like spoofing, layering, wash trading, and cross-product abuse have become more sophisticated, harder to detect, and more damaging when missed. Regulatory pressure is also rising, and surveillance teams are expected not only to flag suspicious behavior, but to do so with precision, context, and speed.\u003c/p\u003e\n\u003cp\u003eAs we’ve explored through these examples of market manipulation, legacy systems are no longer equipped to handle the complexity of today’s trading environment. Firms now need intelligent, adaptive solutions that reduce alert fatigue and bring real compliance risks to the surface before regulators do.\u003c/p\u003e\n\u003cp\u003eeflow’s platform was built for precisely this challenge: smarter surveillance, modular flexibility, dynamic thresholds, and end-to-end support to help your team stay ahead of abuse and enforcement alike.\u003c/p\u003e\n\u003cp\u003eIf you’re unsure whether your current system is flagging the right activity or missing red flags entirely, \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a consultation\u003c/a\u003e. We’ll show you how firms like yours are using eflow to stay one step ahead.\u003c/p\u003e\n","date_published":"2025-04-09T10:10:41+0000"},{"title":"CySEC’s new sanctions regime: What investment firms must do to stay compliant","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/cysecs-new-sanctions-regime/","summary":"\u003cp\u003eThe Cyprus Securities and Exchange Commission (CySEC) is moving to significantly strengthen its sanctions enforcement regime, and CFD brokers are directly in scope. With CySEC’s new framework entering into force on 1st August 2025, supervised entities must ensure their sanctions controls are fit for purpose and capable of detecting and preventing breaches. Supervised entities include:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003eCypriot Investment Firms\u003c/li\u003e\n\u003cli\u003eAdministrative Service Providers\u003c/li\u003e\n\u003cli\u003eUCITS Management Companies\u003c/li\u003e\n\u003cli\u003eInternally Managed UCITS\u003c/li\u003e\n\u003cli\u003eAlternative Investment Fund Managers\u003c/li\u003e\n\u003cli\u003eInternally Managed AIFs\u003c/li\u003e\n\u003cli\u003eInternally Managed AIFLNPs\u003c/li\u003e\n\u003cli\u003eSpecial Purpose Entities managing AIFLNPs\u003c/li\u003e\n\u003cli\u003eSub-threshold AIFMs under Law 81(I)/2020\u003c/li\u003e\n\u003cli\u003eCrypto-Asset Service Providers\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003eCypriot Investment Firms (CIFs) offering contracts for difference (CFDs) to retail clients should take particular notice. Given their speed and cross-border nature, CFDs present an attractive channel for sanctioned individuals seeking synthetic exposure to restricted markets.\u003c/p\u003e\n\u003cp\u003eIn the following sections, we outline the key provisions and provide a practical blueprint for compliance.\u003c/p\u003e\n\u003ch3 id=\"the-three-laws-at-a-glance\"\u003eThe three laws at a glance\u003c/h3\u003e\n\u003cp\u003e\u003cstrong\u003e1. Criminalisation of sanctions breaches:\u003c/strong\u003e\u003csup\u003e[1]\u003c/sup\u003e Implements EU Directive 2024/1226, making it a criminal offence to:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003eProvide funds or resources to designated persons\u003c/li\u003e\n\u003cli\u003eFail to freeze sanctioned assets\u003c/li\u003e\n\u003cli\u003eBreach trade/service bans or licence terms\u003c/li\u003e\n\u003cli\u003eFacilitate sanctioned individuals’ entry or transit\u003c/li\u003e\n\u003cli\u003eConceal ownership/control or circumvent sanctions\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003e\u003csup\u003e[1]\u003c/sup\u003e These offences apply inside and outside Cyprus if there’s a Cypriot link.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e2. National Sanctions Implementation Unit (NSIU):\u003c/strong\u003e The NSIU operates within the Ministry of Finance to coordinate sanctions implementation, process licence applications, issue guidance, and impose administrative fines, alongside enforcement by CySEC.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e3. Whistleblower protection for sanctions breaches:\u003c/strong\u003e Expands whistleblowing laws to cover sanctions violations, including attempts and facilitation. Firms must protect whistleblowers and handle disclosures appropriately.\u003c/p\u003e\n\u003ch3 id=\"why-cfd-brokers-are-in-the-crosshairs\"\u003eWhy CFD brokers are in the crosshairs\u003c/h3\u003e\n\u003cp\u003eCFD brokers sit at the intersection of multiple Financial Action Task Force (FATF) red flags: rapid, digital onboarding; high-velocity, cross-border trading; and reliance on affiliate, introducing brokers (IB), and white-label distribution chains. These models create “intermediary chains” - precisely the structures \u003ca href=\"https://www.fatf-gafi.org/content/dam/fatf-gafi/reports/Complex-PF-Sanctions-Evasions-Schemes.pdf.coredownload.inline.pdf?utm_source=chatgpt.com\" target=\"_blank\" rel=\"noopener\"\u003eFATF warns are exploited to obscure beneficial ownership, bridge jurisdictional gaps, and evade sanctions\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eAdd leverage, synthetic exposure to restricted markets, and the growing role of crypto funding, and the risk profile intensifies. This doesn’t mean CFD brokers are inherently non-compliant, but it does mean the sector must adopt enhanced controls if it wants to stay ahead of sanctions evaders.\u003c/p\u003e\n\u003ch3 id=\"sanctions-compliance-checklist\"\u003eSanctions compliance checklist\u003c/h3\u003e\n\u003cp\u003eCySEC’s circular sets out clear operational priorities for supervised entities. The focus is on tightening controls to detect, escalate and report sanctions breaches quickly and effectively.\u003c/p\u003e\n\u003ch4 id=\"onboarding-and-screening\"\u003eOnboarding and screening\u003c/h4\u003e\n\u003cul\u003e\n\u003cli\u003eScreen customers, beneficial owners, intermediaries against EU/UN/US sanctions lists before onboarding.\u003c/li\u003e\n\u003cli\u003eEmbed risk-based continuous screening. Trigger fresh checks when ownership, jurisdiction, or payment channels change.\u003c/li\u003e\n\u003cli\u003eApply screening to all relevant relationships: counterparties, service providers, and introducers, not just direct applicants.\u003c/li\u003e\n\u003cli\u003eMaintain evidence of screening results, including false positives in management logs.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch4 id=\"transaction-monitoring\"\u003eTransaction monitoring\u003c/h4\u003e\n\u003cul\u003e\n\u003cli\u003eMonitor \u003cem\u003eall\u003c/em\u003e financial flows (deposits, withdrawals, payments, trades, transfers) in real time or near real time where activity volume is high (e.g. CFDs).\u003c/li\u003e\n\u003cli\u003eDetect direct and indirect exposure including via ownership/control structures, intermediaries, and proxy arrangements.\u003c/li\u003e\n\u003cli\u003eBlock and flag transactions involving prohibited goods, services, or crypto-assets covered by EU restrictive measures.\u003c/li\u003e\n\u003cli\u003eIntegrate sanctions monitoring into AML and market abuse surveillance, so potential breaches are reviewed in the wider financial crime context.\u003c/li\u003e\n\u003cli\u003eDocument thresholds, alerts, and escalation pathways in policies/procedures.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch4 id=\"suspicious-activity-reporting\"\u003eSuspicious activity reporting\u003c/h4\u003e\n\u003cul\u003e\n\u003cli\u003eDefine clear internal thresholds and triggers for sanctions-related suspicious activity.\u003c/li\u003e\n\u003cli\u003eMonitor circumvention attempts like PSP layering, sudden jurisdictional shifts, nominee/proxy arrangements.\u003c/li\u003e\n\u003cli\u003eMaintain complete records of alerts, investigations, and decisions, including “no-report” outcomes.\u003c/li\u003e\n\u003cli\u003eTrain staff to recognise sanctions red flags, tailored to business activity (e.g. trading, crypto, payments).\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch4 id=\"escalation-processes\"\u003eEscalation processes\u003c/h4\u003e\n\u003cul\u003e\n\u003cli\u003eEstablish time-bound escalation channels for compliance, senior management, and the board.\u003c/li\u003e\n\u003cli\u003eDefine escalation routes to NSIU and CySEC for suspected or actual breaches.\u003c/li\u003e\n\u003cli\u003eEnsure escalation is immediate once a potential match is confirmed - delays can be treated as non-compliance.\u003c/li\u003e\n\u003cli\u003eAlign escalation channels with whistleblowing procedures, so both internal and third-party reports are captured.\u003c/li\u003e\n\u003cli\u003eProtect staff and external reporters under whistleblower protection laws.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"the-penalty-profile\"\u003eThe penalty profile\u003c/h3\u003e\n\u003cp\u003eThe enforcement risks under the new sanctions regime are substantial:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eIndividuals\u003c/strong\u003e: Up to five years’ imprisonment and fines of up to €100,000\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eLegal entities\u003c/strong\u003e: Up to 5% of global turnover or €40 million, whichever is higher\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eOther measures\u003c/strong\u003e: Licence withdrawal, business bans, exclusion from public contracts, and even liquidation in severe cases\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eAsset freezes/confiscations\u003c/strong\u003e: Apply even if the assets are not deemed criminal proceeds\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eNotably, dual enforcement by the NSIU and CySEC means that a single breach could trigger both criminal and administrative sanctions, amplifying the risk for firms.\u003c/p\u003e\n\u003cp\u003eCySEC has already demonstrated a clear willingness to intervene when firms fail to meet their obligations. In July 2025, \u003ca href=\"https://www.financemagnates.com/forex/cyprus-stock-exchange-suspends-three-firms-following-cysec-directive-for-reporting-failures/\" target=\"_blank\" rel=\"noopener\"\u003ethe Cyprus Stock Exchange suspended trading in three listed companies after they failed to submit key financial reports\u003c/a\u003e - a move taken following a directive from CySEC.\u003c/p\u003e\n\u003ch3 id=\"whats-next\"\u003eWhat\u0026rsquo;s next?\u003c/h3\u003e\n\u003ch4 id=\"leverage-your-risk-assessment\"\u003eLeverage your risk assessment\u003c/h4\u003e\n\u003cp\u003eExposure must be assessed against the specific contours of the business model, products, and distribution channels. For CFD brokers, FATF’s red flags should be given priority in risk assessments, especially the presence of intermediary chains and the use of virtual assets.\u003c/p\u003e\n\u003ch4 id=\"strengthen-controls-and-governance\"\u003eStrengthen controls and governance\u003c/h4\u003e\n\u003cp\u003eCySEC’s direction of travel is towards active intervention. Firms need escalation frameworks that integrate sanctions, AML, and market abuse monitoring into a single surveillance architecture. Escalation must be immediate and seamless, with clear routes to compliance, senior management, and regulators.\u003c/p\u003e\n\u003ch4 id=\"invest-in-advanced-monitoring\"\u003eInvest in advanced monitoring\u003c/h4\u003e\n\u003cp\u003eCompliance hinges on speed and precision. Investing in a trade surveillance system that is  engineered to track high-velocity CFD flows and that can be calibrated to capture synthetic sanctions exposure and cross-border risks is essential.\u003c/p\u003e\n\u003cp\u003eIf you’d like to discuss your regulatory requirements in further detail, feel free to \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a consultation\u003c/a\u003e or get in touch using a \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003econtact form\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-20-08T07:40:00+0000"},{"title":"Understanding Market Abuse as a Strategic Threat: Compliance and Reputation at Risk ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/understanding-market-abuse-as-a-strategic-threat-compliance-and-reputation-at-risk-/","summary":"\u003cp\u003eMarket abuse isn’t just a regulatory issue; it directly threatens your firm’s reputation, leadership, and long-term viability. If you’ve ever asked what market abuse is from a U.S. enforcement perspective, the answer is broader and more serious than you may think.\u003c/p\u003e\n\u003cp\u003eIn the U.S., enforcement is no longer a rare headline event; it’s part of the regulatory routine. From insider trading to spoofing and false disclosures, regulators like the SEC, DOJ, and \u003ca href=\"https://www.cftc.gov/\"\u003eCFTC\u003c/a\u003e are making it clear: if your systems can’t detect misconduct in real time, they will.\u003c/p\u003e\n\u003cp\u003eThey’re not just looking at your trade logs; they’re watching how fast you escalate alerts, how well your surveillance integrates with communications, and whether your compliance team has the authority to act.\u003c/p\u003e\n\u003cp\u003eInvestigations today often start with whistleblowers, communications data, or social media, and they can move very quickly. No firm is too small, new, or historically clean to be targeted. Market abuse is no longer a back-office problem; it’s a board-level concern. The question isn’t if you’ll be scrutinized, it’s whether your defenses are ready when the spotlight turns your way.\u003c/p\u003e\n\u003ch2 id=\"what-is-market-abuse\"\u003e\u003cstrong\u003eWhat is market abuse?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhen asking what market abuse is in the U.S., it’s important to note that the term isn’t formally defined in federal statute. Unlike the UK and EU, where regulations like \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eMAR\u003c/a\u003e (Market Abuse Regulation) provide a centralized legal framework, U.S. enforcement is decentralized and statute-driven.\u003c/p\u003e\n\u003cp\u003eHere, regulators such as the SEC, CFTC, FINRA, and even state attorneys tend to address misconduct through a broad array of laws and rules. Each of these will target specific violations like insider trading, manipulation, or false disclosure. While “market abuse” is widely used in compliance culture and internal governance, it functions more as an operational term than a legal one.\u003c/p\u003e\n\u003cp\u003eThis patchwork enforcement model means your compliance obligations won’t come neatly packaged. Instead, your team must piece together requirements across multiple agencies and jurisdictions, and prepare for scrutiny beyond clear-cut violations.\u003c/p\u003e\n\u003cp\u003eCompared to Europe, U.S. regulators often take a broader and more interpretive view of what constitutes manipulative behavior. You may be held accountable for actions that aren’t explicitly illegal, but are perceived as deceptive or disruptive to fair markets. One misconduct event, intentional or not, could expose you to overlapping oversight under the Exchange Act, CFTC anti-manipulation rules, and FINRA’s conduct standards.\u003c/p\u003e\n\u003cp\u003eThis decentralized environment raises the regulatory bar, causing a constant headache for many businesses. In the scenario, your surveillance tools must be nimble, cross-referenced, and behavior-aware, capable of flagging misconduct even when it doesn’t align with a single rulebook. That’s the challenge, and of greater concern, the expectation.\u003c/p\u003e\n\u003ch2 id=\"common-types-of-market-abuse-in-us-enforcement\"\u003e\u003cstrong\u003eCommon types of market abuse in US enforcement\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhile there’s no single legal answer to what is market abuse, U.S. regulators are now confronting increasingly complex forms of it as global markets converge and evolve. These behaviors vary in structure, speed, and intent, making effective detection more challenging for firms like yours.\u003c/p\u003e\n\u003cp\u003eThe most commonly flagged forms of market abuse include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003ca href=\"https://insurancenewsnet.com/oarticle/18-historical-insider-trading-scandals-that-rocked-the-market\"\u003eInsider Trading\u003c/a\u003e\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eBeyond monitoring price movement and trade timing, today’s investigations often rely on behavioral patterns, relationship mapping, and digital communications. You may miss key risk indicators if your systems aren’t capturing this metadata.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSpoofing/Layering\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThese manipulative tactics rely on fleeting, high-volume trades designed to mislead the market. Detection requires granular timestamping, algorithmic analysis, and the ability to identify repeat patterns across accounts and venues.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eWash Trading and Matched Orders\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eFrequently used by short-term traders to fabricate market interest, these tactics can create misleading volume spikes. Surveillance systems must differentiate genuine liquidity from coordinated or circular trading behaviors.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eCross-Venue Abuse\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWith greater access to global platforms, bad actors exploit differences in jurisdictional oversight, which differs from asset arbitrage. Without cross-market monitoring, your firm may miss abuse that’s deliberately fragmented across execution venues.\u003c/p\u003e\n\u003cp\u003eThe complexity and volume of today’s trading activity make manual oversight insufficient. High-speed, high-frequency behaviors are rarely detectable through legacy methods. This is where advanced RegTech platforms come in, helping you identify misconduct in real time and maintain a defensible audit trail if enforcement follows.\u003c/p\u003e\n\u003ch2 id=\"why-the-us-regulatory-landscape-may-enhance-regulatory-risk\"\u003e\u003cstrong\u003eWhy the US regulatory landscape may enhance regulatory risk\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs a U.S. financial firm, you’ve likely felt the growing regulatory weight firsthand. Many experts argue that the fragmented U.S. regulatory landscape significantly increases your exposure compared to Europe\u0026rsquo;s more centralized approach. Enforcement here isn’t just about ticking technical boxes; it’s driven by litigation risk, reputational damage, and post-breach scrutiny. Regulators often adopt a “enforce first, interpret later” posture, which makes proactive compliance, powered by modern RegTech, a critical line of defense.\u003c/p\u003e\n\u003ch3 id=\"fragmented-oversight--broader-exposure\"\u003e\u003cstrong\u003eFragmented oversight = Broader exposure\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs you will be aware, the U.S. has no single regulator for market abuse. Instead, you’re balancing rules and interpretations from the SEC, CFTC, FINRA, DOJ, and sometimes even state-level regulators. Each body has its own agenda and power, and what’s material to one may be irrelevant to another. This jurisdictional overlap creates exposure across multiple fronts, especially during parallel investigations, enhancing regulatory risk as well as diverting critical resources and focus elsewhere.\u003c/p\u003e\n\u003ch3 id=\"compliance--litigation-readiness\"\u003e\u003cstrong\u003eCompliance = Litigation readiness\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eUnlike many non-U.S. regimes, American regulators often pursue civil and criminal cases simultaneously. That means you must be ready for discovery-level transparency, where your internal communications, policies, alert logs, and escalation timelines can be scrutinized. Compliance today isn’t just about being operationally sound; it’s also about being legally defensible.\u003c/p\u003e\n\u003ch3 id=\"cultural-emphasis-on-enforcement-and-accountability\"\u003e\u003cstrong\u003eCultural emphasis on enforcement and accountability\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIf we turn now to the U.S. regulatory culture, it rewards whistleblowers and demands individual accountability. Under \u003ca href=\"https://www.cfr.org/backgrounder/what-dodd-frank-act\"\u003eDodd-Frank\u003c/a\u003e, whistleblower incentives have triggered high-profile investigations. As a result, self-reporting early - before issues escalate - can shape outcomes a little in your favor. Investigations often name individuals, not just institutions, putting CCOs and senior staff, as well as companies, in the spotlight.\u003c/p\u003e\n\u003ch3 id=\"tools-alone-wont-save-you\"\u003e\u003cstrong\u003eTools alone won’t save you\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhile surveillance technology is essential, regulators look for policy clarity, team coordination, and escalation governance when judging maturity. A checklist might have sufficed a decade ago, but today, you need a fundamental culture of compliance. Delays or misalignment between legal teams, operations, and Compliance don’t just slow responses; they can often unravel relatively strong defences.\u003c/p\u003e\n\u003ch2 id=\"the-reputational-fallout-of-market-abuse\"\u003e\u003cstrong\u003eThe reputational fallout of market abuse\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eIn recent years, we\u0026rsquo;ve seen a surge in high-profile fines issued by the SEC and other U.S. regulators. Often, these penalties follow delayed or inadequate reporting, highlighting not only the financial costs but the lasting reputational damage of a prolonged enforcement action.\u003c/p\u003e\n\u003ch3 id=\"unwelcome-headlines\"\u003e\u003cstrong\u003eUnwelcome headlines\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003ePublic sanctions and investigations can quickly generate national and international media attention. For many firms, this coverage introduces doubt among investors and increases customer churn, regardless of whether any wrongdoing is ultimately proven.\u003c/p\u003e\n\u003ch3 id=\"business-valuation-risk\"\u003e\u003cstrong\u003eBusiness valuation risk\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eReputation and enterprise value are tightly linked, and while it may take years to build brand trust, just one enforcement headline could erode it. Even modest penalties can expose internal controls or decision-making processes that raise red flags with markets or stakeholders.\u003c/p\u003e\n\u003ch3 id=\"pressure-from-institutional-clients\"\u003e\u003cstrong\u003ePressure from institutional clients\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eRetail investors may weather reputational setbacks, but institutional clients\u0026rsquo; options are often limited. Many are fiduciaries, held to a higher compliance standard, and any hint of regulatory friction may trigger enhanced due diligence, at best, or even asset withdrawals.\u003c/p\u003e\n\u003ch3 id=\"personal-accountability\"\u003e\u003cstrong\u003ePersonal accountability\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eUnlike some jurisdictions, which focus first on the institution, U.S. regulators frequently target individuals alongside firms. Enforcement actions may name board members, Chief Compliance Officers, and senior traders, raising personal liability and reputational stakes for your leadership team.\u003c/p\u003e\n\u003ch3 id=\"future-growth-and-partnerships\"\u003e\u003cstrong\u003eFuture growth and partnerships\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIn a 24/7 media and due diligence world, enforcement histories travel. Even indirect association with a censured entity can limit opportunities. Compliance history matters if you\u0026rsquo;re pursuing a strategic partnership, institutional onboarding, or a funding round.\u003c/p\u003e\n\u003ch2 id=\"surveillance-challenges-facing-us-firms\"\u003e\u003cstrong\u003eSurveillance challenges facing US firms\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eSurveillance is no longer a back-office formality. It’s central to answering what is market abuse from an operational standpoint in a U.S. compliance environment. While connected, intelligent compliance infrastructure is now the expectation, many US firms still face persistent gaps that undermine real oversight.\u003c/p\u003e\n\u003ch3 id=\"system-fragmentation-is-the-root-problem\"\u003e\u003cstrong\u003eSystem fragmentation is the root problem\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eRegulators now expect end-to-end visibility across all core systems. However, many US firms still operate in silos, with OMS, EMS, CRM, and voice or chat tools disconnected from one another. Surveillance platforms often function independently from communications infrastructure, making it challenging to undertake joined-up investigations or detect cross-channel abuse in real time.\u003c/p\u003e\n\u003ch3 id=\"alert-fatigue-and-manual-workarounds\"\u003e\u003cstrong\u003eAlert fatigue and manual workarounds\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eEven for firms with automated surveillance, the signal-to-noise ratio is often unmanageable. High volumes of false positives flood systems daily, stretching compliance resources and undermining alert effectiveness. Manual workarounds, typically Excel-based, persist across the industry, limiting scalability and often delaying critical escalations. Without enriched, contextual alerting, teams remain reactive instead of proactive.\u003c/p\u003e\n\u003ch3 id=\"emerging-abuse-techniques-are-harder-to-detect\"\u003e\u003cstrong\u003eEmerging abuse techniques are harder to detect\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eModern manipulation techniques, from cross-venue strategies to algorithmic spoofing, often evade detection by legacy systems. These activities move fast, span asset classes, and exploit platform gaps. Many current tools aren’t built to correlate multi-venue behavior or recognize complex, timing-driven patterns.\u003c/p\u003e\n\u003ch3 id=\"static-surveillance-leads-to-stale-compliance\"\u003e\u003cstrong\u003eStatic surveillance leads to stale compliance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIn today’s high-velocity markets, static parameters don’t cut it. Hardcoded thresholds can’t adapt to shifts in volume, volatility, or firm-specific risk profiles. Surveillance becomes a checkbox exercise without dynamic tuning, increasing compliance burden without improving outcomes. The result is more false positives, slower response times, and higher regulatory exposure.\u003c/p\u003e\n\u003ch2 id=\"a-smarter-strategic-approach-to-market-abuse-risk\"\u003e\u003cstrong\u003eA smarter, strategic approach to market abuse risk\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eModern market abuse risk isn’t just about spotting red flags; it’s about proving that your systems are intelligent, adaptive, and defensible under regulatory scrutiny. In a US landscape where enforcement is fast, fragmented, and high-stakes, a smarter approach isn’t a nice-to-have; it’s mission-critical.\u003c/p\u003e\n\u003cp\u003eToday’s regulators expect your surveillance to work across datasets, not just trade logs but communications, metadata, and behavioral signals. However, most systems still struggle to connect these dots, which is where automation and intelligent architecture make all the difference.\u003c/p\u003e\n\u003cp\u003eAI and machine learning can help US firms move from rigid thresholds to dynamic ones that respond to real-time conditions - volume spikes, market news, or behavioral anomalies. This reduces false positives, sharpens insight, and strengthens your narrative when the auditors come calling.\u003c/p\u003e\n\u003cp\u003eHowever, tools alone aren’t enough. True defensibility means integrated workflows, from alert to escalation to resolution, and visibility that connects compliance with legal, risk, and operations. This is a cross-functional responsibility, not a siloed task.\u003c/p\u003e\n\u003cp\u003eAt eflow, we work with firms that need more than box-ticking. Our platform integrates communications, trading, and surveillance into an adaptive system. It’s built for the US enforcement climate, flexible, transparent, and ensures you will be ready when regulators arrive.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eMarket abuse isn’t a theoretical threat; for a growing number of businesses, it’s a strategic risk hitting more firms more often and with greater regulatory force. In the U.S., enforcement is fast-moving, high-profile, and unforgiving of outdated systems or weak controls.\u003c/p\u003e\n\u003cp\u003eIf your surveillance is still reactive, fragmented, or buried in false positives, you’re not just behind the curve; you’re vulnerable to gaps in your ability to identify what is market abuse in practice. Defensibility today means intelligent alerting, real-time escalation, and workflows that connect compliance with risk, legal, and operations. Firms that succeed are thinking proactively and upgrading strategically, giving them more time to focus on maintaining and growing their businesses.\u003c/p\u003e\n\u003cp\u003eThat’s where eflow makes the difference because our modular, platform-based RegTech solutions are built for the complexities of U.S. regulation. Able to integrate quickly with your existing systems to deliver real-time surveillance, dynamic alerting, and audit-ready transparency, they are integral to many firms\u0026rsquo; day-to-day operations.\u003c/p\u003e\n\u003cp\u003eYou choose only the tools you need, with the flexibility to scale as requirements grow. Everything runs on a unified platform, so data flows seamlessly, investigations accelerate, and compliance becomes smarter, not harder.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/contact-us/\"\u003eContact eflow today\u003c/a\u003e to learn how our platform helps U.S. firms stay ahead of market abuse enforcement and protect their reputations before they’re on the line.\u003c/p\u003e\n","date_published":"2025-11-08T13:48:00+0000"},{"title":"Regulation in 2025 - Our take on what we've seen so far this year","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/regulation-in-2025-our-take-on-what-we-ve-seen-so-far-this-year/","summary":"\u003cp\u003eOver the course of 2025, we’ve made it a priority to speak to existing clients, other regulated firms and regulators themselves to try and better understand the challenges facing compliance professionals in today’s financial markets.\u003c/p\u003e\n\u003cp\u003eAlong with our \u003ca href=\"https://eflowglobal.com/global-trends-in-market-abuse-and-trade-surveillance-form/\"\u003eannual research report\u003c/a\u003e, these discussions help us make informed decisions about the products we offer, while allowing us to better help our clients with their regulatory requirements. Speaking to compliance workers at conferences, our own hosted roundtables, and in regular catch ups has shed light on a number of key topics impacting compliance - here are some of the most common themes we see come up.\u003c/p\u003e\n\u003ch2 id=\"ai---how-is-it-impacting-market-abuse-surveillance\"\u003eAI - How is it impacting market abuse surveillance?\u003c/h2\u003e\n\u003cp\u003eAt a recent roundtable, we posed a question to the roughly 20 regulated firms in attendance: Who currently uses AI as part of their surveillance strategy?\u003c/p\u003e\n\u003cp\u003eTheir response? Not a single firm did.\u003c/p\u003e\n\u003cp\u003eDespite the rapid growth of AI over the last several years and its increasing use across industries, the response to our question was not as surprising as it may initially seem. The cost of developing, calibrating and maintaining an in-house AI compliance solution, and then integrating that technology with any existing surveillance solutions, is simply not cost effective, especially when considering smaller firms.\u003c/p\u003e\n\u003cp\u003eHowever, while most firms would naturally be reluctant to implement their own AI models owing to the drain on resources and specialist knowledge required, many firms may not be aware of the role AI already plays in their own third-party trade surveillance systems. Indeed, good quality surveillance systems will likely harness some form of AI to aid in dynamically suggesting parameter changes, alert risk scoring, sentiment analysis of news articles, and other such complex tasks.\u003c/p\u003e\n\u003cp\u003ePerhaps, then, the response of the 20 firms we asked says more about how firms \u003cem\u003eunderstand\u003c/em\u003e the tools they currently have implemented, how vendors explain the technologies used in their products, or some combination of the two. The reality is that the use of integrated AI in dedicated third-party trade surveillance systems is growing more commonplace by the day, with further adoption by both vendors and regulated firms to continue increasing in the near future.\u003c/p\u003e\n\u003ch3 id=\"the-regulatory-viewpoint\"\u003e\u003cem\u003eThe regulatory viewpoint\u003c/em\u003e\u003c/h3\u003e\n\u003cp\u003eThe adoption of AI by the regulators’ themselves has been perhaps more significant than that of regulated firms.\u003c/p\u003e\n\u003cp\u003eAcross the globe, we are starting to see regulators begin to establish AI teams to both investigate the use of AI by bad actors hoping to manipulate markets, and explore its potential benefits as a tool to be used in surveillance systems.\u003c/p\u003e\n\u003cp\u003eIn the case of the FCA, for instance, we have seen a number of AI initiatives launched in recent years. Last year, the regulator held a number of \u003ca href=\"https://www.fca.org.uk/multimedia/market-abuse-surveillance-techsprint-presentation-eflow\"\u003eTechSprints\u003c/a\u003e (The FCA Market Abuse Tech Sprint - MASTS) examining, among other things, the potential uses of AI as part of market abuse surveillance. eflow’s head of surveillance, Jonathan Dixon, contributed a presentation examining “how AI and Machine Learning (ML) can be used to drive an improvement in both analyst efficiency, by highlighting high-value alerts, and also examining how clients can have parameters that are dynamically adjusted”.\u003c/p\u003e\n\u003cp\u003eThe FCA has also set up an AI-powered “\u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-allows-firms-experiment-ai-alongside-nvidia\"\u003eSupercharged Sandbox\u003c/a\u003e”, giving firms the opportunity to experiment with AI not just in compliance, but across other business functions as well,\u003c/p\u003e\n\u003cp\u003eThis and similar initiatives by global financial regulators indicate a clear enthusiasm around AI adoption. Despite the possibility of new risks being introduced by advances in this technology, the regulatory viewpoint of AI is, generally speaking, an optimistic one as long as the solutions remain repeatable and explainable; black box solutions will not escape regulatory ire.\u003c/p\u003e\n\u003ch2 id=\"collaboration-vs-enforcement---what-is-the-role-of-the-regulator\"\u003eCollaboration vs. enforcement - what is the role of the regulator?\u003c/h2\u003e\n\u003cp\u003eWhen we consider the role of financial regulators, we often immediately think of hefty fines and sanctions levelled against firms found to have broken the rules. This, however, is a view many regulators are eager to change.\u003c/p\u003e\n\u003cp\u003eWe are increasingly seeing a shift towards a more collaborative approach to regulation. In the U.S. FINRA is implementing a number of initiatives intended to assist member firms with the regulatory burdens. They are investing in tailored guidance, clearer feedback loops, and more efficient oversight practices, aiming to reduce friction while giving firms more room to innovate and grow. Echoing this view, at the recent \u003ca href=\"https://eflowglobal.com/key-takeaways-from-finras-2025-annual-conference/\"\u003eFINRA Annual Conference\u003c/a\u003e, CEO Robert Cook stated that “member firm engagement is critical to what [they] do.”\u003c/p\u003e\n\u003cp\u003eIn the UK, we’ve seen similar views espoused by the FCA. Their recent \u003ca href=\"https://eflowglobal.com/the-fcas-strategic-shift/\"\u003eFive Year Strategy\u003c/a\u003e places a huge focus on enabling growth, educating regulated firms, and “smarter” regulatory enforcement. In a recent speech by Therese Chambers, Joint Executive Director of Enforcement and Market Oversight for the FCA, she said that the regulator’s enforcement should be “predictable, proportionate, and purposeful.”\u003c/p\u003e\n\u003cp\u003eEnforcement, while not quite a last resort, can be a necessary tool used by regulators to declaratively stamp out abusive trading while signalling their intentions to other regulated firms. Despite this, the priority of the FCA, FINRA, and other global regulators presently is to facilitate growth while working with firms to help them better understand and meet their regulatory obligations.\u003c/p\u003e\n\u003ch2 id=\"how-important-is-it-to-invest-in-trade-surveillance-technology\"\u003eHow important is it to invest in trade surveillance technology?\u003c/h2\u003e\n\u003cp\u003eThe question, “do I need a trade surveillance system” is, by this point, generally accepted as being moot. It has largely been accepted that, if you want to trade on capital markets, you will need some form of automated trade surveillance system in place.\u003c/p\u003e\n\u003cp\u003eHowever, what still causes some confusion amongst regulated firms is exactly \u003cem\u003ewhat\u003c/em\u003e your surveillance system should be able to do and, by extension, \u003cem\u003ehow much\u003c/em\u003e you need to work with trade surveillance technology.\u003c/p\u003e\n\u003cp\u003eIncreasingly, the regulatory view is that compliance is no longer a tick box exercise. Trade surveillance must meet two clear requirements:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eA surveillance system must be able to successfully monitor for market abuse in a manner tailored to a firms’ particular trading strategy and associated business risks\u003c/li\u003e\n\u003cli\u003eCompliance teams must understand their surveillance systems’ calibration and be able to demonstrate and explain its effectiveness should a regulator request it\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe importance of explainability has been a recurring theme in the FCA’s recent Market Watch updates. In Market Watch 79, the regulator emphasised the importance of stress testing, monitoring and regular audits to ensure the effectiveness and applicability of a firm’s market abuse surveillance function.\u003c/p\u003e\n\u003cp\u003eIn order for a surveillance system to be effective, then, it needs to have the functionality required to monitor for abusive trading in a meaningful way, but it also needs to be properly managed by Subject Matter Experts, with regular testing to ensure its continued effectiveness.\u003c/p\u003e\n\u003ch2 id=\"what-the-future-holds\"\u003eWhat the future holds\u003c/h2\u003e\n\u003cp\u003eThese topics only scratch the surface of the conversations we’ve had over the past few months. Nonetheless, they tell us a great deal about the key challenges facing compliance teams in 2025 and beyond.\u003c/p\u003e\n\u003cp\u003eAnxiety around new technologies and how best to manage them seems to be a recurring theme. However, as AI continues to bed in and teams grow more comfortable in managing more complex surveillance solutions, the worries may subside and be replaced by greater regulatory confidence, fuelled by an increasingly collaborative regulatory landscape.\u003c/p\u003e\n\u003cp\u003eIf you’d like to discuss your regulatory requirements in further detail, feel free to \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a consultation\u003c/a\u003e or get in touch using a \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003econtact form\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-05-08T10:19:00+0000"},{"title":"A new era of accountability in Asia’s capital markets","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/a-new-era-of-accountability-in-asia-s-capital-markets/","summary":"\u003cp\u003eAsia’s capital markets have grown significantly over the past decade and are now home to around 55% of the world’s listed companies, with a combined market capitalisation of $34 trillion USD. The subsequent surge in liquidity and trading activity creates more opportunities for institutional and retail investors. But, as trade volumes rise, so too does the risk of market abuse.\u003c/p\u003e\n\u003cp\u003eGrowth must be tempered by a commitment to fair and equitable trading, promoted through strong regulatory foundations, robust enforcement, and close cooperation between regulators, law enforcement, and the private sector.\u003c/p\u003e\n\u003cp\u003eSupervisors across the region have demonstrated their desire to stamp out manipulative trading in recent months. In this article, we break down the key stories and share our thoughts on what this means for Asia’s market participants.\u003c/p\u003e\n\u003ch3 id=\"jane-street-group-how-sebi-caught-a-billion-dollar-index-manipulation\"\u003eJane Street Group: How SEBI caught a billion-dollar index manipulation\u003c/h3\u003e\n\u003cp\u003eIndia’s capital markets were rocked in April 2024 when media reports surfaced about Jane Street Group’s alleged misuse of proprietary trading strategies in index options. The Securities and Exchange Board of India (SEBI) sprang into action, launching an immediate probe and directing the National Stock Exchange (NSE) to dig into Jane Street’s trades.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eHere’s the strategy Jane Street used:\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eIn the morning:\u003c/strong\u003e Jane Street aggressively bought up BANKNIFTY stocks and futures, artificially propping up the index. Meanwhile, they loaded up on bearish options, buying puts and selling calls while the rest of the market watched the index climb.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eIn the afternoon:\u003c/strong\u003e With their options positions set, Jane Street dumped the stocks and futures, sending the index plunging. The options trades earned massive profits, easily outstripping any losses on stocks and futures.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e\u003cstrong\u003eHow SEBI Tracked the Manipulation:\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eSEBI and the NSE analysed minute-by-minute trades across Jane Street’s Indian affiliates. The regulator focused on the 30 most profitable days (nearly all expiry days), mapping out profits and losses. Total profits were equal to ₹36,502 crore (~ USD 5 billion).\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSEBI flagged two core tactics:\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e“Intra-day Index Manipulation”: the morning-pump, afternoon-dump\u003c/li\u003e\n\u003cli\u003e“Extended Marking the Close”: pressuring the index right up to close\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eEven after SEBI cautioned Jane Street via the NSE, warning them to rein in their trades, the group kept pushing massive positions. SEBI concluded this was coordinated market manipulation, violating India’s Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules. SEBI’s deep dive, powered by granular market data, offers a blueprint for catching bad actors and limiting their ability to tilt the market.\u003c/p\u003e\n\u003ch3 id=\"south-korea-launches-one-strike-out-rule-to-crack-down-on-illegal-stock-trading\"\u003eSouth Korea launches “one-strike-out” rule to crack down on illegal stock trading\u003c/h3\u003e\n\u003cp\u003eSouth Korea is stepping up its fight against illegal stock trading with a bold new “one-strike-out” policy. Announced by the Financial Services Commission (FSC), Financial Supervisory Service (FSS), and Korea Exchange (KRX), the rule means anyone caught manipulating markets or engaging in unfair trading practices faces immediate and permanent expulsion from the market, with no second chances.\u003c/p\u003e\n\u003cp\u003eA joint inspection team will enable real-time monitoring and swift investigations. If illegal activity is detected, authorities will instantly freeze suspect accounts to stop illicit profits from being moved, and violators will face fines up to twice their illegal gains.\u003c/p\u003e\n\u003cp\u003eThe new policy aims to boost global investor confidence and streamline enforcement by shifting surveillance from account-based to individual-based tracking, making it easier to spot links between accounts. Additional measures will tighten listing standards and protect minority shareholders. This marks a major step toward a fairer, more transparent Korean stock market.\u003c/p\u003e\n\u003ch3 id=\"reflecting-on-2025-so-far\"\u003eReflecting on 2025 so far\u003c/h3\u003e\n\u003cp\u003eElsewhere, our analysis of recent enforcement activity shows a trend amongst Asian regulators, who have been stepping up oversight to match the scale and complexity of their capital markets.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eKey developments from our recent\u003c/strong\u003e \u003ca href=\"https://eflowglobal.com/q2-2025-enforcement-update-new-signals-emerge-from-the-new-administration/\"\u003equarterly updates\u003c/a\u003e \u003cstrong\u003einclude:\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eHigh-profile insider trading cases:\u003c/strong\u003e Hong Kong authorities have pursued several headline cases, including one where a chauffeur’s tip-off led to an investigation and penalties.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eOngoing crackdown on market manipulation:\u003c/strong\u003e Singapore’s MAS imposed more than $600,000 in penalties against multiple individuals for false trading and unauthorised account use in a coordinated pump-and-dump scheme.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eWash trading and masking risks:\u003c/strong\u003e Hong Kong’s SFC continues to ban individuals for practices such as wash trading, often used to disguise margin call risks.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eData integrity and trade reporting:\u003c/strong\u003e Regulators across the region are focusing on data quality and accurate trade reporting, with enforcement targeting failures in recordkeeping and reporting systems.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"a-new-standard-for-market-participants\"\u003eA New Standard for Market Participants\u003c/h3\u003e\n\u003cp\u003eSupervisors in Asia are leveraging every tool at their disposal (policy, advanced analytics, and robust enforcement) to set clear expectations for market participants. Firms are now expected not only to uphold high standards of market conduct, but also to actively support regulators in their mission to detect and deter illicit trading.\u003c/p\u003e\n\u003cp\u003eWe identify five key implications for firms:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cem\u003e\u003cstrong\u003eAdvanced analytics are essential\u003c/strong\u003e\u003c/em\u003e: Robust surveillance systems are required to detect, prevent, and evidence potential misconduct before it escalates to regulatory attention.\u003c/li\u003e\n\u003cli\u003e\u003cem\u003e\u003cstrong\u003eCompliance must be end-to-end\u003c/strong\u003e\u003c/em\u003e: Beyond analytics, firms need well-documented procedures, timely reporting, and proactive self-disclosure.\u003c/li\u003e\n\u003cli\u003e\u003cem\u003e\u003cstrong\u003eCooperation and transparency matter\u003c/strong\u003e\u003c/em\u003e: Asia\u0026rsquo;s Regulators reward early self-reporting and demonstrable remediation, often with reduced penalties.\u003c/li\u003e\n\u003cli\u003e\u003cem\u003e\u003cstrong\u003eZero tolerance is the new normal\u003c/strong\u003e\u003c/em\u003e: Whether it’s the permanent exclusion for market manipulation in Korea or strict bans and penalties elsewhere, firms should expect less leniency and greater consequences for breaches, no matter how complex or cross-border the activity.\u003c/li\u003e\n\u003cli\u003e\u003cem\u003e\u003cstrong\u003eInvestor trust is at stake\u003c/strong\u003e\u003c/em\u003e: Maintaining strong standards is fundamental to sustaining global investor confidence and ensuring continued growth for Asia’s markets.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eAt eflow, we help firms simplify surveillance, automate control testing, and prepare confidently for the future of regulation, anywhere in the world. To learn how we can support your compliance strategy, \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a consultation\u003c/a\u003e or explore our solutions \u003ca href=\"https://eflowglobal.com/\"\u003ehere\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-29-07T15:31:00+0000"},{"title":"Cross-product manipulation in financial markets","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/cross-product-manipulation-in-financial-markets/","summary":"\u003cp\u003eWhen it comes to regulatory enforcement, one of the most complex market manipulation typologies is cross-product manipulation (as well as cross-market manipulation) This involves manipulating one asset class to impact the price or perception of another related asset class. While it\u0026rsquo;s different from single-instrument manipulation, it\u0026rsquo;s also important to differentiate it from arbitrage, which is perfectly legal.\u003c/p\u003e\n\u003cp\u003eA simple example of cross-product manipulation would be traders trading in the derivatives market to influence the underlying asset\u0026rsquo;s value. The increasing interconnectivity of global financial markets and the wide variety of tradable products have opened up many opportunities for rogue traders. Historic regulations made little mention of cross-product manipulation, so they need to be updated. Then there is the issue of cross-market/cross-country cooperation.\u003c/p\u003e\n\u003cp\u003eWhile technological advances have increased the efficiency and liquidity of many markets, they also provide a range of different opportunities for those looking at more complex manipulation.\u003c/p\u003e\n\u003ch2 id=\"scope-and-relevance-across-asset-classes\"\u003e\u003cstrong\u003eScope and relevance across asset classes\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe mention of cross-product manipulation will draw many eyes towards derivatives, but this problem goes much deeper. It can involve a whole range of different assets, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eEquities\u003c/li\u003e\n\u003cli\u003eBonds\u003c/li\u003e\n\u003cli\u003eInterest rates\u003c/li\u003e\n\u003cli\u003eForex\u003c/li\u003e\n\u003cli\u003eCommodities\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWhen you consider the effect of, for example, equity manipulation on the value of indices and the knock-on effect of futures markets and index trackers, for instance., the full impact of the issue starts to become more evident. Recently, we have seen the LIBOR scandal, in which traders were able to impact interest rates and, as a consequence, a vast range of financial products based upon this one figure.\u003c/p\u003e\n\u003cp\u003eIt is not difficult to see how this can significantly impact market efficiency and investor trust.\u003c/p\u003e\n\u003ch2 id=\"technology-and-interconnectivity\"\u003e\u003cstrong\u003eTechnology and interconnectivity\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAdvanced trading technologies, such as algorithmic and high-frequency trading have not only presented the perfect tools to those looking to manipulate markets but can also exacerbate the impact. In milliseconds, manipulative trading in one market or asset can have a ripple effect worldwide, with data processing and trading happening in real-time.\u003c/p\u003e\n\u003cp\u003eIn theory, with cutting-edge regulatory technology available, ensuring compliance with marketing trading regulations and replicating knowledge in one market to others would seem relatively simple. The reality is much more complex. It\u0026rsquo;s not only the ability to interconnect markets, regulators, and different products but also the ability to create systems that can create a connected timeline of events that prove market manipulation.\u003c/p\u003e\n\u003cp\u003eThe introduction of AI and machine learning languages and complex algorithms creates an element of \u0026ldquo;on-the-job\u0026rdquo; learning, but the perpetrators are constantly innovating.\u003c/p\u003e\n\u003ch2 id=\"distinguishing-cross-product-from-cross-market-manipulation\"\u003e\u003cstrong\u003eDistinguishing cross-product from cross-market manipulation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe subject of \u003ca href=\"https://www.sciencedirect.com/science/article/pii/S1042443124000507\"\u003ecross-market manipulation\u003c/a\u003e will likely arise when discussing cross-product manipulation. It\u0026rsquo;s important to appreciate the distinct differences between these two types of manipulation:\u003c/p\u003e\n\u003ch3 id=\"cross-market-manipulation\"\u003e\u003cstrong\u003eCross-market manipulation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIn essence, this is manipulating the same instrument across multiple markets or trading venues. Not to be confused with arbitrage, which is perfectly legal and based upon naturally occurring price differentiation, there is clear intent to manipulate prices.\u003c/p\u003e\n\u003ch3 id=\"cross-product-manipulation\"\u003e\u003cstrong\u003eCross-product manipulation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eDistinct from cross-market manipulation, cross-product manipulation involves trading one asset to influence a related but distinct asset. Aside from the more obvious derivative scenario, this type of trading could include purchasing a particular commodity, such as gold, to push the price higher and impact the perceived value of a gold mining company.\u003c/p\u003e\n\u003ch3 id=\"wider-consequences\"\u003e\u003cstrong\u003eWider consequences\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIf we look at the impact of derivatives in relation to equities, on a broader outlook, this can also impact investor/market sentiment. The effect can be far-reaching if traders notice movement in a particular equity or derivative on the back of critical data points (support and resistance levels).\u003c/p\u003e\n\u003cp\u003eWhen a change in one of the assets prompts a new trend, a huge volume of data is needed to create connection points. Thankfully, new AI services can analyse vast data sets and cross-check to find connections and timelines between different products.\u003c/p\u003e\n\u003ch2 id=\"regulatory-landscape-and-challenges\"\u003e\u003cstrong\u003eRegulatory landscape and challenges\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe challenge for regulators is simple: building on ever more complex regulations to identify and specify instances of, in this case, cross-product manipulation. The topic is covered in a range of US regulations such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eUS Securities and Exchange Act 1934\u003c/li\u003e\n\u003cli\u003e1933 Securities Act\u003c/li\u003e\n\u003cli\u003e1936 Commodity Exchange Act\u003c/li\u003e\n\u003cli\u003eTitle 18 of the US code\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIt\u0026rsquo;s also important to consider the role of organisations and exchanges such as FINRA and the CME and how they address market manipulation rules for their members.\u003c/p\u003e\n\u003cp\u003eIn the EU and the UK, there are specific references to cross-product \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003emarket abuse\u003c/a\u003e in regulations, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eEU - Market Abuse Regulations (MAR)\u003c/li\u003e\n\u003cli\u003eUK - MAR 1.6 Market abuse (manipulating transactions)\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe US, EU and the UK are the regulatory leaders in financial markets. One often overlooked issue with a more interconnected global market is the need for individual countries to follow this broad global regulatory structure to attract and maintain foreign investment.\u003c/p\u003e\n\u003ch2 id=\"risk-exposure-and-implications-for-firms\"\u003e\u003cstrong\u003eRisk exposure and implications for firms\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe regulations covering cross-product manipulation are centred on market efficiency and trust. Financial institutions need to introduce and update appropriate surveillance for many reasons.\u003c/p\u003e\n\u003ch3 id=\"fines\"\u003e\u003cstrong\u003eFines\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhen it comes to cross-product manipulation, the majority of fines have involved what is known as spoofing. Spoofing involves placing false orders (the trader has no intention of fulfilling them) to manipulate an order book and give a different outlook to a specific asset. There have been numerous multi-million dollar fines involved in interest rates, derivatives, and commodities.\u003c/p\u003e\n\u003ch3 id=\"reputational-damage\"\u003e\u003cstrong\u003eReputational damage\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eReputational damage can be more harmful than a multi-million dollar fine in many ways. Historically, your reputation may have opened doors and prompted lucrative partnerships, but this can change overnight. Media outlets can often prolong the agony with emotive headlines and a constant flow of accusations.\u003c/p\u003e\n\u003ch3 id=\"loss-of-investor-confidence\"\u003e\u003cstrong\u003eLoss of investor confidence\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe relationship between a financial institution and clients can take decades to nurture, but due to reputational damage, it can disappear in an instant. If proven to be involved in regulatory breaches, this would place doubt into the minds of investors who may indirectly have been financially impacted.\u003c/p\u003e\n\u003ch3 id=\"rogue-traders\"\u003e\u003cstrong\u003eRogue traders\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eRogue traders can inflict extensive damage on both institutions and markets. Even if proven to have acted in isolation, at best, this can highlight gaps in surveillance and compliance. As we mentioned above, the knock-on effect can be significant regarding fines, brand damage, and increased compliance spending.\u003c/p\u003e\n\u003ch2 id=\"detection-and-surveillance-challenges\"\u003e\u003cstrong\u003eDetection and surveillance challenges\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhile cross-product manipulation is not necessarily a new strategy, the introduction of cutting-edge technology has facilitated more complex and approaches which are harder to detect. It\u0026rsquo;s important to remember that this is not an easy challenge. It is a constantly moving target, and due to the vast, multi-market data required for analysis, it is technologically and financially demanding.\u003c/p\u003e\n\u003cp\u003eTraditional surveillance tools are unlikely to capture these sophisticated patterns in market manipulation. Consequently, financial institutions are now looking to outsource their compliance and regulatory obligations. This has seen a considerable increase in the Regtech sector and investment in compliance surveillance systems.\u003c/p\u003e\n\u003ch2 id=\"case-study\"\u003e\u003cstrong\u003eCase study\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhile there are many instances of cross-product manipulation, the \u003ca href=\"https://www.cfr.org/backgrounder/understanding-libor-scandal\"\u003eLIBOR scandal\u003c/a\u003e may be the most alarming and potentially most damaging regarding reputation and financials. In 2012, several major global banking institutions were found to have manipulated LIBOR. This allowed the banks to influence borrowing costs and trading profits, directly influencing the value of often complex derivatives.\u003c/p\u003e\n\u003cp\u003eThe reputational damage to money markets reverberated worldwide as the LIBOR was used to value everyday financial products such as mortgages. An example of irretrievable reputational damage, LIBOR was eventually replaced in June 2023 after a prolonged period of untangling its influence across the financial world.\u003c/p\u003e\n\u003ch3 id=\"how-was-the-libor-scandal-uncovered\"\u003e\u003cstrong\u003eHow was the LIBOR scandal uncovered?\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIn a perfect example of a disconnected regulatory compliance sector, it was only by chance that a secret recording of bankers discussing market/product manipulation emerged. Fast-forward to the current day, using unstructured and structured data to monitor background conversations and interactions would likely have uncovered the scandal relatively early.\u003c/p\u003e\n\u003ch2 id=\"best-practices-for-combating-cross-product-manipulation\"\u003e\u003cstrong\u003eBest practices for combating cross-product manipulation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs cross-product manipulation becomes more complex, there is a renewed focus on technology. Recognising the opportunities presented by new, cutting-edge technologies is essential, but there are also other supportive issues to consider.\u003c/p\u003e\n\u003ch3 id=\"robust-policies-and-governance\"\u003e\u003cstrong\u003eRobust policies and governance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIgnorance is not an excuse, so financial firms must maintain up-to-date internal policies that clearly define manipulative practices and outline the consequences.\u003c/p\u003e\n\u003ch3 id=\"training-and-education\"\u003e\u003cstrong\u003eTraining and Education\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhile training and education will focus more on traders and investment advisers, it should be extended to all employees. Discussing manipulation, ethics, and the potential consequences for individuals, clients, and the company ensures employees know what to look for.\u003c/p\u003e\n\u003ch3 id=\"data-integration\"\u003e\u003cstrong\u003eData integration\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs mentioned above, one of the earliest challenges with cross-product manipulation was integrating data sources. Creating an appropriate timeline using trade orders, communications, and relevant external data is critical to identifying abuse and supporting enforcement.\u003c/p\u003e\n\u003cp\u003eOutsourcing compliance monitoring obligations allows financial institutions to focus on their core services, utilising cutting-edge third-party technology, incorporating flexibility and a forward-thinking approach to regulations.\u003c/p\u003e\n\u003ch2 id=\"innovative-solutions-in-the-market\"\u003e\u003cstrong\u003eInnovative solutions in the market\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs a leading supplier of Regtech services, eflow provides a range of flexible solutions to an ever-changing regulatory landscape. The ability to draw together data from numerous sources, analyse vast amounts of information, and identify instances of potential cross-product manipulation is critical in the fight to maintain market integrity and the reputation of financial institutions.\u003c/p\u003e\n\u003cp\u003eUsing structured and unstructured data, we can help identify possible red flags for further investigation and provide critical supporting information. The ability to integrate our surveillance tools, incorporating the latest cutting-edge technology, into existing systems is a vital element of our evolution.\u003c/p\u003e\n\u003cp\u003eUsing predictive analytics, sophisticated AI models, and complex algorithms allows us to identify suspicious activity. However, new challenges constantly emerge as criminals become more refined and innovative. So, rest assured we are continually looking to expand and improve our services, taking in new threats and strategies to help fulfil your regulatory obligations.\u003c/p\u003e\n\u003ch2 id=\"conclusion-preparing-for-the-future\"\u003e\u003cstrong\u003eConclusion: Preparing for the future\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhile cross-product manipulation is an emerging topic in compliance and regulation, it is not a new activity. We can identify common patterns, raise red flags, and assist with investigations only because of the emergence of cutting-edge technology, AI, and complex algorithms.\u003c/p\u003e\n\u003cp\u003eThe ability to analyse massive data reams, identify patterns, and create timelines has undoubtedly changed the regulatory landscape. But this is not a one-off activity; it is an ongoing process with a degree of proactivity but mostly reactivity, adapting to new threats.\u003c/p\u003e\n\u003cp\u003eAll types of market manipulation have the potential to erode trust and reputation, the foundations of financial markets. If you are concerned about your regulatory obligations going forward, please \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003econtact us\u003c/a\u003e, and we can discuss your options in detail.\u003c/p\u003e\n","date_published":"2025-21-07T16:07:00+0000"},{"title":"Q2 2025 enforcement update: New signals emerge from the new administration","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/q2-2025-enforcement-update-new-signals-emerge-from-the-new-administration/","summary":"\u003cp\u003eAfter a record-breaking 2024, and a fast start to 2025, global enforcement actions finally slowed down in the second quarter. While the value of closed enforcement actions dropped, regulators remained active in other ways, with important signals emerging in the U.S. regarding the priorities of this new administration.\u003c/p\u003e\n\u003cp\u003eIn Q2 2025, there were 18 enforcement actions:\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/chart-2-1.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003cp\u003eAcross six jurisdictions:\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/chart-3.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003cp\u003eTotalling $4.7 million\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/chart-1.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003ch2 id=\"keep-your-eyes-on-family-ties-insider-trading-enforcements-persist\"\u003eKeep your eyes on family ties, insider trading enforcements persist\u003c/h2\u003e\n\u003cp\u003eThe U.S. had an uncharacteristically quiet quarter, but enforcement continued apace elsewhere. In the UK, the FCA secured convictions in two notable insider trading cases. Both highlight how familial and social circles remain key channels for illicit information sharing.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eTwo brothers \u003ca href=\"https://www.fca.org.uk/news/press-releases/two-brothers-plead-guilty-insider-dealing\"\u003eexploited\u003c/a\u003e insider information from brokers to profit from share dealings in several AIM-listed companies.\u003c/li\u003e\n\u003cli\u003eAn asset management analyst orchestrated a complex \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-secures-convictions-insider-dealing-and-money-laundering-worth-1-million\"\u003escheme\u003c/a\u003e involving his sister and associates to profit from confidential deal insights, netting around £1 million via Contracts for Difference (CFDs).\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe French AMF took a firm stance with multi-party actions involving individuals and corporations. Fines \u003ca href=\"https://www.amf-france.org/en/news-publications/news-releases/enforcement-committee-news-releases/amf-enforcement-committee-fines-issuer-eu20000-and-its-shareholders-total-eu17-million\"\u003etotalling\u003c/a\u003e over €2 million were imposed on European TopSoho, Dynamic Treasure Group, and Ms Qiu for disseminating misleading information and leveraging their inside knowledge for trading gains. Separately, four individuals received substantial \u003ca href=\"https://www.amf-france.org/en/news-publications/news-releases/enforcement-committee-news-releases/amf-enforcement-committee-fines-three-individuals-and-one-legal-entity-total-eu700000-insider\"\u003epenalties\u003c/a\u003e for insider trading and unlawful recommendations:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eMs Pignet-Aiach, CEO of Lysogene, passed confidential information about FDA approval for clinical trials to her ex-husband, Mr Aiach, who used it to acquire shares and shared it with friends and associates. These parties executed trades based on the information, with some also recommending investments to others.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"market-manipulation-and-spoofing-individuals-and-firms-face-stiff-sanctions\"\u003eMarket manipulation and spoofing: Individuals and firms face stiff sanctions\u003c/h2\u003e\n\u003cp\u003eMarket manipulation, especially spoofing and false trading, remains high on regulators’ agendas. The FCA’s successful defence of bans against three traders for spoofing Italian government bond futures demonstrated a willingness to pursue long-running, technically complex cases through to the Upper Tribunal. These fines and bans underline the serious consequences of deceiving the market, even if it is without direct monetary gain.\u003c/p\u003e\n\u003ch4 id=\"spotlight-global-crackdown-on-finfluencers\"\u003eSpotlight: Global crackdown on finfluencers\u003c/h4\u003e\n\u003cp\u003e\u003cbr\u003eIn June, the FCA led a coordinated international \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-leads-international-crackdown-illegal-finfluencers\"\u003ecrackdown\u003c/a\u003e on illegal “finfluencers,” working alongside regulators from Australia, Canada, Hong Kong, Italy, and the UAE. The UK’s efforts alone resulted in three arrests, authorised criminal proceedings against three individuals, and over 650 takedown requests targeting unauthorised financial promotions on social media. Social media personalities promoting financial products without authorisation will face real consequences, as regulators worldwide move to protect consumers from misleading online promotions.\u003c/p\u003e\n\u003cp\u003eAsia-Pacific regulators were equally active. Hong Kong’s SFC \u003ca href=\"https://fxnewsgroup.com/forex-news/regulatory/sfc-bans-former-cinda-international-securities-rep-for-three-years/?utm_source=chatgpt.com\"\u003ebanned\u003c/a\u003e a former representative for three years after uncovering a pattern of wash trading designed to mask margin call risks. In Australia, ASIC secured \u003ca href=\"https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-098mr-asic-secures-guilty-pleas-in-telegram-pump-and-dump-action/\"\u003eguilty pleas\u003c/a\u003e from participants in a Telegram-based pump-and-dump ring:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eOver three weeks, the group coordinated nine “pump” announcements to artificially boost share prices, then sold their holdings for profit.\u003c/li\u003e\n\u003cli\u003eEach faces significant penalties, including up to 15 years imprisonment and fines over $1 million. The case highlights ASIC’s commitment to cracking down on social media-driven market manipulation.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"systems-and-controls-us-brokers-penalised-for-surveillance-failures\"\u003eSystems and controls: U.S. brokers penalised for surveillance failures\u003c/h3\u003e\n\u003cp\u003eFINRA handed down multiple \u003ca href=\"https://www.finra.org/sites/default/files/2025-06/disciplinary-actions-june-2025.pdf\"\u003epenalties\u003c/a\u003e related to deficient systems and trade surveillance in Q2 2025. TP ICAP Global Markets, SpeedRoute, TradeUp Securities, and U.S. Tiger Securities were all cited for failures to detect manipulative trading, such as spoofing, wash trades, and layering.\u003c/p\u003e\n\u003cp\u003eThese cases reveal a persistent gap, first highlighted in our “\u003ca href=\"https://eflowglobal.com/global-trends-in-market-abuse-and-trade-surveillance-form/\"\u003eGlobal trends in market abuse and trade surveillance\u003c/a\u003e\u003cem\u003e” report\u003c/em\u003e: even as surveillance technology improves, resourcing and calibration remain weak points, sometimes with only a single employee reviewing thousands of alerts.\u003c/p\u003e\n\u003cp\u003eFINRA also emphasised the importance of electronic communications retention, penalising several firms and individuals for failing to supervise, record, or retain business communications, including on personal devices.\u003c/p\u003e\n\u003ch3 id=\"the-big-picture\"\u003eThe big picture\u003c/h3\u003e\n\u003cp\u003eAcross jurisdictions, this quarter’s actions reinforce a few core trends: personal and social connections remain vectors for insider dealing, technical manipulation schemes are under sustained scrutiny, and firms that neglect surveillance and reporting systems continue to court regulatory risk. With regulators sharing intelligence and tightening expectations, firms must ensure their controls are both robust and proactive, or risk being the next enforcement headline.\u003c/p\u003e\n\u003ch2 id=\"beyond-the-numbers-whats-going-on-in-the-us\"\u003eBeyond the numbers: What’s going on in the U.S.?\u003c/h2\u003e\n\u003cp\u003eFollowing a record-breaking Q1 - in which the SEC and CFTC issued over \u003ca href=\"https://eflowglobal.com/q1-2025-enforcement-update/\"\u003e$100 million\u003c/a\u003e in market abuse penalties and announced more than 200 enforcement actions including non-market abuse typologies - Q2 saw activity drop sharply to just 114 total actions, a 43% quarter-on-quarter decline, with no fines at all for market abuse or insider trading.\u003c/p\u003e\n\u003cp\u003eMuch of this deceleration aligns with the first 100 days of a new, Republican-led SEC. In the post-election, pre-inauguration window, the outgoing administration accelerated enforcement, filing 188 actions as they cleared the decks. Since then, the pace has slowed as the SEC has undergone restructuring under new leadership. Much of that work is complete, and the new administration has signalled its intent to crack down on market abuse throughout the rest of the year.\u003c/p\u003e\n\u003ch3 id=\"looking-ahead-the-sec-has-signalled-a-back-to-basics-approach\"\u003eLooking ahead, the SEC has signalled a “back to basics” approach.\u003c/h3\u003e\n\u003cp\u003eAt SEC Speaks 2025, senior officials explicitly outlined plans to focus on core enforcement areas: insider trading, accounting and disclosure fraud, market manipulation, and breaches of fiduciary duty. The Division has restructured, consolidating its regional oversight and reorganising specialised units to improve efficiency and management. The new Market Abuse Unit, under Deputy Director Jason Burt, will home in on insider trading rings and sophisticated market manipulation, including activity on alternative trading systems.\u003c/p\u003e\n\u003ch3 id=\"meanwhile-the-cftc-has-adopted-a-new-approach-to-enforcement\"\u003eMeanwhile, the CFTC has adopted a new approach to enforcement:\u003c/h3\u003e\n\u003cp\u003eApril saw the rollout of formal guidance encouraging self-reporting, with a focus on material violations, cases that involve significant client harm or market integrity. Incidents and issues of lower severity are now more likely to be handled internally, signalling a more risk-based, resource-efficient enforcement regime.\u003c/p\u003e\n\u003ch3 id=\"the-bottom-line\"\u003eThe bottom line\u003c/h3\u003e\n\u003cp\u003eThe U.S. is entering a new era of enforcement, leaner, more targeted, and laser-focused on high-impact cases, with organisational changes and strategic priorities shaping the regulatory landscape for the remainder of 2025.\u003c/p\u003e\n","date_published":"2025-09-07T10:27:00+0000"},{"title":"eflow launches trade surveillance Sandbox functionality  to help compliance teams cope with rise in market volatility","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-launches-trade-surveillance-sandbox-functionality-to-help-compliance-teams-cope-with-rise-in-market-volatility/","summary":"\u003cp\u003e\u003cstrong\u003eLondon; 1st July 2025:\u003c/strong\u003e Leading regulatory technology provider eflow Global today announced the launch of its new Sandbox functionality for its award-winning \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eTZTS Trade Surveillance system\u003c/a\u003e. The new functionality offers compliance teams a dedicated environment to simulate, test and refine their trade surveillance parameters with zero impact on their live system.\u003c/p\u003e\n\u003cp\u003eDesigned in direct response to growing regulatory pressure and the increasingly complex compliance landscape, the Sandbox empowers firms to reduce their volume of false positives, demonstrate audit-ready decision-making, and react with agility to volatile market conditions.\u003c/p\u003e\n\u003cp\u003eeflow’s latest research highlights the challenge: \u003ca href=\"https://eflowglobal.com/global-trends-in-market-abuse-and-trade-surveillance-form/\" target=\"_blank\" rel=\"noopener\"\u003e43% of regulatory professionals cite managing the volume of false positive alerts generated by their trade surveillance system as a major concern\u003c/a\u003e. Yet until now, firms have rarely had access to a safe space in which to experiment with system configurations without jeopardising compliance.\u003c/p\u003e\n\u003cp\u003eProviding a ring-fenced replica of a firm’s live trade surveillance system, the Sandbox enables compliance professionals to simulate parameter changes using their own historical trading data, assess alert outcomes in detail, and export refined settings to the live system in just a few clicks.\u003c/p\u003e\n\u003cp\u003e“The ability to stress-test your surveillance strategy with real-life trading data in a no-risk environment is a game-changer,” said Ben Parker, CEO of eflow Global. “Firms need the confidence that their alert thresholds are both appropriately stringent and operationally manageable. The Sandbox gives them that confidence - backed by real data and a clear audit trail.”\u003c/p\u003e\n\u003cp\u003eThe launch comes at a time of unprecedented regulatory scrutiny. Global regulatory enforcement activity remained high in the first quarter of 2025, with more than $150 million in penalties issued across six jurisdictions. The volume of enforcement actions in 2024 also rose 863% year-on-year, underlining the critical need for firms to take a more robust, evidence-led approach to trade surveillance configuration.\u003c/p\u003e\n\u003cp\u003e“Recent market shocks, such as the release of DeepSeek AI and its ripple effect across NVIDIA and the wider NASDAQ, as well as the renewed volatility following President Trump\u0026rsquo;s recent tariff announcements, have shown how quickly alert volumes can spike,” added Parker. “The Sandbox gives firms a way to replay these periods, refine parameters in response, and ensure robust controls are in place.”\u003c/p\u003e\n\u003cp\u003eWith regulators increasingly scrutinising firms’ surveillance frameworks, the ability to demonstrate regular, evidence-based parameter testing is becoming a compliance requirement. The Sandbox enables firms to demonstrate to regulators that their trade surveillance strategies are built on robust, credible and auditable processes.\u003c/p\u003e\n\u003cp\u003eeflow’s Sandbox functionality is available immediately to all TZTS Trade Surveillance users. To learn more or request a demo, \u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003eclick here\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n","date_published":"2025-01-07T07:32:16+0000"},{"title":"Eliminating low-quality alerts in Regtech: The case for smarter flag generation","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eliminating-low-quality-alerts-in-regtech-the-case-for-smarter-flag-generation/","summary":"\u003cp\u003eInstitutions face the challenge of balancing rigorous monitoring with managing an overwhelming volume of alerts in financial compliance. While erring on the side of caution, many firms find their compliance teams inundated with low-quality alerts and false positives. Rigid, rule-based systems often fail to capture the nuances between legitimate and suspicious activities, leading to wasted resources, alert fatigue, and the risk of missing genuine threats. Smarter, adaptive alert generation is now essential to ensure efficiency and strengthen regulatory confidence.\u003c/p\u003e\n\u003ch2 id=\"employees-are-still-a-part-of-the-process\"\u003e\u003cstrong\u003eEmployees are still a part of the process\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eDespite advancements in compliance technology, human oversight remains crucial as teams investigate flagged trades. However, surges in low-quality alerts can generate alert fatigue, whereby compliance professionals are overwhelmed by irrelevant notifications. Reducing these low-value alerts can help refocus resources on meaningful risks and improve overall compliance effectiveness.\u003c/p\u003e\n\u003cp\u003eFor senior management, the need for smarter alert generation isn’t just about compliance—it’s a key driver of operational efficiency, risk management, and cost savings that directly impact the bottom line.\u003c/p\u003e\n\u003ch2 id=\"challenges-posed-by-low-quality-alerts\"\u003e\u003cstrong\u003eChallenges posed by low-quality alerts\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe cost of managing overwhelming volumes of low-quality alerts can be substantial, impacting overall compliance budgets and diverting resources from strategic initiatives. The impact of alert fatigue on compliance teams should never be overlooked. Aside from the obvious time issue, alert fatigue can be detrimental in many different ways:\u003c/p\u003e\n\u003ch3 id=\"drain-on-resources\"\u003e\u003cstrong\u003eDrain on resources\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eBalancing the growing regulatory burden against investment in compliance teams is challenging enough without the need to investigate \u003ca href=\"https://eflowglobal.com/reducing-false-positives-in-trade-surveillance/\"\u003efalse positives\u003c/a\u003e. This diverts critical time and effort away from genuine compliance tasks.\u003c/p\u003e\n\u003ch3 id=\"reduced-effectiveness\"\u003e\u003cstrong\u003eReduced effectiveness\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eForced to constantly trawl through low-quality alerts and false positives, compliance teams can become desensitised and sometimes overlook genuine suspicious activity. The potential knock-on effect on the company and regulatory impact can be significant.\u003c/p\u003e\n\u003ch3 id=\"employee-burnout\"\u003e\u003cstrong\u003eEmployee burnout\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eLow-quality alerts can prompt job dissatisfaction, burnout, and a high turnover of personnel. The operational and personal challenges in this situation are not difficult to see.\u003c/p\u003e\n\u003ch3 id=\"compliance-costs\"\u003e\u003cstrong\u003eCompliance costs\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe cost of setting up a compliance team and providing them with the appropriate resources can be high. Consequently, time spent investigating false positives or low-quality alerts that should be ignored when put into context reduces compliance efficiency and increases expense.\u003c/p\u003e\n\u003ch3 id=\"enhanced-regulatory-scrutiny\"\u003e\u003cstrong\u003eEnhanced regulatory scrutiny\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIt is not uncommon to see compliance departments flooded by low-quality alerts, often prompting a switch to selective quality control or a risk-assessed bulk closure of alerts. This means that not all alerts are pro-actively considered, increasing the likelihood that significant compliance issues could slip through the net.\u003c/p\u003e\n\u003ch2 id=\"criteria-for-smart-alert-generation\"\u003e\u003cstrong\u003eCriteria for “Smart” Alert Generation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eIn theory, the higher the percentage of true positive alerts a system can create, the more likely a firm is to remain compliant. However, it\u0026rsquo;s also important that systems are able to identify potentially low-quality alerts using a smart filter system. This form of filtering system can help in several areas:\u003c/p\u003e\n\u003ch3 id=\"accuracy\"\u003e\u003cstrong\u003eAccuracy\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eUsing sophisticated algorithms and data models, it is possible to differentiate between genuinely suspicious activity and benign transactions. This creates a batch of genuine alerts, which are passed on to the compliance team for further investigation.\u003c/p\u003e\n\u003ch3 id=\"relevance\"\u003e\u003cstrong\u003eRelevance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs mentioned above, it\u0026rsquo;s essential to put any potential alert into context, whether due to dealing size or the client\u0026rsquo;s trading history. If a client regularly deals in significant size, then the number of shares in a trade should not necessarily prompt a red flag.\u003c/p\u003e\n\u003ch3 id=\"timing\"\u003e\u003cstrong\u003eTiming\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIf the alert system is filtered by accuracy and relevance, this should create a more focused set of alerts with a strong requirement for further investigation. While still a reactive trigger, a prompt response can reduce further damage, financial losses and regulatory breaches.\u003c/p\u003e\n\u003ch2 id=\"regulatory-requirements-shaping-alert-standards\"\u003e\u003cstrong\u003eRegulatory requirements shaping alert standards\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eUltimately financial compliance alerting systems are defined by regulatory frameworks. We have the \u003ca href=\"https://www.congress.gov/bill/111th-congress/house-bill/4173/text\"\u003eDodd-Frank Act\u003c/a\u003e in the US, while the Market Abuse Regulation (MAR) dominates the EU, with the UK operating a similar system post-Brexit.\u003c/p\u003e\n\u003cp\u003eThese regulations impact alerting standards in several ways:\u003c/p\u003e\n\u003ch3 id=\"risk-based-approach\"\u003e\u003cstrong\u003eRisk-based approach\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThere is no one-size-fits-all approach to monitoring compliance obligations and liabilities, as each firm will have a different focus depending on products traded and trade processes and volumes. Consequently, regulators are very keen to take a risk-based approach that ensures alerts are related to the institution\u0026rsquo;s actual exposure and regulatory focus.\u003c/p\u003e\n\u003ch3 id=\"documentation-and-audits\"\u003e\u003cstrong\u003eDocumentation and audits\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs you would expect, compliance monitoring systems must retain records of alerts, investigations and resolutions. This ensures that data is available in the event of a prosecution and also allows the regulator to audit, assess and investigate individual firms.\u003c/p\u003e\n\u003ch3 id=\"real-time-surveillance\"\u003e\u003cstrong\u003eReal-time surveillance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eSpecific regulations require real-time or near real-time monitoring of transactions and communications where possible. Institutions operating in these areas must invest in advanced technology to process large amounts of data.\u003c/p\u003e\n\u003ch3 id=\"continuous-improvement\"\u003e\u003cstrong\u003eContinuous improvement\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe innovative nature of those perpetrating market abuse means that financial institutions and regulators are on a course of continuous improvement. This includes introducing the latest technology and ongoing training of employees.\u003c/p\u003e\n\u003cp\u003eJust as financial institutions aim to filter out low-quality alerts to focus their time, effort, and resources on appropriate issues, regulators do the same. The last thing they want is to be inundated with low-quality, non-contextualised alerts that divert in-demand resources.\u003c/p\u003e\n\u003ch2 id=\"the-case-for-advanced-ai-and-machine-learning-in-alert-generation\"\u003e\u003cstrong\u003eThe case for advanced AI and machine learning in alert generation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhen we talk about advanced AI and machine learning systems, it can be tempting to focus more on time savings than on the broader benefits. It\u0026rsquo;s safe to say that new technology is transforming alert generation, enhancing accuracy and efficiency and filtering out low-quality or contextually irrelevant alerts.\u003c/p\u003e\n\u003cp\u003eThere are many ways in which the accuracy of financial compliance alerts has been improved:\u003c/p\u003e\n\u003ch3 id=\"adaptive-algorithms\"\u003e\u003cstrong\u003eAdaptive algorithms\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs we mentioned above, one of the fundamental problems with previous compliance monitoring systems was the relatively rigid rules. Complex algorithms constantly adapt their criteria, learning from new patterns and adapting to changing times.\u003c/p\u003e\n\u003ch3 id=\"contextual-analysis\"\u003e\u003cstrong\u003eContextual analysis\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eContextual analysis is critical for future compliance monitoring, whether examining market conditions or historic client trading activity. Considering potential alerts against the background of market trends and events, recent industry news and other timely information can put false positive alerts into context.\u003c/p\u003e\n\u003ch3 id=\"pattern-recognition\"\u003e\u003cstrong\u003ePattern recognition\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eA further benefit is the ability to analyse significant amounts of data and recognise new patterns that rule-based systems could miss. This ability to recognise nuanced deviations further enhances more accurate alert flagging. The benefits of this can be twofold; both the recognising of new alerts as well as the ability to offer dynamic, contextual, parameterisation of a Trade Surveillance tools’ alerts.\u003c/p\u003e\n\u003ch3 id=\"communication-surveillance\"\u003e\u003cstrong\u003eCommunication Surveillance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eNatural language processing is central to analysing unstructured data. It allows the reviewing of emails, chats or telephone calls and puts the discussions into context. Often overlooked, unstructured data can, in some instances, flag potential regulatory issues before they commence.\u003c/p\u003e\n\u003ch3 id=\"examples-of-successful-implementation\"\u003e\u003cstrong\u003eExamples of successful implementation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThere are many scenarios where smart flag generation has helped to both identify valid flags (which would have been missed by previous systems) and dismiss false alerts. These include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eAdaptive algorithms in transaction monitoring\u003c/li\u003e\n\u003cli\u003eContextual analysis with client risk scoring\u003c/li\u003e\n\u003cli\u003eAnomaly detection in market surveillance\u003c/li\u003e\n\u003cli\u003eNatural language processing and insider trading\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe flexible and in-depth nature of these elements has helped to significantly enhance compliance monitoring in the financial services industry. There will always be new challenges and threats emerging, and by definition, monitoring systems will often be playing catch-up. However, the introduction of AI and machine learning is supplying more innovative tools for regulators and financial institutions.\u003c/p\u003e\n\u003ch2 id=\"impact-on-compliance-efficiency-and-regulatory-confidence\"\u003e\u003cstrong\u003eImpact on compliance efficiency and regulatory confidence\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs an experienced regulatory technology company, eflow\u0026rsquo;s services have enhanced compliance efficiency and bolstered regulatory confidence for our clients. This is the practical end of the industry, the way we incorporate cutting-edge services into legacy systems.\u003c/p\u003e\n\u003cp\u003eWe know from client feedback that reducing alert volumes can significantly improve compliance performance through a number of means:-\u003c/p\u003e\n\u003ch3 id=\"enhanced-resource-allocation\"\u003e\u003cstrong\u003eEnhanced resource allocation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWe have a range of processes that reduce the number of false positives, allowing our clients to focus on genuine issues that require further investigation. This improves metrics such as return on investment, analyst efficiency, regulatory compliance, workload, and investigation quality.\u003c/p\u003e\n\u003ch3 id=\"improved-detection-accuracy\"\u003e\u003cstrong\u003eImproved detection accuracy\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eOur ability to adapt algorithms and leverage contextual analysis has seen us refine alert accuracy by recognising trading and transaction behaviour patterns. This minimises the risk of compliance breaches and the associated regulatory consequences.\u003c/p\u003e\n\u003ch3 id=\"reduced-alert-fatigue\"\u003e\u003cstrong\u003eReduced alert fatigue\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs with so many critical factors, alert fatigue is an issue that is often overlooked and dismissed. However, a constant flow of low-quality alerts can prompt \u003ca href=\"https://www.ukfinance.org.uk/policy-and-guidance/consultation-responses/uk-finance-response-pra-consultation-paper-2623-fca\"\u003ealert fatigue\u003c/a\u003e and increased errors. Enhanced trust in eflow systems reduces alert fatigue, allowing teams to remain focused.\u003c/p\u003e\n\u003cp\u003eFor executives focused on optimising resource allocation, eflow’s solutions provide measurable savings by allowing teams to concentrate on critical alerts, reducing overall compliance costs and enhancing operational efficiency.\u003c/p\u003e\n\u003ch2 id=\"linking-improvements-to-confidence-in-regulatory-audits-and-reviews\"\u003e\u003cstrong\u003eLinking improvements to confidence in regulatory audits and reviews\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWith investment markets, uncertainty breeds uncertainty, which is no different regarding regulatory compliance and trust. Some of the broader benefits of an improved alert system include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eStrengthened regulatory relationships\u003c/li\u003e\n\u003cli\u003eDetailed and traceable audits\u003c/li\u003e\n\u003cli\u003eIncreased regulatory confidence\u003c/li\u003e\n\u003cli\u003eLower risk of regulatory and financial penalties\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIf we drill down into the basics, it\u0026rsquo;s all about trust—trust in eflow services, information analysis, and the quality of alerts. These are conducive to a healthy respect for relationships with regulators and also strengthen and support your wider reputation with clients and third parties.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eIn financial compliance, effective alert filtering often hinges on context. What may initially seem suspicious can appear routine when viewed against a client’s typical trading activity and prevailing market conditions. Beyond the costs of investigating low-quality alerts, this contextual accuracy helps mitigate issues like alert fatigue, employee burnout, and morale challenges within compliance teams.\u003c/p\u003e\n\u003cp\u003eeflow’s adaptable surveillance systems are designed to continually improve accuracy. They offer a cost-effective, time-efficient, and future-proof approach to compliance. With our intelligent alert systems, financial institutions can enhance compliance at a lower cost, reduce risk exposure, and streamline operational efficiency—adding measurable value to the bottom line.\u003c/p\u003e\n","date_published":"2025-24-06T15:21:00+0000"},{"title":"What is MAR Regulation? Overview and Implications","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/what-is-mar-regulation-overview-and-implications/","summary":"\u003cp\u003eIntroduced in July 2016, the Market Abuse Regulation (MAR) replaced the Market Abuse Directive (MAD) to create a stronger, more uniform framework for tackling insider trading and market manipulation across EU financial markets. Today, MAR is a cornerstone of financial regulation, ensuring fairness and transparency. Increasing regulatory obligations in European financial markets have fueled the growth of Regulatory Technology (Regtech) as markets continue to grow and technology advances.\u003c/p\u003e\n\u003cp\u003eWhether looking at equities, fixed interest, commodities, or any other investment market, market integrity, trust, and investor protection are central to their success. In essence, MAR ensures that everyone follows the same rules, keeping markets honest and trustworthy.\u003c/p\u003e\n\u003cp\u003eIn this article, we will examine MAR compliance and surveillance obligations and their impact on broader trading activities.\u003c/p\u003e\n\u003ch1 id=\"understanding-mar-regulations\"\u003e\u003cstrong\u003eUnderstanding MAR regulations\u003c/strong\u003e\u003c/h1\u003e\n\u003cp\u003e\u003ca href=\"https://financialcrimeacademy.org/mar-and-mad-definition/\"\u003eMAR is an EU regulatory framework\u003c/a\u003e designed to prevent market manipulation, insider trading, and unfair trading practices. Its core objective is simple: to ensure transparency, fairness, and equal opportunity in financial markets and prevent any participant from gaining an unfair advantage.\u003c/p\u003e\n\u003cp\u003eThose operating in the financial markets will likely already be well aware of the ever-changing regulatory environment, and while it has evolved over time, MAR maintains several key objectives in aid of the fight to retain market integrity.\u003c/p\u003e\n\u003ch2 id=\"key-objectives-of-mar\"\u003e\u003cstrong\u003eKey objectives of MAR\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWith the broad objectives of MAR in mind, it is worth exploring the regulations’ key objectives in more detail:\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eEnhancing market transparency\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eTo ensure that all investors have equal access to material information, MAR requires listed entities to disclose inside information that could impact asset prices.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003ePreventing insider trading and market abuse\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe regulations prohibit individuals with non-public information from trading financial assets for personal gain. They also include additional trading practices such as spoofing, pump-and-dump schemes, and false rumours that can mislead investors and markets.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eEnsuring fair competition among market participants\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFair competition relies on a level playing field where no trader or institution has an unfair advantage. This promotes confidence, which then creates additional liquidity and more efficient markets.\u003c/p\u003e\n\u003ch1 id=\"key-provisions-of-mar\"\u003e\u003cstrong\u003eKey provisions of MAR\u003c/strong\u003e\u003c/h1\u003e\n\u003cp\u003eIn order to appreciate the regulatory obligations of MAR, it\u0026rsquo;s important to be aware of its key provisions:\u003c/p\u003e\n\u003ch2 id=\"insider-trading\"\u003e\u003cstrong\u003eInsider trading\u003c/strong\u003e\u003c/h2\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eWhat is insider trading?:\u003c/strong\u003e Trading which leverages non-public information that, if made public, would significantly affect the price of an asset.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eHow does insider trading occur?:\u003c/strong\u003e Executives, employees, or other connected individuals use privileged information for personal gain or pass it on to third parties.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eRegtech is a powerful tool that allows companies to monitor trading activity for suspicious patterns, analyse communications, and flag activity for further investigation.\u003c/p\u003e\n\u003ch2 id=\"market-manipulation\"\u003e\u003cstrong\u003eMarket manipulation\u003c/strong\u003e\u003c/h2\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eWhat is market manipulation?:\u003c/strong\u003e Any attempt to deliberately alter the value of a financial instrument by way of misleading or illegal trading practices.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eWhat are some examples of market manipulation?:\u003c/strong\u003e Prohibited trading practices include spoofing, wash trading, pump and dump, pinging and layering.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eUsing enhanced Regtech, real-time data analysis allows companies and regulators to spot suspicious patterns in trading behaviour. Machine learning allows the systems to adapt to new manipulation tactics, which may involve cross-border trading activity.\u003c/p\u003e\n\u003ch2 id=\"obligations-for-financial-firms\"\u003e\u003cstrong\u003eObligations for financial firms\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eUnder MAR, financial firms are required to take several steps to ensure their compliance.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eTrade surveillance\u003c/strong\u003e: Firms must monitor employee and client trading activity using multiple data sources and flag trades that deviate from standard patterns.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eReporting suspicious transactions\u003c/strong\u003e: Firms have a legal obligation to report suspicious transactions to regulators promptly and with supporting evidence.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eMaintaining market integrity\u003c/strong\u003e: Through internal controls, firms must have clear policies on market abuse, staff training and the use of RegTech to enhance detection accuracy/rates.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eTo put this into perspective, a report by \u003ca href=\"https://legal.thomsonreuters.com/en/insights/articles/how-regtech-can-transform-your-regulatory-compliance\"\u003eThomson Reuters\u003c/a\u003e back in 2020 noted an increase in global regulatory changes from 10 a day in 2008 to 200 a day by 2016. What will the figures be today with the introduction of digital assets and even tighter regulations on traditional trading?\u003c/p\u003e\n\u003ch1 id=\"best-practices-for-mar-compliance\"\u003e\u003cstrong\u003eBest practices for MAR compliance\u003c/strong\u003e\u003c/h1\u003e\n\u003cp\u003eWhen it comes to compliance with MAR, many different factors must be considered. Each is an important part of the overall picture and provides a degree of regulatory and legal cover for the companies.\u003c/p\u003e\n\u003ch2 id=\"implementing-robust-surveillance-systems\"\u003e\u003cstrong\u003eImplementing robust surveillance systems\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eRather than seeing the implementation of surveillance systems as a burdensome cost, it should be considered an investment. These systems can analyse huge amounts of data in real-time, highlighting suspicious activity such as insider trading and market manipulation. One key to long-term success is the ability of machine learning algorithms to detect unusual trading prior to the release of critical news.\u003c/p\u003e\n\u003cp\u003eReflecting the constant improvement and adoption of Regtech services, contextual analysis has seen a significant fall in false positives. This ensures compliance teams are not overwhelmed by unnecessary notifications that may require additional action.\u003c/p\u003e\n\u003cp\u003eWe can only estimate the level of cross-market manipulation as only recent technological enhancements have allowed the tracking of multiple asset classes and markets. For example, manipulating the price of oil in commodities markets can influence the value of options contracts.\u003c/p\u003e\n\u003ch2 id=\"employee-training-on-market-abuse\"\u003e\u003cstrong\u003eEmployee training on market abuse\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eTraining is now a core element of any business, but it is particularly important in financial services and MAR. Employees must be trained to recognise potential market abuse, be clear about the internal code of conduct, and understand acceptable and prohibited trading practices. When all employees work together, this creates an additional level of compliance, which benefits everyone.\u003c/p\u003e\n\u003cp\u003eSome firms conduct simulated compliance drills to test employee responses to insider trading leaks or suspicious trades. These exercises provide practical exposure, helping employees recognise and respond to potential market abuse in real scenarios.\u003c/p\u003e\n\u003ch2 id=\"enhancing-internal-controls-and-reporting-mechanisms\"\u003e\u003cstrong\u003eEnhancing internal controls and reporting mechanisms\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhen looking at the cutting-edge technology used in Regtech, it isn\u0026rsquo;t difficult to see the importance of enhanced internal controls and reporting mechanisms. These mechanisms not only protect firms from regulatory actions but also help maintain market integrity and transparency.\u003c/p\u003e\n\u003cp\u003eWhile real-time monitoring (which is reported to regulators) may not be enough to prevent insider trading, it has undoubtedly reduced its frequency. In reality, looking back over suspicious trades and gathering strong evidence of illegal activity and manipulation is as critical as real-time monitoring.\u003c/p\u003e\n\u003cp\u003eWe only need to look back 20 or 30 years to see the collapse of numerous alleged insider trading cases due to overly technical or insufficient evidence. The introduction of whistle-blower protection and anonymous reporting has strengthened ethical trading enforcement.\u003c/p\u003e\n\u003cp\u003eBy implementing these best practices, firms can reduce regulatory risks, enhance operational efficiency, and maintain strong investor market confidence.\u003c/p\u003e\n\u003ch1 id=\"how-eflow-helps-firms-stay-mar-compliant\"\u003e\u003cstrong\u003eHow eflow helps firms stay MAR-compliant\u003c/strong\u003e\u003c/h1\u003e\n\u003cp\u003eeflow provides \u003ca href=\"https://eflowglobal.com/\"\u003eadvanced Regtech solutions\u003c/a\u003e to help financial firms comply with MAR regulations efficiently and effectively.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eTrade Surveillance \u0026amp; Market Abuse Detection:\u003c/strong\u003e eflow\u0026rsquo;s trade surveillance system monitors trading activity, identifying suspicious patterns such as insider trading and market manipulation.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eDynamic Reporting \u0026amp; Automated Compliance Tools\u003c/strong\u003e: Our platform automates MAR reporting, reducing manual workload and ensuring timely and accurate Suspicious Transaction and Order Reports (STORs).\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eRegulatory Adaptability\u003c/strong\u003e: eflow’s solutions are continuously updated to align with evolving MAR requirements, helping firms stay ahead of regulatory changes without overhauling their compliance framework.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eeflow combines AI-driven automation, post-trade surveillance, and regulatory adaptability to help firms reduce compliance risks, improve efficiency, and maintain market integrity in an evolving regulatory landscape.\u003c/p\u003e\n\u003ch1 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h1\u003e\n\u003cp\u003eThe Market Abuse Regulation (MAR) is more than just a legal requirement; it is essential for ensuring fair, transparent, and trustworthy financial markets. MAR protects investors and upholds market integrity by preventing insider trading and market manipulation. However, compliance is not without its challenges. Firms must navigate complex reporting obligations, evolving regulations, and increasing surveillance demands.\u003c/p\u003e\n\u003cp\u003eFinancial institutions need smart, efficient, and scalable compliance solutions to stay ahead. This is where Regtech plays a critical role. Advanced tools like eflow’s trade surveillance, automated reporting, and AI-driven risk detection can help firms reduce regulatory risks, enhance operational efficiency, and maintain investor confidence.\u003c/p\u003e\n\u003cp\u003eNow is the time for firms to strengthen their compliance frameworks. By embracing Regtech-powered MAR compliance, businesses can meet regulatory obligations and gain a competitive edge in today’s fast-moving financial landscape. Are you ready to take control of your MAR compliance? Let’s \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003etalk\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-12-06T14:01:00+0000"},{"title":"How to Stay Compliant with Evolving MAR Regulations","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/how-to-stay-compliant-with-evolving-mar-regulations/","summary":"\u003cp\u003eThe regulatory landscape is undergoing a significant transformation. The Market Abuse Regulation (MAR) is expanding its reach, encompassing cryptocurrency transactions, alternative data sources, and off-channel communications. This evolution reflects a broader shift towards more comprehensive oversight in financial markets.\u003c/p\u003e\n\u003cp\u003eRecent actions by regulatory bodies underscore this proactive approach. For instance, in 2023, \u003ca href=\"https://www.mnb.hu/en/supervision/news/esma-publishes-first-consolidated-report-on-sanctions\"\u003eover 970 administrative sanctions and measures\u003c/a\u003e were imposed across EU Member States in the financial sector under ESMA\u0026rsquo;s purview, amounting to more than €71 million in fines. Notably, the highest amounts of administrative fines were imposed under MAR and MiFID II, highlighting the increasing focus on market abuse enforcement.\u003c/p\u003e\n\u003cp\u003eThese developments signal a clear message: compliance frameworks must evolve in tandem with regulatory expectations. Firms can no longer rely on static systems; instead, they need agile, forward-looking strategies to navigate the complexities of modern compliance.\u003c/p\u003e\n\u003cp\u003eIn this article, we delve into MAR\u0026rsquo;s future trajectory, exploring anticipated regulatory changes and offering insights on how compliance leaders can stay ahead of these evolving obligations.\u003c/p\u003e\n\u003ch2 id=\"the-future-of-mar-regulation-updates-whats-coming-next\"\u003e\u003cstrong\u003eThe future of MAR regulation updates: What’s coming next?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs financial markets continue to evolve, regulators are looking to keep pace and, in some areas, accelerate by expanding the scope of MAR. For compliance leaders, the question isn\u0026rsquo;t if obligations will increase but when and how quickly.\u003c/p\u003e\n\u003ch3 id=\"expanding-the-scope-of-insider-trading\"\u003e\u003cstrong\u003eExpanding the scope of insider trading\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eFor years, insider trading has been the bane of regulators, but recent MAR regulation updates aim to close enforcement gaps. While relatively easy to identify in theory, successful prosecutions have proved more difficult. As a means of expanding the reach, ESMA is considering expanding the definition of insider trading under MAR to include ‘shadow trading’- where individuals trade securities of economically linked companies using insider information.\u003c/p\u003e\n\u003cp\u003eThis would represent a shift from MAR’s current focus on specific securities and related instruments, aligning EU rules with the approach taken by the SEC in the landmark \u003ca href=\"https://www.gibsondunn.com/sec-successfully-prosecutes-novel-shadow-trading-theory-at-trial/\"\u003ePanuwat\u003c/a\u003e case.\u003c/p\u003e\n\u003cp\u003eThe FCA is also exploring whether to broaden enforcement powers by targeting ‘information chains’ - extending liability beyond direct insiders to those indirectly passing on insider information. This would expand MAR enforcement beyond its current focus on primary insiders and recipients, capturing those facilitating insider trading through multi-level information sharing.\u003c/p\u003e\n\u003cp\u003eRegulators are also assessing whether algorithmic trading strategies that execute pre-programmed trades influenced by insider knowledge should fall under MAR’s insider trading prohibitions. This would represent an extension of MAR’s current scope, which does not explicitly cover algorithm-driven trades derived indirectly from inside information. If the scope of insider trading is officially expanded, firms will need to monitor \u0026ldquo;connected\u0026rdquo; securities, not just issuer securities.\u003c/p\u003e\n\u003ch3 id=\"crypto-and-digital-asset-integration\"\u003e\u003cstrong\u003eCrypto and digital asset integration\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eESMA is working to align crypto-asset oversight with MAR principles by issuing guidelines under the Markets in Crypto-Assets Regulation (MiCA). While MAR itself has not yet been formally extended to cover crypto-assets, these guidelines signal a potential future integration. Expanding MAR-style market abuse monitoring into crypto trading on regulated platforms, where no such coverage previously existed.\u003c/p\u003e\n\u003cp\u003eWhile the concept of crypto and digital assets revolves around decentralised ledgers, regulators plan to use digital wallets as market abuse monitoring tools. Compliance systems will need to ingest blockchain transaction data alongside traditional market information to meet regulatory obligations. As a means of controlling trading in crypto and digital assets, there is likely to be significant cross-border cooperation between the UK, EU, and US regulators as future MAR regulation updates increasingly target digital assets.\u003c/p\u003e\n\u003ch3 id=\"communication-surveillance-tightening\"\u003e\u003cstrong\u003eCommunication surveillance tightening\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eOn numerous occasions, \u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-79\"\u003eFCA Market Watch 79\u003c/a\u003e has helped flag several shortcomings in communication surveillance systems, especially around data gaps, failure to monitor all relevant channels, and thoroughly tested logic. Consequently, the FCA has increased scrutiny of business-related communications on encrypted messaging apps like WhatsApp, Signal, and Telegram, signalling a tightening interpretation of MAR’s communication surveillance obligations.\u003c/p\u003e\n\u003cp\u003eWhile no new binding rules have been introduced, this heightened expectation effectively expands enforcement under existing MAR provisions. This requires firms to ensure such channels are captured and monitored, where previously oversight may have been narrower.\u003c/p\u003e\n\u003cp\u003eWe will likely see more enforcement risk under existing MAR provisions where firms fail to capture/retain the relevant communications, both internal and external. There is also a growing focus on BYOD (bring your own device) policies, with the expectation that firms will ensure that communications are recorded for compliance.\u003c/p\u003e\n\u003cp\u003eIn high-risk areas, technology is shifting towards real-time monitoring of communications. Post-event reviews may no longer be enough. This has created a compliance challenge for many companies, integrating a wide range of communication platforms into unified surveillance systems.\u003c/p\u003e\n\u003ch2 id=\"why-staying-ahead-matters-risk-of-falling-behind\"\u003e\u003cstrong\u003eWhy staying ahead matters: Risk of falling behind\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eStaying ahead of the compliance curve - especially as MAR regulation updates increase obligations - has many benefits, including reduced risk, less chance of censorship, and more time focusing on client-facing services. Cutting-edge RegTech solutions ensure you are not just up-to-date with your regulatory obligations but also planning for the future.\u003c/p\u003e\n\u003ch3 id=\"upcoming-mar-amendments\"\u003e\u003cstrong\u003eUpcoming MAR amendments\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThere is no doubt that MAR is being used as a broad canvas to enhance and increase regulatory protection for clients and markets. This will mean increased reporting obligations for firms, who must prepare systems for today and tomorrow.\u003c/p\u003e\n\u003ch3 id=\"ai-driven-monitoring\"\u003e\u003cstrong\u003eAI-driven monitoring\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAutomated surveillance tools are integral to market abuse detection, leading to faster and more precise enforcement actions. The increasing use of AI and data analytics is making a huge difference, and with machine learning effectively \u0026ldquo;learning on the job\u0026rdquo;, this impact will only increase.\u003c/p\u003e\n\u003ch3 id=\"risk-of-non-compliance\"\u003e\u003cstrong\u003eRisk of non-compliance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs the regulatory burden increases and market abuse detection systems continually improve, the dangers of non-compliance are growing. Those failing to maintain their internal regulatory framework, leading to non-compliance, can trigger a loss of investor trust, higher regulatory scrutiny and increased audit frequency.\u003c/p\u003e\n\u003cp\u003eThe combined effect is significant, but the financial impact of losing investor trust is far more damaging. There are also other issues to take into consideration, such as:-\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThe increase in enforcement penalties\u003c/li\u003e\n\u003cli\u003eManagement\u0026rsquo;s responsibility to incorporate \u0026ldquo;reasonable procedures\u0026rdquo;\u003c/li\u003e\n\u003cli\u003eFailure to automate compliance will give competitors a significant advantage\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eOne of the unsung advantages of today\u0026rsquo;s RegTech solutions is scalability, the ability to maintain strong compliance as your business grows.\u003c/p\u003e\n\u003ch2 id=\"the-challenges-faced-by-compliance-leaders\"\u003e\u003cstrong\u003eThe challenges faced by compliance leaders\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eHistorically seen as removed from everyday business, under an “us and them” shadow, compliance teams are now an integral part of daily activity. They must work closely with colleagues in all departments to create strong foundations and a sustainable regulatory framework.\u003c/p\u003e\n\u003ch3 id=\"keeping-pace-with-regulatory-change\"\u003e\u003cstrong\u003eKeeping pace with regulatory change\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIt is becoming more evident that legacy systems can have significant limitations, lacking the flexibility to adapt swiftly to regulatory changes. This makes timely updates challenging and often reliant on manual processing. Aside from the obvious time disadvantage, human error can cause serious problems and hinder the adoption of new regulations.\u003c/p\u003e\n\u003cp\u003eMany companies are also experiencing budgetary pressures, with existing staff often pushed to the limit. This reduces the necessary resources required to fund and carry out upgrades and improvements to existing systems.\u003c/p\u003e\n\u003ch3 id=\"data-and-communications-integration\"\u003e\u003cstrong\u003eData and communications integration\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhen creating the growing array of regulatory and compliance reports, a typical compliance team will need to pull data from multiple systems, including:-\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eTrading platforms\u003c/li\u003e\n\u003cli\u003eCommunication surveillance tools\u003c/li\u003e\n\u003cli\u003eMarket data sources\u003c/li\u003e\n\u003cli\u003eFragmented information silos\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThis is the price of detached legacy systems, which lack the flexibility and scalability of modern RegTech solutions.\u003c/p\u003e\n\u003ch3 id=\"manual-surveillance-and-alert-fatigue\"\u003e\u003cstrong\u003eManual surveillance and alert fatigue\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eA lack of nuance in legacy surveillance systems often results in high numbers of false positives. This can quickly overwhelm compliance teams, meaning they need to divert attention away from genuine threats to false alerts.\u003c/p\u003e\n\u003cp\u003eIn an area with significant human oversight, the constant influx of alerts can often lead to desensitisation amongst compliance staff. The knock-on effect is the risk of missing critical issues, which could trigger regulatory intervention and deeper investigations. Automating a significant element of the regulatory process improves operational efficiency and accuracy.\u003c/p\u003e\n\u003ch2 id=\"how-to-stay-compliant-proactive-strategies-for-a-moving-target\"\u003e\u003cstrong\u003eHow to stay compliant: Proactive strategies for a moving target\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eBalancing the need to focus on business operations while being acutely aware of growing regulatory liabilities is a challenge, even considering the latest RegTech solutions. However, a proactive approach ensures you are prepared for your obligations today and tomorrow, looking ahead as far as possible.\u003c/p\u003e\n\u003cp\u003eThere are three fundamental pillars which allow compliance teams to navigate the dynamic regulatory landscape, including:\u003c/p\u003e\n\u003ch3 id=\"automated-trade-and-market-surveillance\"\u003e\u003cstrong\u003eAutomated trade and market surveillance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eFor many companies, trade and market surveillance automation is taken for granted. The ability to adjust thresholds based on market volatility, thereby reducing false positives, is especially important during hectic, turbulent periods.\u003c/p\u003e\n\u003cp\u003eMany clients leverage our \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eeflow TZTS trade surveillance system\u003c/a\u003e, which facilitates conditional parameters tailored to specific trading activities, thereby improving detection accuracy. The key here is to contextualise each firm\u0026rsquo;s broader regulatory responsibilities, maximising operational efficiency while maintaining full compliance.\u003c/p\u003e\n\u003ch3 id=\"integrated-communication-surveillance\"\u003e\u003cstrong\u003eIntegrated communication surveillance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eRegTech systems can now process structured and unstructured data, which is excellent for integrating communication surveillance into existing systems. A unified platform consolidating real-time data from various communication channels, such as email, WhatsApp, Teams, etc., is now possible.\u003c/p\u003e\n\u003cp\u003eAdvanced analytics, such as natural language processing, can also identify sentiment in structured and unstructured data, flagging potentially suspicious behaviour. Technological breakthroughs now make it possible to link specific communications with relevant trades, providing a holistic view of potential market abuse.\u003c/p\u003e\n\u003ch3 id=\"future-ready-compliance-reporting\"\u003e\u003cstrong\u003eFuture-ready compliance reporting\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eGone are the days of reading through huge regulatory folders to appreciate forthcoming regulatory changes. Implementing systems that automatically update report formats in accordance with ESMA and FCA minimises manual intervention and ensures your systems stay up-to-date.\u003c/p\u003e\n\u003cp\u003eAnother element often overlooked is data enrichment, which can put vital information into context. This ensures the accuracy and completeness of regulatory reports, which can be automatically dispatched to the relevant bodies. Integrating new RegTech solutions with existing systems ensures efficient data management and reporting processes, thereby minimising errors.\u003c/p\u003e\n\u003cp\u003eBy focusing on these three pillars, firms can enhance their compliance posture, reduce operational risks, and stay ahead in a rapidly changing regulatory environment.\u003c/p\u003e\n\u003ch2 id=\"practical-next-steps-for-firms\"\u003e\u003cstrong\u003ePractical next steps for firms\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eIt\u0026rsquo;s critical to adopt a proactive approach in the face of evolving MAR to ensure full compliance and operational resilience. The following is a basic checklist which outlines actionable steps which will allow you to future-proof your compliance framework:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eConduct a MAR gap analysis: It\u0026rsquo;s essential to regularly assess your compliance positioning against the latest ESMA and FCA guidelines, allowing you to address any deficiencies. Our RegTech solutions ensure that your systems are updated with the latest regulatory changes as they are confirmed.\u003c/li\u003e\n\u003cli\u003eMap data flows: The seamless integration of order management systems, execution management systems, communication platforms, and market data sources is critical to facilitating comprehensive surveillance.\u003c/li\u003e\n\u003cli\u003eTransition to adaptive surveillance systems: Historically, compliance systems have been founded on static rule-based analysis. Today\u0026rsquo;s RegTech solutions have moved towards more adaptive platforms that can evolve with market conditions and regulatory changes, thereby reducing false positives.\u003c/li\u003e\n\u003cli\u003eEstablish internal protocols: In addition to ongoing staff training, firms must develop clear escalation and documentation procedures to address suspected market abuse. This ensures that any incidents can be considered promptly and effectively responded to.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eCompliance with ever-changing regulations is ongoing and effectively a moving target. However, implementing the above steps can significantly enhance your firm’s compliance capabilities, improve operational efficiency, and give you more time for client-facing services.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eRegulators aren\u0026rsquo;t standing still, and neither can you, as Market Abuse Regulation expands to cover crypto-assets, alternative data, and off-channel communications. One thing is clear: Compliance is no longer a static checkbox exercise; it’s a moving target, and only firms with adaptive, future-ready systems will be able to stay ahead.\u003c/p\u003e\n\u003cp\u003eThe firms winning in this environment aren’t those adding more manual checks or scrambling to retrofit outdated systems. They\u0026rsquo;re embracing platform-based compliance, reducing false positives, integrating trade and communication surveillance, and updating rules in days, not months.\u003c/p\u003e\n\u003cp\u003eYou\u0026rsquo;re not just reducing regulatory risk by shifting from reactive to proactive compliance. You\u0026rsquo;re safeguarding your firm\u0026rsquo;s reputation, operational resilience, and competitive edge in a world where regulators use AI and data analytics to spot issues faster than ever.\u003cbr\u003e\u003ca href=\"https://eflowglobal.com/contact-us/\"\u003eContact eflow\u003c/a\u003e today to discover how our dynamic compliance platform helps you stay ahead of evolving MAR obligations and MAR regulation updates, with less complexity, lower risk, and greater agility.\u003c/p\u003e\n","date_published":"2025-09-06T17:07:00+0000"},{"title":"Key takeaways from FINRA’s 2025 Annual Conference","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/key-takeaways-from-finra-s-2025-annual-conference/","summary":"\u003ch1 id=\"what-we-learned-at-the-2025-finra-annual-conference\"\u003eWhat we learned at the 2025 FINRA Annual Conference\u003c/h1\u003e\n\u003cp\u003eFINRA’s Annual Conference in Washington, D.C., is a cornerstone event in the regulatory calendar, bringing together member firms, FINRA staff, and industry leaders to exchange insights on the future of risk and compliance. With over 30 sessions covering communications supervision, vendor risk management, AI, cybersecurity, and remote oversight, the event offered a valuable lens into FINRA’s evolving priorities. The eflow Global team was on the ground, and in this blog, we share some of our key takeaways for surveillance and compliance professionals.\u003c/p\u003e\n\u003ch3 id=\"expect-closer-collaboration\"\u003eExpect closer collaboration\u003c/h3\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cem\u003e“Member firm engagement is critical to what we do.”\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eRobert Cook, FINRA CEO\u003c/em\u003e\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003eOne of the clearest themes across the three-day event was cooperation. The tone from FINRA leadership was notably collaborative, with repeated invitations for firms to engage, challenge, and partner with the regulator. “We want to work with you… Getting direct feedback from [members] really does benefit us,” one official emphasized. There was a consistent message that FINRA wants to be a co-pilot in building stronger, safer markets.\u003c/p\u003e\n\u003cp\u003eFINRA openly acknowledged the resource pressures facing firms, particularly smaller members, and framed its role as enabling, not obstructing, innovation. The message felt genuine and constructive: \u003cem\u003etell us what’s working, what’s not, and how we can help.\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eThe sentiment at the event reflects the supervisor\u0026rsquo;s recent initiatives. It’s investing in practical support: tailored guidance, clearer feedback loops, and more efficient oversight processes. The goal is to reduce regulatory friction and give firms more room to anticipate risks and innovate confidently.\u003c/p\u003e\n\u003cp\u003eThis collaborative spirit mirrors a broader global trend called out in our Global Market Abuse Surveillance Report, released in March 2025. In it, we predicted that global regulators would move away from purely reactive enforcement and toward more preventative, data-informed and collaborative supervision. We’re now seeing that play out in real time. For surveillance and compliance teams, there’s a real opportunity to shape how oversight evolves through open dialogue, transparency, and shared insight. In today’s environment, that kind of partnership is vital.\u003c/p\u003e\n\u003ch3 id=\"artificial-intelligence-poses-questions-for-recordkeeping\"\u003eArtificial Intelligence poses questions for recordkeeping\u003c/h3\u003e\n\u003cp\u003eAnother standout topic was the growing influence of generative AI on compliance, supervision, and communications. While AI has long been used in financial services, FINRA sees the latest wave of generative tools as fundamentally reshaping workflows, bringing both powerful efficiencies and complex regulatory challenges. From summarization tools to client-facing automation, firms are exploring transformative capabilities. But this evolution raises an important question: how do these tools fit within existing compliance frameworks?\u003c/p\u003e\n\u003cp\u003eFINRA’s approach is refreshingly open. The April 2025 request for comment on modernizing workplace rules signals a clear intent to understand how member firms are deploying AI in practice. There’s growing recognition that oversight frameworks, especially those focused on communication surveillance, must evolve to reflect the realities of decentralized teams, cloud infrastructure, and increasingly autonomous systems.\u003c/p\u003e\n\u003ch4 id=\"implications-for-recordkeeping-and-risk-monitoring\"\u003eImplications for Recordkeeping and Risk Monitoring\u003c/h4\u003e\n\u003cp\u003eA key question posed by FINRA: When does an AI-generated output - whether a chatbot reply, meeting summary, or suggested client communication - cross the line into becoming a regulated communication or business record?\u003c/p\u003e\n\u003cp\u003eThis matters because recordkeeping rules exist to ensure accountability, auditability, and investor protection. If generative AI produces content that informs or interacts with clients or even internal stakeholders, should that content be retained and supervised like traditional electronic communications?\u003c/p\u003e\n\u003cp\u003eFINRA hasn’t provided a firm answer yet, but it wants firms to engage with the issue and help shape the response. For surveillance and compliance teams, that’s a critical opportunity to define policies and controls that ensure transparency and defensibility as generative AI becomes more deeply embedded in day-to-day operations. FINRA’s principles-based stance offers space for innovation, but it also places the onus on firms to build governance frameworks that can stand up to regulatory scrutiny.\u003c/p\u003e\n\u003ch3 id=\"expect-to-see-more-ecomms-enforcement\"\u003eExpect to see more eComms enforcement\u003c/h3\u003e\n\u003cp\u003eRetail communications, particularly those involving digital assets, remain firmly in FINRA’s sights. During the conference, officials shared updates on an ongoing review launched in late 2022, shortly after the collapse of FTX. While enforcement actions have not yet been announced, the findings were notable: potential violations of Rule 2210 were identified in 70% of the communications reviewed, across more than 500 materials.\u003c/p\u003e\n\u003cp\u003eThe review included messaging related to crypto assets offered directly by firms or through affiliates and third parties. Common issues included comparisons between crypto and cash-like products, vague disclosures about risk, and unclear statements regarding regulatory protections. In many cases, a small subset of firms accounted for most of the problematic content.\u003c/p\u003e\n\u003cp\u003eFor firms still handling client interest in digital assets, from custody to compliance, our takeaway was that communications must be fair, balanced, and accurate. As new product categories emerge, the burden is on firms to ensure their messaging holds up to scrutiny. The focus from FINRA isn\u0026rsquo;t just on what’s being offered, but \u003cem\u003ehow\u003c/em\u003e it’s being explained.\u003c/p\u003e\n\u003ch3 id=\"some-final-thoughts\"\u003eSome final thoughts\u003c/h3\u003e\n\u003cp\u003eAs FINRA continues to evolve its approach, firms have a clear opportunity to shape the path forward. Surveillance and compliance teams that engage proactively, particularly around AI, communications, and recordkeeping, will be better positioned to stay ahead of regulatory expectations.\u003c/p\u003e\n\u003cp\u003eAt eflow Global, we help firms simplify surveillance, automate control testing, and prepare confidently for the future of regulation. To learn how we can support your compliance strategy, get in touch or explore our solutions \u003ca href=\"https://eflowglobal.com/\"\u003ehere\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-05-06T12:35:47+0000"},{"title":"Overcoming compliance challenges posed by legacy systems","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/overcoming-compliance-challenges-posed-by-legacy-systems/","summary":"\u003ch1 id=\"the-risk-of-legacy-compliance-systems\"\u003eThe risk of legacy compliance systems\u003c/h1\u003e\n\u003cp\u003eIf your firm is still replying on outdated compliance systems, you’re not alone. While familiarity with your legacy systems and lack of resources may make updating your system unappealing, outdated compliance software can be a ticking timebomb for compliance.\u003c/p\u003e\n\u003cp\u003eAgeing systems can’t keep up with evolving regulations and cyber threats, exposing companies to security breaches, fines, and inefficiencies. In today\u0026rsquo;s fast-moving digital landscape, it\u0026rsquo;s critical that your systems are up to date so that you can fulfil your compliance obligations.\u003c/p\u003e\n\u003cp\u003eIn this article, we will address legacy systems challenges and their impact on regulatory obligations. While many budgets are stretched, adhering to industry regulations is not an option; it’s a necessity, and failure to do so could significantly impact not only your balance sheet but also your reputation.\u003c/p\u003e\n\u003ch2 id=\"understanding-legacy-systems\"\u003e\u003cstrong\u003eUnderstanding legacy systems\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eBefore we look at the challenges legacy systems can create, it’s important to identify exactly what they are. These systems use outdated software and hardware infrastructures that are being replaced by modern, more efficient alternatives. Legacy systems may still function, but emerging technology highlights their operational and compliance limitations.\u003c/p\u003e\n\u003cp\u003eSome typical characteristics of legacy systems might include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eOutdated technology and architecture\u003c/li\u003e\n\u003cli\u003eLack of vendor support and updates\u003c/li\u003e\n\u003cli\u003eIntegration difficulties with modern applications\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eSeeing the basic characteristics of a legacy system may prompt many readers to reconsider their position: \u003cem\u003eIs your business really up-to-date with the latest cutting-edge compliance systems?\u003c/em\u003e\u003c/p\u003e\n\u003ch3 id=\"prevalence-in-organisations\"\u003e\u003cstrong\u003ePrevalence in organisations\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eTechnology evolves rapidly, and while today’s systems may seem sufficient, legacy systems present more profound challenges. Despite their limitations, many organisations still rely on them due to high replacement costs, operational dependencies, and the risk of downtime.\u003c/p\u003e\n\u003cp\u003eIn a highly competitive industry where margins are tight and running costs are rising, system upgrades often take a backseat. However, the potential damage caused by outdated systems, from regulatory non-compliance to reputational harm, can far outweigh the costs of modernisation.\u003c/p\u003e\n\u003ch2 id=\"compliance-challenges-from-legacy-systems\"\u003e\u003cstrong\u003eCompliance challenges from legacy systems\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eOn the surface, your existing legacy system may seem to be delivering exactly what you need. However, when you dig a little deeper, a whole host of compliance issues emerge.\u003c/p\u003e\n\u003ch3 id=\"security-vulnerabilities\"\u003e\u003cstrong\u003eSecurity vulnerabilities\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIn the world of financial services, regulators have brought this huge issue to the fore. Outdated security systems increase the risk of data breaches due to weak encryption standards.\u003c/p\u003e\n\u003ch3 id=\"data-management-issues\"\u003e\u003cstrong\u003eData management issues\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eMany legacy systems have difficulty maintaining data integrity and accuracy, and retrieval is often far from straightforward. If the required information is not readily available, the potential impact on not only compliance audits but also client services is clear.\u003c/p\u003e\n\u003ch3 id=\"regulatory-updates\"\u003e\u003cstrong\u003eRegulatory updates\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eInternal systems must adapt to the latest compliance regulations. Even introducing a manual process, which is far from ideal even as a short-term measure, has its own basic weaknesses, such as higher error rates.\u003c/p\u003e\n\u003ch3 id=\"documentation-and-audit-trails\"\u003e\u003cstrong\u003eDocumentation and audit trails\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIt is often a case of one in, one out when it comes to system updates, with vendors more focused on today’s technology for obvious reasons. Consequently, vendor support and assistance will fade as your legacy system ages. This will expose significant dangers, such as an outdated central IT system that lacks meaningful support.\u003c/p\u003e\n\u003ch2 id=\"strategies-to-mitigate-compliance-risks\"\u003e\u003cstrong\u003eStrategies to mitigate compliance risks\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eLong-term planning is critical to any business\u0026rsquo;s success, but investment is crucial to mitigating compliance and operational risks when it comes to legacy system challenges. Various strategies can help mitigate legacy system challenges\u0026quot;.\u003c/p\u003e\n\u003ch3 id=\"system-modernisation\"\u003e\u003cstrong\u003eSystem modernisation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAfter the initial cost of replacing your legacy system, it’s important to see updating as a continual process. Cloud-based solutions for compliance have numerous benefits, such as efficiency and cost, which are critical when considering investment in new technology. However, a full system replacement is not an option for all businesses.\u003c/p\u003e\n\u003ch3 id=\"implementing-middleware-solutions\"\u003e\u003cstrong\u003eImplementing middleware solutions\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eOne popular strategy used by many companies is implementing middleware solutions that effectively bridge the gap between legacy and modern systems. This is where eflow excels, bringing together legacy systems and the latest cutting-edge Regtech technology at a fraction of the price of a system overall.\u003c/p\u003e\n\u003ch3 id=\"regular-compliance-audits\"\u003e\u003cstrong\u003eRegular compliance audits\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eA growing number of companies now employ the services of external third parties to carry out regular compliance audits of not only their technology and systems but also their internal processes. These audits identify and address compliance gaps, often prompting the introduction of automated tools for continuous monitoring.\u003c/p\u003e\n\u003ch3 id=\"employee-training-and-awareness\"\u003e\u003cstrong\u003eEmployee training and awareness\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eStaff training is essential for both compliance and business success. Regular training will help update employees about new systems, compliance requirements, and best practices. Continuous training and awareness should be part of your employee handbook, helping to establish a culture of compliance within organisations.\u003c/p\u003e\n\u003ch2 id=\"how-eflow-can-help-with-legacy-systems-challenges\"\u003e\u003cstrong\u003eHow eflow can help with legacy systems challenges\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eOur experience in providing clients with robust compliance technology has helped a number of financial firms overcome legacy system challenges. Our \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eTrade Surveillance\u003c/a\u003e, \u003ca href=\"https://eflowglobal.com/tz-best-execution-and-transaction-cost-analysis/\" target=\"_blank\" rel=\"noopener\"\u003eBest Execution\u003c/a\u003e, \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eeComms Surveillance\u003c/a\u003e and \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\" target=\"_blank\" rel=\"noopener\"\u003eTransaction Reporting\u003c/a\u003e solutions are designed help firms move beyond outdated legacy systems to ensure compliance with the regulatory standards.\u003c/p\u003e\n\u003ch3 id=\"automating-compliance\"\u003e\u003cstrong\u003eAutomating compliance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eMany legacy systems rely on manual compliance checks, leading to inefficiencies and risks. Automating regulatory reporting ensures seamless and consistent data validation and submission. The end result is compliant workflows, improved accuracy, and enhanced efficiency.\u003c/p\u003e\n\u003ch3 id=\"enhancing-risk-and-surveillance-capabilities\"\u003e\u003cstrong\u003eEnhancing risk and surveillance capabilities\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eBy leveraging machine learning-driven surveillance tools, TZTS is able to detect market abuse and suspicious trading activity. The automatic flagging of potential compliance breaches and reduced number of false positives increase efficiency and reaction times.\u003c/p\u003e\n\u003ch3 id=\"future-proofing-and-scalability\"\u003e\u003cstrong\u003eFuture-proofing and scalability\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eMany legacy systems tend to be relatively inflexible, which can make it very difficult to adapt to new regulations. The introduction of modern Regtech solutions brings with it regular compliance updates, allowing businesses to remain compatible with global regulations, and customisable rule alerts. Built-in scalability ensures that you can also fulfil your compliance obligations as your business grows.\u003c/p\u003e\n\u003ch3 id=\"reduced-operational-and-compliance-costs\"\u003e\u003cstrong\u003eReduced operational and compliance costs\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe ability to optimise compliance operations, reducing the need for manual intervention, will significantly impact operational and compliance costs going forward. In addition, this not only reduces the risk of regulatory fines but also helps enhance client confidence and avoid reputational damage.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eLegacy systems pose serious compliance risks, from security vulnerabilities to regulatory inefficiencies. Evolving regulations make outdated technology a compliance risk.\u003c/p\u003e\n\u003cp\u003eeflow solves this problem, offering tech-driven surveillance, automated reporting, and seamless integration without costly system overhauls. By addressing legacy systems challenges, clients can stay compliant, reduce costs, and future-proof operations.\u003c/p\u003e\n\u003cp\u003eDon’t let outdated systems hold you back. \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003eBook a consultation today\u003c/a\u003e to discover how our Regtech solutions can help you stay ahead of evolving regulations.\u003c/p\u003e\n","date_published":"2025-30-05T14:51:00+0000"},{"title":"The FCA’s strategic shift","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/the-fca-s-strategic-shift/","summary":"\u003ch1 id=\"a-smarter-approach-to-preventing-market-abuse\"\u003eA smarter approach to preventing market abuse\u003c/h1\u003e\n\u003cp\u003eThe FCA’s 2025-2030 \u003ca href=\"https://eflowglobal.com/the-fcas-5-year-strategy-what-it-means-for-trade-surveillance-market-abuse-and-the-regtech-frontier/\"\u003estrategy\u003c/a\u003e signals a bold shift toward tech-driven, collaborative oversight. With a focus on becoming a smarter regulator, fighting financial crime, and enabling growth, the strategy places market abuse prevention at the heart of its agenda. From using AI to detect misconduct to promoting earlier, more open engagement with firms, the FCA is walking the walk on modernising surveillance and compliance, setting clear expectations for firms to do the same.\u003c/p\u003e\n\u003cp\u003eA recent \u003ca href=\"https://www.fca.org.uk/news/speeches/our-agenda-combat-market-abuse\"\u003espeech\u003c/a\u003e by Therese Chambers, joint executive director of enforcement and market oversight, reinforces the FCA’s renewed approach to tackling market abuse. Framed through the lens of “Three Ps” — predictable, proportionate, and purposeful — the regulator aims to improve market cleanliness and boost economic growth by engaging earlier, communicating more clearly, and focusing its energy where it can have the most impact.\u003c/p\u003e\n\u003ch3 id=\"predictable\"\u003ePredictable\u003c/h3\u003e\n\u003cp\u003eThe FCA is sharpening its communications to focus on what truly matters to firms, aiming to deliver predictability through clarity, consistency, and relevance. By streamlining messages and prioritising transparency around its decisions and expectations, the regulator is helping firms act early to prevent market abuse. The FCA reinforced the importance of communications such as their MarketWatch series and Primary Market Bulletins, which serve as channels for sharing enforcement activity, priorities and learnings.\u003c/p\u003e\n\u003ch3 id=\"proportionate\"\u003eProportionate\u003c/h3\u003e\n\u003cp\u003eThe FCA’s focus on proportionality is simple in principle: remove duplication, ask only for the data that’s truly needed, and ease the regulatory load where possible. However, lowering the volume of data requests does not mean reduced regulatory scrutiny — it means a greater focus on the data that is submitted.\u003c/p\u003e\n\u003cp\u003eThis means the burden shifts, in part, back to the regulator. With fewer data points, the FCA has to get smarter in how it uses what it receives. That’s a good thing. The speech made clear that the regulator is ready to hold itself to higher standards by improving internal analytics and refining how it monitors markets, particularly in volatile conditions.\u003c/p\u003e\n\u003cp\u003eAt the same time, the FCA is signalling a greater appetite for calculated risk. A prime example is its plan for a new market model: the Private Intermittent Securities and Capital Exchange System, or PISCES. Designed as a “private plus” venue, PISCES would allow private companies to trade shares periodically, outside the full scope of the Market Abuse Regulation. This isn’t a public market in disguise, it’s a targeted innovation to support growth, where transaction reporting won’t apply and disclosures will be limited to eligible investors. It reflects a shift in mindset: when regulation becomes more proportionate, it can also become more agile, supporting innovation without losing sight of integrity.\u003c/p\u003e\n\u003ch3 id=\"purposeful\"\u003ePurposeful\u003c/h3\u003e\n\u003cp\u003eBeing purposeful means the FCA is pursuing outcomes that matter. The regulator wants firms to know that market abuse controls aren’t optional extras; they are fundamental responsibilities. If a firm persistently falls short, the FCA will step in, as seen in recent restrictions placed on Dinosaur Merchant Bank.\u003c/p\u003e\n\u003cp\u003ePurposeful supervision also means knowing when to escalate and when to disrupt early. The FCA is using increasingly sophisticated tools to detect misconduct before it causes real harm and is willing to take alternative enforcement action when full investigations aren\u0026rsquo;t practical. This could mean tipping off employers, engaging with international regulators, or suspending listings to prevent damage before it’s done.\u003c/p\u003e\n\u003cp\u003eThe expectation is clear: firms are the first line of defence, and that often requires difficult decisions. Offboarding clients that don’t align with a firm’s risk profile isn’t an overreaction — it’s a necessary step to protect market integrity.\u003c/p\u003e\n\u003cp\u003eAt the heart of this approach is data. The FCA relies heavily on STORs, which triggered over 70% of its current investigations. A recent insider dealing case — involving alleged illicit gains of £1.5 million — started with one. The system works best when firms engage early and fully.\u003c/p\u003e\n\u003cp\u003eThe FCA acknowledges that prosecuting insider dealing is particularly difficult. But they remain undeterred. Its purpose is to create a hostile environment for bad actors, and it expects firms to share that mission.\u003c/p\u003e\n\u003ch3 id=\"strategic-priorities-in-tackling-market-abuse\"\u003eStrategic priorities in tackling market abuse\u003c/h3\u003e\n\u003cp\u003eThe FCA’s “Three Ps” are backed by a clear set of strategic priorities, a tactical playbook of sorts, aimed at strengthening the UK’s defences against market abuse. These priorities reflect the evolving complexity of criminal activity and the need for faster, more collaborative enforcement across borders and markets.\u003c/p\u003e\n\u003ch4 id=\"disrupting-organised-crime-groups-ocgs\"\u003eDisrupting Organised Crime Groups (OCGs)\u003c/h4\u003e\n\u003cp\u003eTop of the list is the growing threat posed by OCGs. These are sophisticated operations, often with insider access, accounting for a quarter of all STORs. Since 2022, suspected insider dealing by OCGs is estimated to have generated more than £500 million in illicit profits.\u003c/p\u003e\n\u003cp\u003eThe FCA is leaning on the full weight of its toolkit, including targeted arrests, intelligence-sharing, and cross-agency coordination, to disrupt these groups before they cause lasting harm.\u003c/p\u003e\n\u003ch4 id=\"responding-to-strategic-leaks-and-unlawful-disclosure\"\u003eResponding to strategic leaks and unlawful disclosure\u003c/h4\u003e\n\u003cp\u003eLeaks are another high-stakes concern, particularly around mergers and acquisitions. When price-sensitive information surfaces in the press ahead of a deal, it damages market fairness and investor confidence. The FCA, alongside the Takeover Panel, is stepping up its oversight here, including direct engagement with investment banks, to tackle leaks at the source and encourage better control frameworks around sensitive events.\u003c/p\u003e\n\u003ch4 id=\"expanding-focus-across-ficc-markets\"\u003eExpanding focus across FICC markets\u003c/h4\u003e\n\u003cp\u003eWhile equity markets often get the spotlight, the FCA is ramping up scrutiny across fixed income, currencies, and commodities (FICC). Recent enforcement action involving alleged manipulation of Italian bond futures is a signal that non-equity markets are firmly on the radar. Firms operating in these spaces should expect greater attention to managing conduct risk, even in more complex or less transparent environments.\u003c/p\u003e\n\u003ch4 id=\"strengthening-international-cooperation\"\u003eStrengthening international cooperation\u003c/h4\u003e\n\u003cp\u003eMarket abuse doesn’t respect borders. Whether insider trading or manipulation, the most serious threats often involve cross-border activity. That’s why the FCA is doubling down on international coordination, working closely with overseas regulators and law enforcement to share intelligence, build cases, and close enforcement gaps. Market integrity is a global effort, and the FCA wants UK firms to see themselves as part of that broader defence.\u003c/p\u003e\n\u003ch3 id=\"aligning-with-the-fcas-vision\"\u003eAligning with the FCA’s vision\u003c/h3\u003e\n\u003cp\u003eThe FCA is setting a new pace in market abuse prevention — faster, smarter, and more focused on outcomes. Meeting those expectations means acting early, using the right tools, and staying ahead of emerging risks. That’s exactly where eflow fits in. From surfacing suspicious activity to streamlining STORs, eflow gives firms the clarity and control to stay compliant and become more proactive. In a market where timing is everything, that’s a tangible strategic advantage.\u003c/p\u003e\n\u003cp\u003eFor more information on eflow’s trade surveillance technology, \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eclick here\u003c/a\u003e or get in touch with the team to \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003eorganise a personalised consultation\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-21-05T12:39:00+0000"},{"title":"eflow and EXANTE partner to tackle market abuse through enhanced trade surveillance data","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-global-and-exante-partner-to-tackle-market-abuse-through-enhanced-trade-surveillance-data/","summary":"\u003cp\u003e\u003cstrong\u003eLondon, UK; 13th May 2025:\u003c/strong\u003e eflow, a leading provider of regulatory technology solutions, has today announced a strategic partnership with \u003ca href=\"http://exante.eu/\" target=\"_blank\" rel=\"noopener\"\u003eEXANTE\u003c/a\u003e, a global prime brokerage offering access to 50+ global markets and over one million financial instruments.\u003c/p\u003e\n\u003cp\u003eThe partnership will see EXANTE’s multi-asset trading platform integrated into eflow’s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eTZTS Trade Surveillance system\u003c/a\u003e. This collaboration will significantly improve the speed with which financial institutions can implement eflow’s award-winning regulatory technology by streamlining the process of sharing and analysing a firm’s trading data as part of their system configuration.\u003c/p\u003e\n\u003cp\u003eA firm’s trading data is an essential component of a robust trade surveillance system, as it is analysed using advanced algorithms to detect anomalies and patterns that are indicative of market abuse. However, the initial collation, sharing and analysis that is required is often a time consuming and resource-intensive process.\u003c/p\u003e\n\u003cp\u003eThe partnership between eflow and EXANTE will remove this burden from the client, accelerating their onboarding process and allowing them to strengthen their market abuse controls more efficiently than ever before. In addition, the integration of the two systems will enhance the depth and quality of data available within TZTS, facilitating greater analytical precision and regulatory robustness for eflow’s clients.\u003c/p\u003e\n\u003cp\u003eBen Parker, CEO at eflow, commented: “Our partnership with EXANTE significantly enhances our market data capabilities, allowing us to provide our clients with deeper insights and more effective compliance solutions. By combining EXANTE\u0026rsquo;s extensive global market reach with our advanced regulatory technology, we\u0026rsquo;re creating a more powerful platform for financial firms to meet their compliance obligations while optimising their trading operations.”\u003c/p\u003e\n\u003cp\u003eNatalia Taft, EXANTE’s Global Head of Compliance, added: “At EXANTE, we believethat speed, precision, and regulatory excellence are non-negotiable in today’s trading landscape. Partnering with eflow allows us to push those standards even higher. By combining our global market reach with eflow’s cutting-edge surveillance technology, we’re not just helping firms meet compliance demands — we’re empowering them to lead with confidence in an increasingly complex market.”\u003c/p\u003e\n\u003cp\u003eThe partnership will also include joint events that bring together their collective expertise, offering clients valuable insights into navigating complex regulatory landscapes.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n","date_published":"2025-13-05T07:40:00+0000"},{"title":"eflow publishes U.S Trends in Market Abuse and Trade Surveillance 2025","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-global-publishes-u.s-trends-in-market-abuse-and-trade-surveillance-2025/","summary":"\u003cp\u003e\u003cstrong\u003eBOSTON, May 6, 2025\u003c/strong\u003e – According to a newly released survey of U.S. regulatory compliance professionals, nearly two-thirds (63%) indicate that technology-driven risk is the most significant market force likely to cause compliance issues for U.S. financial services firms in 2025. Other market forces cited are global economic instability (58%), increasing regulatory complexity (48%), digital assets and crypto markets (37% each) and geopolitical instability (20%).\u003c/p\u003e\n\u003cimg alt=\"Market forces likely to cause compliance challenges for U.S. firms\" title=\"Market forces likely to cause compliance challenges for U.S. firms\" height=\"750\" width=\"960\" src=\"/images/which-market-forces-are-most-likely-to-cause-compliance-challenges-for-u-s-firms-small.jpg\" /\u003e\n\u003cp\u003eThe survey, conducted by \u003ca href=\"http://www.eflowglobal.com/\" target=\"_blank\" rel=\"noreferrer noopener\"\u003eeflow \u003c/a\u003efor its second annual “\u003cstrong\u003eU.S.\u003c/strong\u003e \u003cstrong\u003eTrends in Market Abuse and Trade Surveillance 2025\u003c/strong\u003e” report, provides an analysis of market abuse enforcement, trends and challenges faced by compliance teams in the U.S. as well as how the U.S. stacks up against the rest of the world. Overall, 300 total (60 per country) final or joint decision-makers or those part of a team that makes decisions about regulatory compliance were surveyed in three continents in January 2025.\u003c/p\u003e\n\u003cp\u003eWhen asked to rank market abuse and what the main regulatory challenges keeping them up at night are, U.S. regulatory compliance professionals cited keeping abreast of regulatory changes (43%), assessing risk profiles across multiple asset classes (42%) and accurately identifying insider trading and market manipulation (40%) as their top three choices. This was followed by integrating trade and electronic communications (or eComms) surveillance as part of a holistic strategy and being able to fully understand and explain the output of trade surveillance reports – each at 38%.\u003c/p\u003e\n\u003cp\u003eIn 2024, U.S. regulators levied $1.67 billion in fines against financial firms, representing a majority of the $1.84 billion in fines imposed by regulators globally. This is slightly below the five-year peak of $1.9 billion in fines levied globally in 2022, however, the penalties are spread across a significantly higher number of enforcement actions, highlighting that regulators are targeting a wider cross-section of firm types and sizes. Of the total fines imposed against U.S. firms, the largest amount was for eComms record-keeping violations ($740.7 million), followed by trade surveillance systems and controls ($562.4 million), insider trading ($305.8 million), market manipulation ($51.3 million), short selling violations ($6.7 million) and trade reporting ($4.7 million).\u003c/p\u003e\n\u003cp\u003e“U.S. regulators continued to focus on eComms surveillance failures as a major enforcement area in 2024 while our survey revealed that just 52% the country’s regulatory professionals have only some degree of confidence in their firm’s ability to integrate trade and eComms data as part of a holistic approach to trade surveillance,” said Ben Parker, CEO, eflow.\u003c/p\u003e\n\u003cp\u003e“With the volume of global enforcement actions surging by 260% year-over-year in 2024, and regulators increasingly targeting small- and mid-market firms, this should serve as a wake-up call for the thousands of smaller financial institutions and trading firms seeking to proactively enhance their compliance operations.”\u003c/p\u003e\n\u003cimg alt=\"What do U.S. firms want to see from regulators?\" title=\"What do U.S. firms want to see from regulators?\" height=\"425\" width=\"960\" src=\"/images/how-could-regulators-better-support-u-s-firms-small.jpg\" /\u003e\n\u003cp\u003eWhen asked how regulators could better support firms in their efforts to ensure regulatory compliance, more than six out of 10 (62%) cited the need for greater transparency around regulator expectations and enforcement action. Forty-eight percent said closer collaboration between regulators and compliance teams followed by greater standardization of international regulatory requirements (45%), clear guidance on minimum core technology standards (37%) and increased use of data and technology to enhance market oversight and greater credit for proactive self-reporting (30% each).\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/us-trends-in-market-abuse-and-trade-surveillance-form/\" target=\"_blank\" rel=\"noopener\"\u003eTo download the full report, click here\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n","date_published":"2025-05-05T08:00:00+0000"},{"title":"How the U.S. is rewriting the enforcement playbook","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/how-the-u-s-is-rewriting-the-enforcement-playbook/","summary":"\u003ch1 id=\"self-reporting-pays\"\u003eSelf-reporting pays\u003c/h1\u003e\n\u003cp\u003eIn our recent \u003ca href=\"https://eflowglobal.com/global-trends-in-market-abuse-and-trade-surveillance-form/\"\u003eGlobal Trends in Market Abuse and Trade Surveillance report\u003c/a\u003e, we predicted that US regulators would begin to shift away from purely punitive enforcement and instead adopt a more constructive, incentive-based approach - one that rewards transparency, early reporting, and investment in remediation. \u003cem\u003eThat shift is no longer hypothetical.\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eIn a move that confirms our thinking, the Commodity Futures Trading Commission (CFTC) has issued a new \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/9054-25\"\u003eEnforcement Advisory\u003c/a\u003e outlining how it will evaluate self-reporting, cooperation, and remediation when recommending enforcement actions. For the first time, the CFTC has introduced a “Mitigation Credit Matrix”, giving firms fair notice of how much they stand to benefit - up to a 55% reduction in penalties - for exemplary cooperation and disclosure.\u003c/p\u003e\n\u003cp\u003eActing Chairman Caroline D. Pham remarked,\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e“By making the CFTC’s expectations for self-reporting, cooperation, and remediation more clear… this advisory creates meaningful incentives for firms to come forward and get cases resolved faster with reasonable penalties.”\u003c/em\u003e\u003c/p\u003e\n\u003ch2 id=\"what-does-good-self-reporting-look-like\"\u003eWhat does ‘good’ self-reporting look like?\u003c/h2\u003e\n\u003cp\u003eThe Enforcement Advisory represents a structural reworking of enforcement culture. The CFTC outlines a tiered approach to evaluating how and when a firm self-reports potential misconduct. The best outcomes are for those who report early, provide full material information, and maintain open engagement throughout.\u003c/p\u003e\n\u003cp\u003eThe framework reflects key principles that the SEC has long outlined for cooperation credit, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eSelf-policing:\u003c/strong\u003e Build a culture of compliance that identifies risks early.\u003cbr\u003e\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eEarly disclosure:\u003c/strong\u003e Report violations as soon as they’re discovered - even if all the facts are not yet known.\u003cbr\u003e\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eSwift remediation:\u003c/strong\u003e Discipline individuals, fix control gaps, and demonstrate a commitment to prevent recurrence.\u003cbr\u003e\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eMeaningful cooperation:\u003c/strong\u003e Go beyond the minimum - e.g. providing internal findings or helping narrow the scope of regulatory requests.\u003cbr\u003e\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eConsistent engagement:\u003c/strong\u003e Keep regulators informed throughout, fostering trust and transparency.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"cftc-mitigation-credit-matrix\"\u003e\u003cstrong\u003eCFTC Mitigation Credit Matrix\u003c/strong\u003e\u003c/h3\u003e\n\u003ctable\u003e\u003ctbody\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e\u003cstrong\u003eNo Cooperation\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e\u003cstrong\u003eSatisfactory Cooperation\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e\u003cstrong\u003eExcellent Cooperation\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e\u003cstrong\u003eExemplary Cooperation\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cstrong\u003eNo Self-Report\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e0%*\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e10%\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e20%\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e35%\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cstrong\u003eSatisfactory Self-Report\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e10%\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e20%\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e30%\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e45%\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cstrong\u003eExemplary Self-Report\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e20%\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e30%\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e40%\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003e55%\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003c/tbody\u003e\u003c/table\u003e\n\u003cp\u003e* Percentages indicate the percentage reduction in fine value stemming from relative quality of self-reports and cooperation.\u003c/p\u003e\n\u003ch2 id=\"self-reporting-discount-in-action\"\u003eSelf-reporting discount in action\u003c/h2\u003e\n\u003cp\u003eIt’s not just the CFTC recognising the value of self-reporting. While the Securities and Exchange Commission (SEC) has yet to formalise its own matrix or framework, recent enforcement activity points to a clear shift in approach.\u003c/p\u003e\n\u003cp\u003eIn January 2025, the SEC \u003ca href=\"https://www.sec.gov/newsroom/press-releases/2025-6\"\u003efined\u003c/a\u003e 12 firms for widespread failures to preserve electronic communications - an increasingly common theme in market abuse enforcement. The total penalties exceeded $63 million.\u003c/p\u003e\n\u003cp\u003eWhile guilty parties like Blackstone, Schwab and Apollo paid between $8.5 million and $12 million each, \u003cstrong\u003ePJT Partners LP\u003c/strong\u003e, which self-reported its violations, received a markedly different outcome: a \u003cstrong\u003e$600,000 fine\u003c/strong\u003e.\u003c/p\u003e\n\u003cp\u003eThe SEC’s Sanjay Wadhwa was clear about why:\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e“While holding firms responsible for their recordkeeping failures, the Commission once more recognised and credited a registrant’s self-report, demonstrating yet again that there are tangible benefits to be gained from proactive cooperation.”\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eThis wasn’t a soft touch. PJT’s violations were similar in nature to its peers, but the firm’s willingness to self-report, remediate, and engage proactively made a multi-million-dollar difference. Self-reporting is clearly a commercially advantageous strategy.\u003c/p\u003e\n\u003ch2 id=\"the-role-of-technology-and-controls\"\u003eThe role of technology and controls\u003c/h2\u003e\n\u003cp\u003eFor firms looking to follow this path, the ability to self-report - and do so convincingly - relies on having robust surveillance, investigation, and escalation capabilities in place.\u003c/p\u003e\n\u003cp\u003eBoth the SEC and CFTC emphasise the importance of \u003cstrong\u003etimeliness\u003c/strong\u003e and \u003cstrong\u003ecompleteness\u003c/strong\u003e. This requires technology that enables:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eEarly detection\u003c/strong\u003e of suspicious activity or policy breaches;\u003cbr\u003e\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eClear audit trails\u003c/strong\u003e of internal investigations and disciplinary steps;\u003cbr\u003e\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eStructured workflows\u003c/strong\u003e that escalate issues to legal and compliance functions rapidly;\u003cbr\u003e\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eData-driven insight\u003c/strong\u003e to assess the root cause and propose credible remediation plans.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eControls, policies, and procedures aren’t enough if you can’t produce the evidence fast. In today’s environment, being prepared to disclose means being equipped to \u003cem\u003eprove\u003c/em\u003e your case to regulators and internal stakeholders.\u003c/p\u003e\n\u003cp\u003eFirms that can surface misconduct early, explain it transparently, and demonstrate credible reforms stand to benefit from lighter penalties, stronger reputational standing and regulatory goodwill.\u003c/p\u003e\n\u003ch2 id=\"a-new-chapter-for-compliance-culture\"\u003eA new chapter for compliance culture\u003c/h2\u003e\n\u003cp\u003eNorth American regulators aren’t backing away from enforcement, but they are becoming more discerning. They’re looking for signs of maturity, transparency, and a genuine compliance mindset. This new enforcement philosophy offers an opportunity for firms to shift from reactive defensiveness to proactive engagement.\u003c/p\u003e\n\u003cp\u003eWe’re moving into a regulatory era where accountability is incentivised, not just expected. Firms that invest in the right culture, controls, and communication channels will not only avoid the worst outcomes - they may help shape the next chapter of fair, efficient, and principles-based enforcement.\u003c/p\u003e\n","date_published":"2025-30-04T16:45:00+0000"},{"title":"The FCA’s 5-year strategy: What it means for trade surveillance, market abuse, and the RegTech frontier","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/the-fca-s-5-year-strategy-what-it-means-for-trade-surveillance-market-abuse-and-the-regtech-frontier/","summary":"\u003cp\u003eThe UK regulator’s new \u003ca href=\"https://www.fca.org.uk/publication/corporate/our-strategy-2025-30.pdf\"\u003e5-year strategy\u003c/a\u003e embraces technology like never before. Here’s why that matters - and how firms can align with the FCA’s smarter, faster, more collaborative approach to compliance.\u003c/p\u003e\n\u003ch2 id=\"a-new-chapter-for-regulation---and-for-regtech\"\u003eA new chapter for regulation - and for RegTech\u003c/h2\u003e\n\u003cp\u003eThe Financial Conduct Authority (FCA) has published its 2025–2030 strategy, and one thing is clear: the regulator is placing a bold bet on technology.\u003c/p\u003e\n\u003cp\u003eIn fact, across its four core priorities - becoming a smarter regulator, supporting growth, helping consumers, and fighting crime - technology is a central theme that runs throughout. The FCA is leaning into innovation, digitisation, and data-driven decision-making to an unprecedented extent.\u003c/p\u003e\n\u003cp\u003eFor financial institutions operating in capital markets, especially those facing mounting pressures around trade surveillance and market abuse, this shift brings both opportunity and accountability. And for RegTech providers like eflow, it’s validation of what we’ve long believed: that smart, adaptive technology is essential to modern compliance.\u003c/p\u003e\n\u003ch2 id=\"the-fca-as-a-tech-forward-regulator\"\u003eThe FCA as a tech-forward regulator\u003c/h2\u003e\n\u003cp\u003eIn a break from risk-averse convention, the FCA strategy explicitly calls for a “smarter” and more “proportionate” regulatory model - one that embraces technology both within the regulator itself and across the firms it oversees.\u003c/p\u003e\n\u003cp\u003eAs part of this transformation, the FCA has committed to:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eDigitising its authorisations process\u003c/strong\u003e to improve speed, consistency and ease of engagement.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eReducing regulatory friction\u003c/strong\u003e by only asking for the data it truly needs.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eSharing supervisory insights\u003c/strong\u003e more openly to allow firms to learn from each other.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eUsing AI and advanced analytics\u003c/strong\u003e to detect market abuse and anomalies faster.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eFor firms under the FCA’s watch - particularly those in wholesale and high-frequency trading markets - this means scrutiny is going digital. Firms will be expected to move at the same pace that the regulator now demands of itself.\u003c/p\u003e\n\u003ch2 id=\"surveillance-volatility-and-the-risk-rebalance\"\u003eSurveillance, volatility, and the risk rebalance\u003c/h2\u003e\n\u003cp\u003ePerhaps the most consequential concept in the FCA’s new strategy is its call to \u003cstrong\u003e“rebalance risk.”\u003c/strong\u003e The idea? That overly cautious regulation can stifle innovation, and that healthy markets require space for informed risk-taking - as long as controls are fit for purpose.\u003c/p\u003e\n\u003cp\u003eThe FCA explicitly acknowledges that emerging technologies like AI can lead to:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eGreater market efficiency through faster reactions to new information;\u003c/li\u003e\n\u003cli\u003eBut also greater risk - especially increased volatility and susceptibility to market abuse.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThis duality puts surveillance and conduct controls squarely in the spotlight. As markets evolve and trading becomes more dynamic, static or one-size-fits-all monitoring frameworks won’t cut it. Firms need surveillance systems that can:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eDynamically recalibrate thresholds across asset classes and trading venues;\u003c/li\u003e\n\u003cli\u003eDetect sophisticated abuse typologies like layering, spoofing, and cross-product manipulation;\u003c/li\u003e\n\u003cli\u003eRespond to increased volumes and complexity with real-time insight.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"from-enforcement-to-enablement\"\u003eFrom enforcement to enablement\u003c/h2\u003e\n\u003cp\u003eAnother standout in the FCA’s strategy is its shift from punitive enforcement toward \u003cstrong\u003eearlier, more collaborative engagement\u003c/strong\u003e with firms.\u003c/p\u003e\n\u003cp\u003eInstead of saving its scrutiny for the point of failure, the FCA wants to be:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eMore \u003cstrong\u003epredictable\u003c/strong\u003e in its supervision;\u003c/li\u003e\n\u003cli\u003eMore \u003cstrong\u003eopen\u003c/strong\u003e in communicating risks;\u003c/li\u003e\n\u003cli\u003eAnd more \u003cstrong\u003esupportive\u003c/strong\u003e of firms seeking to do the right thing.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThis echoes a broader regulatory trend we’ve seen globally - in the U.S., for example, both the CFTC and SEC have offered tangible incentives for self-reporting and early cooperation.\u003c/p\u003e\n\u003cp\u003eIn this new enforcement era, it’s not enough to “have a policy.” Firms must show:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThat they can detect misconduct early;\u003c/li\u003e\n\u003cli\u003eThat they maintain clear audit trails of internal investigations;\u003c/li\u003e\n\u003cli\u003eThat they escalate and remediate issues swiftly;\u003c/li\u003e\n\u003cli\u003eAnd that they can present a transparent, data-backed story to regulators when needed.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIn our recent \u003ca href=\"https://eflowglobal.com/global-trends-in-market-abuse-and-trade-surveillance-form/\"\u003ereport\u003c/a\u003e on global trends in market abuse and trade surveillance, we made five predictions for 2025. The first prediction, that regulatory oversight will evolve, has been validated even quicker than we had expected.\u003c/p\u003e\n\u003cp\u003eOur conviction was developed in part by listening to the market. Of the 300 regulatory executives surveyed across five different jurisdictions, 59% said that “greater transparency around regulator expectations and enforcement action” was how regulators could better support their firm.\u003c/p\u003e\n\u003cimg src=\"/images/reg-help-pdf.png\" alt=\"How could regulators better support financial firms? \" title=\"How could regulators better support financial firms? \" height=\"270\" width=\"762\" /\u003e\n\u003ch2 id=\"fighting-crime-with-technology\"\u003eFighting crime with technology\u003c/h2\u003e\n\u003cp\u003eThe FCA’s renewed commitment to fighting crime comes with a clear mandate: use technology to do it better.\u003c/p\u003e\n\u003cp\u003eThe regulator is already:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eUsing machine learning to detect abnormal trading;\u003c/li\u003e\n\u003cli\u003ePartnering with over 60 data and tech suppliers;\u003c/li\u003e\n\u003cli\u003eActively exploring how generative AI can support decision-making;\u003c/li\u003e\n\u003cli\u003eInvesting in its own SupTech infrastructure, including more advanced internal analytics and digital platforms.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eCrucially, the FCA isn’t going it alone. It sees the firms it regulates as vital partners - and RegTech as a crucial enabler. In their own words, they want to “support firms in drawing on new, developing technology” to strengthen controls and reduce cost.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003ePrediction 4\u003c/em\u003e of our recent report is also aging well:\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e“As we look ahead to 2025 and beyond, market abuse surveillance will undergo significant transformation, driven by advancements in AI and machine learning. \u003cstrong\u003eThe adoption of AI by regulators themselves signals a paradigm shift - one that will see firms facing heightened scrutiny over their own AI implementations.\u003c/strong\u003e In response, surveillance tools will not only become more sophisticated but will also shift towards predictive and adaptive frameworks that proactively identify emerging risks rather than reactively responding to past behaviours.”\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eThis alignment couldn’t be clearer. Firms that invest in surveillance platforms with adaptive intelligence and demonstrable value will be best placed to meet the FCA’s expectations—and to become trusted partners in the fight against market abuse.\u003c/p\u003e\n\u003ch2 id=\"surveillance-that-moves-at-the-speed-of-change\"\u003eSurveillance that moves at the speed of change\u003c/h2\u003e\n\u003cp\u003eWith financial markets undergoing constant transformation - structurally, technologically, and geopolitically - the one constant is change. And regulators are catching up.\u003c/p\u003e\n\u003cp\u003eThe FCA’s strategy represents a new kind of regulation: agile, data-driven, and ready to work with firms rather than only acting against them. But this shift comes with higher expectations, especially for firms operating in fast-moving, abuse-prone markets.\u003c/p\u003e\n\u003cp\u003eAt eflow, we believe that compliance shouldn’t be a brake on growth - it should be a catalyst. That’s why we’ve built our surveillance solutions to adapt in real-time, reflect market complexity, and give firms the tools to meet evolving regulatory demands head-on.\u003c/p\u003e\n\u003cp\u003eAs the FCA ushers in a more tech-positive era of supervision, the message is clear: surveillance and conduct systems aren’t just support functions. They are strategic assets.\u003c/p\u003e\n\u003cp\u003eFollow these links to find out more about eflow’s solutions for \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance\u003c/a\u003e, \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eeComms surveillance\u003c/a\u003e, \u003ca href=\"https://eflowglobal.com/tz-best-execution-and-transaction-cost-analysis/\"\u003ebest execution\u003c/a\u003e and \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\"\u003etransaction reporting\u003c/a\u003e can help your firm’s regulatory strategy.\u003c/p\u003e\n","date_published":"2025-15-04T15:15:51+0000"},{"title":"Q1 2025 Enforcement Update","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/q1-2025-enforcement-update/","summary":"\u003ch2 id=\"systemic-gaps-and-strategic-self-reporting-take-centre-stage\"\u003eSystemic Gaps and Strategic Self-Reporting Take Centre Stage\u003c/h2\u003e\n\u003cp\u003eRegulatory enforcement activity remained high in the first quarter of 2025, with more than $150 million in penalties issued across six jurisdictions. This quarter’s actions reveal a sharper regulatory focus on data integrity, system vulnerabilities, and the advantages—both strategic and financial—of self-reporting compliance failures.\u003c/p\u003e\n\u003ch4 id=\"in-q1-2025-we-saw\"\u003eIn Q1 2025, we saw:\u003c/h4\u003e\n\u003cp\u003e37 enforcement actions:\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/1.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003cp\u003eAcross 6 jurisdictions\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/3.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003cp\u003eTotalling $153.3 Million\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/2-1.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003ch3 id=\"ecomms-recordkeeping-enforcement-self-reporting-emerges-as-a-strategic-lever\"\u003e\u003cstrong\u003eeComms recordkeeping enforcement: Self-reporting emerges as a strategic lever\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe SEC’s continued crackdown on eComms recordkeeping failures dominated the start of the year. Nine investment advisers and three broker-dealers were \u003ca href=\"https://www.sec.gov/newsroom/press-releases/2025-6\"\u003efined\u003c/a\u003e a combined $62.6 million for failing to maintain and preserve electronic communications.\u003c/p\u003e\n\u003cp\u003eAmong the sanctioned were household names like Blackstone ($12m), KKR ($11m), Schwab ($10m), Apollo, Carlyle, TPG, and Santander. Each firm was found to have allowed employees to communicate business matters via off-channel platforms without proper retention policies, violating the recordkeeping provisions of the Exchange Act.\u003c/p\u003e\n\u003cp\u003eHowever, PJT Partners LP stood out. While fined $600,000, the firm self-reported its deficiencies—a move that led to a significantly reduced penalty. This reflects a broader trend in North America where regulators are not only rewarding transparency, but actively encouraging it. For firms weighing reputational damage against regulatory goodwill, coming forward may mitigate the financial and legal fallout. Self-reporting is a robust risk-reduction strategy. Firms that surface issues early, cooperate fully, and remediate quickly are seeing materially lower penalties.\u003c/p\u003e\n\u003ch3 id=\"cross-border-manipulation-via-dual-listing-arbitrage\"\u003e\u003cstrong\u003eCross-border manipulation via dual-listing arbitrage\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eOne of the quarter’s most technically intricate enforcement actions came from France’s AMF, which \u003ca href=\"https://www.amf-france.org/en/news-publications/news-releases/enforcement-committee-news-releases/amf-enforcement-committee-fines-us-investment-fund-and-its-director-total-eu10-million-price\"\u003efined\u003c/a\u003e U.S.-based investment fund EcoR1 Capital and its director, Oleg Nodelman, a combined €10 million (~$10.8 million USD) for market manipulation and disclosure failures. The case illustrates how cross-border enforcement is evolving—particularly where dual-listed instruments create opportunities for price distortion across jurisdictions.\u003c/p\u003e\n\u003cp\u003eThe events centre around Innate Pharma, a biotech company primarily listed on Euronext Paris. In October 2019, Innate launched a secondary listing on the Nasdaq through the issuance of American Depositary Shares (ADSs). Crucially, the subscription price for the ADSs was not independently set. Instead, it was calculated based on the five-day volume-weighted average of Innate’s closing share price on Euronext Paris immediately preceding the offering. This mechanism created a clear dependency between the French market and the U.S.-based issuance.\u003c/p\u003e\n\u003cp\u003eDuring the pricing window, EcoR1 engaged in heavy selling of Innate shares on Euronext Paris, particularly at the close of each trading day. These sales, which were large relative to market volume, had the effect of depressing the daily closing price. Because the ADS price was directly derived from the average of those closes, EcoR1 was able to artificially lower the subscription price of the ADSs it would go on to purchase in the U.S. offering. Put simply, the firm used its influence in the French market to drive down the cost of securities it would acquire on the Nasdaq—effectively arbitraging the pricing link between the two listings.\u003c/p\u003e\n\u003ch3 id=\"robinhoods-multimillion-dollar-mistakes\"\u003e\u003cstrong\u003eRobinhood’s multimillion-dollar mistakes\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eRobinhood’s operations came under fire from both the \u003ca href=\"https://www.sec.gov/newsroom/press-releases/2025-5\"\u003eSEC\u003c/a\u003e and \u003ca href=\"https://www.finra.org/media-center/newsreleases/2025/finra-orders-robinhood-financial-pay-375-million-restitution\"\u003eFINRA\u003c/a\u003e this quarter, demonstrating the potential scale of compliance deficiencies when systems, supervision, and disclosure all fail.\u003c/p\u003e\n\u003cp\u003eIn total, Robinhood was fined \u003cstrong\u003e$74.75 million\u003c/strong\u003e across two actions:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eSEC action ($45m)\u003c/strong\u003e covered:\u003cbr\u003e\n\u003cul\u003e\n\u003cli\u003eFailure to file suspicious activity reports in a timely manner (2020–2022)\u003c/li\u003e\n\u003cli\u003eInadequate policies to prevent identity theft (2019–2022)\u003c/li\u003e\n\u003cli\u003eCybersecurity vulnerabilities exploited by third parties in 2021\u003c/li\u003e\n\u003cli\u003eOff-channel communications and poor retention of brokerage data\u003c/li\u003e\n\u003cli\u003eReg SHO violations tied to short sale practices, including order-marking, locate, and close-out requirements\u003c/li\u003e\n\u003cli\u003eIncomplete and inaccurate blue sheet reporting over five years\u003cbr\u003e\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eFINRA action ($29.75m)\u003c/strong\u003e addressed:\u003cbr\u003e\n\u003cul\u003e\n\u003cli\u003eMisleading disclosures on “collared” market orders\u003c/li\u003e\n\u003cli\u003eDeficiencies in AML programs and customer identification\u003c/li\u003e\n\u003cli\u003eSevere latency and clearing issues in response to high-volume trading events\u003c/li\u003e\n\u003cli\u003eSupervision gaps in influencer marketing communications\u003c/li\u003e\n\u003cli\u003ePersistent failings in trade and CAT reporting\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eTogether, the actions paint a picture of systemic governance failure, where foundational issues spanned surveillance, IT infrastructure, marketing oversight, and trade reporting. This was a multi-vector breakdown across the entire control framework.\u003c/p\u003e\n\u003cp\u003eRobinhood has agreed to internal audits and remediation, but the scale of deficiencies underscores the risks when growth outpaces governance.\u003c/p\u003e\n\u003ch3 id=\"other-highlights-from-q1-2025\"\u003e\u003cstrong\u003eOther highlights from Q1 2025\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003e\u003cstrong\u003eInsider trading cases continue\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThe SEC \u003ca href=\"https://www.sec.gov/newsroom/press-releases/2025-12\"\u003echarged\u003c/a\u003e a network of traders and broker-dealer reps in a long-running scheme to front-run follow-on offerings—resulting in hundreds of thousands of dollars in profits.\u003c/li\u003e\n\u003cli\u003eIn a separate \u003ca href=\"https://www.sec.gov/newsroom/press-releases/2025-4\"\u003ecase\u003c/a\u003e, former CIO Alfred Tobia Jr. and his sister-in-law paid $1.36m to settle charges tied to material non-public information.\u003c/li\u003e\n\u003cli\u003eAsia-Pacific regulators pursued several high-profile insider trading cases, including one in \u003ca href=\"https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=25PR9\"\u003eHong Kong\u003c/a\u003e linked to a chauffeur’s tip-off and another in \u003ca href=\"https://asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-039mr-victorian-man-charged-over-alleged-market-manipulation/\"\u003eAustralia\u003c/a\u003e involving share placement exploitation.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e\u003cstrong\u003eSingapore crack down on market manipulation\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eIn Singapore, MAS imposed over $600,000 in penalties across \u003ca href=\"https://www.mas.gov.sg/regulation/enforcement/enforcement-actions/2025/civil-penalty-actions-taken-against-five-individuals-for-false-and-unauthorised-trading\"\u003emultiple\u003c/a\u003e \u003ca href=\"https://www.mas.gov.sg/regulation/enforcement/enforcement-actions/2025/civil-penalty-action-taken-against-gui-boon-sui-for-false-trading-and-unauthorised-trading\"\u003eindividuals\u003c/a\u003e for false trading and unauthorised account use in a coordinated pump-and-dump scheme.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e\u003cstrong\u003eTrade reporting failures remain under scrutiny\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eFINRA \u003ca href=\"https://www.finra.org/sites/default/files/2025-03/disciplinary-actions-March-2025.pdf\"\u003efined\u003c/a\u003e UBS $1.1m for submitting blue sheets with errors across multiple data fields.\u003c/li\u003e\n\u003cli\u003eBofA, G1 Execution, and others faced \u003ca href=\"https://www.finra.org/sites/default/files/2025-03/disciplinary-actions-March-2025.pdf\"\u003epenalties\u003c/a\u003e for delayed or inaccurate TRACE and OTC reporting, with operational volumes and OMS design flaws cited as contributing factors.\u003cbr\u003e\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"our-thoughts\"\u003e\u003cstrong\u003eOur thoughts\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThis quarter\u0026rsquo;s actions reinforce a few clear takeaways:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eSelf-reporting can significantly reduce penalties\u003c/strong\u003e, especially in eComms enforcement where violations are widespread and regulatory expectations are well-publicised.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eData integrity is the new frontline\u003c/strong\u003e—whether it\u0026rsquo;s trade reporting under MiFIR or blue sheets in the US, regulators are no longer tolerating systemic errors in submissions.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eMulti-domain deficiencies\u003c/strong\u003e like those seen in Robinhood are drawing coordinated regulatory responses.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eAs regulators push forward with more real-time surveillance, cross-jurisdictional cooperation, and an expanding risk perimeter, firms must treat every aspect of operational oversight as a potential compliance risk.\u003c/p\u003e\n","date_published":"2025-08-04T14:51:00+0000"},{"title":"Staying ahead of regulatory reporting updates","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/staying-ahead-of-regulatory-reporting-updates/","summary":"\u003cp\u003eRegulatory reporting is no longer a static requirement; it\u0026rsquo;s a fast-moving target. Across every major financial jurisdiction, regulators like \u003ca href=\"https://www.esma.europa.eu/\"\u003eESMA\u003c/a\u003e, the FCA, the SEC, and MAS are continuously revising rules, introducing new reporting standards, and demanding more granular, real-time transparency. From EMIR Refit to MiFIR transaction adjustments and Dodd-Frank updates, the pace of change has become a defining challenge for compliance teams.\u003c/p\u003e\n\u003cp\u003eFor financial institutions, keeping up isn’t just about avoiding penalties. It’s about maintaining operational integrity, safeguarding reputation, and demonstrating governance standards. These are needed to inspire critical confidence from clients, investors, and regulators alike. In a competitive marketplace, robust compliance is now a mark of leadership, not just a legal obligation.\u003c/p\u003e\n\u003cp\u003eYet many firms remain reliant on fragmented, legacy infrastructure, systems ill-equipped to adapt quickly or scale efficiently. Manual processes can no longer support modern regulations\u0026rsquo; speed, complexity, or cross-jurisdictional demands.\u003c/p\u003e\n\u003cp\u003eEnter RegTech. Innovative compliance platforms now offer the tools to automate, monitor, and adapt in real-time. If used correctly, this has turned reporting from a reactive process into a proactive strength, even a commercial advantage. This article explores how firms can stay ahead of regulatory updates by embracing scalable, technology-driven strategies, empowering compliance, risk, and operations leaders to not just keep up but lead the way.\u003c/p\u003e\n\u003ch2 id=\"understanding-the-changing-regulatory-landscape\"\u003e\u003cstrong\u003eUnderstanding the changing regulatory landscape\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe pace of regulatory change is no longer region-specific; it’s global. As investor demand for international exposure increases, regulators are stepping up across all major jurisdictions:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eEMIR Refit introduces enhanced reporting templates and stricter validation rules.\u003c/li\u003e\n\u003cli\u003eMiFIR expands transparency requirements with more granular transaction data.\u003c/li\u003e\n\u003cli\u003eSFTR refinements demand improved reconciliation and disclosure on collateral reuse.\u003c/li\u003e\n\u003cli\u003eDodd-Frank continues to evolve, deepening complexity in derivatives reporting.\u003c/li\u003e\n\u003cli\u003eAPAC regulators (e.g., MAS, ASIC, SFC) are enforcing robust, locally tailored but globally aligned standards.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThis constant evolution raises compliance costs and increases reputational risk for firms that fail to keep pace.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eThe multi-jurisdictional compliance challenge\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eDespite efforts toward regulatory harmonisation, each jurisdiction still imposes its own reporting logic, timelines, and data schemas. As a result, firms often need to submit the same transaction in multiple formats across different regulators, heightening the risk of inconsistencies, errors, and late submissions. Global operations bring opportunity but also complexity.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eData complexity and rising expectations\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eRegulators now expect real-time (or, at minimum, T+1) reporting across major markets. With increasing scrutiny on accuracy, completeness, and timeliness, firms face growing pressure to manage:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eMultiple identifier standards (LEIs, UTIs, UPIs, ISINs)\u003c/li\u003e\n\u003cli\u003eStricter data validation and reconciliation protocols\u003c/li\u003e\n\u003cli\u003eDetailed, immutable audit trails\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eOne of the challenges is accommodating regulatory reporting obligations today while leaving sufficient headroom to accommodate future changes.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eWhy RegTech is now essential\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eTo stay compliant, firms are turning to RegTech for:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eAI-powered rule interpretation and dynamic regulatory configuration\u003c/li\u003e\n\u003cli\u003eJurisdiction-specific dashboards for real-time tracking\u003c/li\u003e\n\u003cli\u003eAPI-driven integrations with trade repositories for seamless compliance workflows\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIn a world of constant change, adaptability isn\u0026rsquo;t optional. It\u0026rsquo;s a competitive necessity.\u003c/p\u003e\n\u003ch2 id=\"common-pitfalls-in-regulatory-reporting-compliance\"\u003e\u003cstrong\u003eCommon pitfalls in regulatory reporting compliance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhile individual firms may face unique challenges, several recurring pitfalls are emerging across the industry regarding regulatory reporting.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eData inconsistencies and quality gaps\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eEven minor changes, such as a discrepancy in a trade identifier, can sever the link between internal systems and external trade repositories. These issues often escalate quickly, drawing regulatory attention and potentially triggering deeper investigations. Incomplete or inaccurate counterparty data, including \u003ca href=\"https://www.fca.org.uk/markets/uk-emir/uk-emir-reporting-questions-and-answers\"\u003eLEIs, ISINs, and UTIs\u003c/a\u003e, is an increasingly common issue but relatively straightforward to resolve with the right tools.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSolutions\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eAI-driven validation engines can automatically detect and correct anomalies before submission, reducing risk and saving significant time and resources. RegTech-enabled reconciliation tools also allow firms to align data across multiple systems, supporting end-to-end consistency.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eInability to keep pace with evolving regulations\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFor many firms, this is the most pressing challenge: managing regulatory change reactively (using manual systems) rather than proactively. Manual tracking often leads to missed implementation deadlines and increased risk of non-compliance. What was once sufficient - keeping up - is no longer enough, and firms now need to anticipate and prepare for change before it arrives.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSolutions\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eMany in the financial services sector have adopted automated rule management systems that update compliance logic in real-time. Seamless integration of regulatory updates into reporting workflows enables a more agile, forward-looking approach to compliance.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eFragmented legacy reporting infrastructure\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eKnowing when to invest in new systems and when to modernise existing ones is a pivotal inflexion point for compliance leaders. Disconnected legacy platforms can create operational silos and limit visibility across the reporting chain. Inconsistent formatting and system incompatibilities delay submissions and increase error rates, inviting regulatory scrutiny.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSolutions\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFirms are increasingly migrating to cloud-based, modular reporting frameworks that offer real-time adaptability and scalability. Consolidating reporting functions under a single compliance platform greatly enhances transparency, efficiency, and oversight.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eInsufficient audit trails and recordkeeping\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eRegulators now expect detailed, time-stamped transaction histories that can be accessed and audited at a moment’s notice. Manual logs are outdated, resource-heavy, and prone to human error, often creating unnecessary exposure to regulatory oversight.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSolutions\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eBlockchain-based audit systems are quickly becoming the gold standard for immutable, tamper-proof records. These systems ensure full traceability and support internal compliance checks and external regulatory audits with minimal friction.\u003c/p\u003e\n\u003cp\u003eRegTech has a critical supporting role in ensuring adaptability through AI-powered rule interpretation, regulatory intelligence dashboards, and API-driven integration.\u003c/p\u003e\n\u003ch2 id=\"the-role-of-regtech-in-future-proofing-compliance\"\u003e\u003cstrong\u003eThe role of RegTech in future-proofing compliance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs regulatory complexity grows, financial firms need more than manual processes to keep pace; they need intelligent, scalable systems that work in real-time. Thankfully, RegTech is emerging as the backbone of future-ready compliance, offering automation, integration, and predictive insight across global regulatory regimes.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eHow advanced compliance solutions address modern challenges\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eIn one of the most competitive industries in the world, as much time as possible should be spent growing your business and client base. For many, the growing regulatory burden is taking time away from client-facing activities to non-commercial firefighting.\u003c/p\u003e\n\u003cp\u003eThe use of dynamic regulatory update engines is making a real difference:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eAI-powered systems that monitor regulatory changes in real-time\u003c/li\u003e\n\u003cli\u003eAutomated updates to compliance rules across multiple jurisdictions\u003c/li\u003e\n\u003cli\u003eEliminating manual tracking to reduce the lag between rule changes and implementation\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThen we have automated trade transaction reporting, taking in a range of pre-configured templates for:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eEMIR\u003c/li\u003e\n\u003cli\u003eMiFIR\u003c/li\u003e\n\u003cli\u003eSFTR\u003c/li\u003e\n\u003cli\u003eDodd-Frank\u003c/li\u003e\n\u003cli\u003eMAS\u003c/li\u003e\n\u003cli\u003eASIC\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThis not only reduces human error and potential reporting bottlenecks but introduces a high level of consistency and accurate reporting across a range of different regulatory regimes.\u003c/p\u003e\n\u003cp\u003eUsing cutting-edge technology, full data life-cycle visibility, from capture to submission, is now possible. From harmonising trade data from multiple internal sources to aligning disparate formats to regulatory scheme requirements, we live in a world of optimal transparency.\u003c/p\u003e\n\u003cp\u003eeflow’s platform is designed to simplify complexity, enabling firms to respond to regulatory changes with speed and precision. By automating data validation and seamlessly integrating with existing systems, we ensure continuous and scalable compliance. With eflow, firms don\u0026rsquo;t just keep up; they stay ahead.\u003c/p\u003e\n\u003ch2 id=\"best-practices-for-staying-ahead-of-regulatory-updates\"\u003e\u003cstrong\u003eBest practices for staying ahead of regulatory updates\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhether looking at recordkeeping, trade data or multi-jurisdictional operations, the goal is relatively simple: staying ahead of regulatory updates. There are several issues to take into consideration, such as:\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eImplementing a centralised compliance framework\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe ultimate goal is to consolidate fragmented reporting processes into a single, simplified, integrated compliance ecosystem. Aligning data models, formats, and governance standards will ensure consistency across numerous jurisdictions. It will also facilitate faster regulatory alignment and reduce the obvious risks from jurisdictional divergence.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eAutomate data validation and submission\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe use of machine learning is critical in cutting-edge reconciliation tools, which can flag inconsistencies before reports are submitted. The automated submission logic based on evolving jurisdictional requirements ensures reduced manual intervention, lower error rates, and fewer regulatory rejections.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eInvest in real-time monitoring and alerts\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eWhile the term \u0026lsquo;real-time reporting\u0026rsquo; can be subjective, firms can still implement compliance dashboards with AI-driven anomaly detection and configurable alert thresholds. Monitoring transactional activity and regulatory changes in real-time will prevent compliance breaches, empowering teams to act on alerts before they become reportable incidents.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eLeverage RegTech to track regulatory changes\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe vast majority of regulatory changes are flagged in some shape or form, and using predictive analytics can help anticipate the upcoming changes. Deciphering what can be complex regulatory updates supports a focused, proactive approach to ongoing regulatory compliance. Reducing dependence on outside consultancies for fragmented, manual research is a regulatory plus and a significant commercial advantage.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eConduct regular compliance audits and stress testing\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eA proactive approach to regulatory audits and stress testing enables firms to identify reporting blind spots or control gaps. It also allows systems to be tested in stressful scenarios like peak trading days and multi-venue submissions to see how they respond. Regular reruns enable findings to be used to refine processes, increase audit readiness, and strengthen internal governance.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/\"\u003eeflow\u003c/a\u003e supports numerous best practices, such as real-time API integration with trade repositories and regulatory bodies. This enables timely direct compliance submissions. We also have a smart alerting system that flags rule changes, discrepancies, and late submissions, allowing firms to remain ahead of the curve.\u003c/p\u003e\n\u003ch2 id=\"how-eflow-helps-firms-stay-compliant-with-regulatory-reporting-updates\"\u003e\u003cstrong\u003eHow eflow helps firms stay compliant with regulatory reporting updates\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eeflow provides financial institutions with the tools to manage regulatory complexity with confidence. Our regulatory intelligence and compliance automation capabilities enable real-time rule tracking and automated updates, ensuring your compliance framework evolves in step with global regulations. AI-driven logic interprets complex reporting mandates and seamlessly embeds changes into operational workflows.\u003c/p\u003e\n\u003cp\u003eWith seamless multi-jurisdictional reporting, eflow offers pre-built, regulator-aligned templates for EMIR, \u003ca href=\"https://eflowglobal.com/tztr-mifir-reporting/\"\u003eMiFIR\u003c/a\u003e, SFTR, Dodd-Frank, and more, minimising customisation and accelerating deployment. These templates ensure consistency across reporting regimes while reducing the risk of non-compliance due to misinterpretation.\u003c/p\u003e\n\u003cp\u003eOur continuous compliance monitoring and adaptability mean firms benefit from dynamic data validation workflows that detect and resolve discrepancies before submission. This ensures accuracy at scale and audit readiness at all times.\u003c/p\u003e\n\u003cp\u003eWhether managing cross-border obligations or responding to fast-changing mandates, eflow delivers a scalable, intelligent solution to keep you ahead of the compliance curve.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eRegulatory reporting is evolving relentlessly, and the risks of falling behind are only growing. From data inconsistencies and manual errors to increasingly complex cross-jurisdictional mandates, firms are under pressure to deliver accuracy, speed, and transparency at scale. So, what is the solution?\u003c/p\u003e\n\u003cp\u003eA future-proof compliance strategy built on AI-driven automation, real-time data validation, and predictive tools that adapt as fast as regulations change. With the right RegTech in place, compliance becomes a commercial strength, not a burden. For many companies, now is the time to modernise before their competitors, as time really is of the essence.\u003c/p\u003e\n\u003cp\u003eIf you are ready to turn compliance into a competitive edge, let’s talk about \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003ehow eflow can simplify your reporting\u003c/a\u003e and help you lead with confidence.\u003c/p\u003e\n","date_published":"2025-02-04T13:53:00+0000"},{"title":"eflow and DHI partner to transform market abuse detection through AI-powered trade surveillance","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-global-and-dhi-partner-to-transform-market-abuse-detection-through-ai-powered-trade-surveillance/","summary":"\u003cp\u003e\u003cstrong\u003eLondon, UK; 1st April 2025:\u003c/strong\u003e eflow , a leading provider of regulatory compliance and trade surveillance technology, today announces a strategic partnership with Australian AI specialist, \u003ca href=\"https://www.dhi-ai.com/#home\" title=\"DHI\" target=\"_blank\" rel=\"noopener\"\u003eDHI\u003c/a\u003e, to significantly advance the detection and management of market abuse risks.\u003c/p\u003e\n\u003cp\u003eThe collaboration introduces AI-generated risk scoring to eflow’s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eTZTS Trade Surveillance system\u003c/a\u003e which will be based on real-time analysis of news events and their potential impact on market movements. The risk scores can then be combined with the system’s highly configurable alert parameters to generate additional insights that will help firms to identify potential instances of market abuse more accurately and efficiently.\u003c/p\u003e\n\u003cp\u003eEqually, the technology will enable firms to address the high volume of false positive alerts that traditional trade surveillance systems generate, which \u003ca href=\"https://eflowglobal.com/global-trends-in-market-abuse-and-trade-surveillance-form/\" target=\"_blank\" rel=\"noopener\"\u003eeflow’s research recently highlighted\u003c/a\u003e as a significant challenge for almost half (43%) of regulatory leaders.\u003c/p\u003e\n\u003cp\u003eBen Parker, CEO at eflow commented: “As the use of AI in regulated environments continues to accelerate, our partnership with DHI represents a significant milestone in how these advanced tools can be practically integrated into regulatory technology. By embedding DHI’s proven AI models into our TZTS platform, we are enhancing our own capabilities while also providing our clients with powerful tools to address the increasingly complex and dynamic challenge of meeting their regulatory obligations. This collaboration allows us to offer a more sophisticated approach to market surveillance, ensuring our clients are better equipped to stay ahead of regulatory demands in a rapidly changing landscape.”\u003c/p\u003e\n\u003cp\u003eMoving forward, DHI’s AI technology will be integrated into eflow’s holistic suite of regulatory solutions, which span trade surveillance, eComms surveillance, best execution and transaction reporting, and are already used by more than 130 financial institutions globally. The partnership will supplement eflow’s existing machine learning capabilities and accelerate the development of their own proprietary AI tools, while leveraging DHI’s industry expertise to respond to new and emerging regulatory threats.\u003c/p\u003e\n\u003cp\u003eKenn Rodrigues, CEO at DHI commented: “Our expertise in creating AI-driven compliance tools aligns perfectly with eflow’s mission to offer their clients the most robust and innovative regulatory technology. This partnership marks a crucial step forward in the evolution of AI-powered market surveillance, and will equip firms with smarter tools to manage the increasingly complex compliance challenges that they face.”\u003c/p\u003e\n\u003cp\u003eKenn added: “At DHI we are very excited about this collaboration. Our companies have significant alignment on values and what we are attempting to achieve in this world.\u0026quot;\u003c/p\u003e\n\u003cp\u003eThe partnership was established during eflow and DHI’s involvement in the \u003ca href=\"https://eflowglobal.com/fca-market-abuse-tech-sprint/\" target=\"_blank\" rel=\"noopener\"\u003eFCA Market Abuse Surveillance TechSprint\u003c/a\u003e, where both companies were invited to participate due to their expertise in trade surveillance and AI-driven compliance solutions.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n","date_published":"2025-01-04T08:00:00+0000"},{"title":"Regulation, strategy, and leadership in RegTech","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/regulation-strategy-and-leadership-in-regtech/","summary":"\u003cp\u003eIn the rapidly evolving world of financial markets, regulatory technology (RegTech) plays a critical role in ensuring that institutions comply with ever-tightening regulations. To gain a deeper understanding of the current and future state of the RegTech sector, we spoke with Jonathan Dixon, Head of Trade Surveillance at eflow Global. Jonathan has more than a decade of experience across various facets of market surveillance, including client-side, vendor-side, exchange-side, and consultancy roles. His extensive knowledge in this space positions him as a leading authority on the subject.\u003c/p\u003e\n\u003cp\u003eIn this article, Jonathan shares his insights on regulatory harmonisation, the relationship between regulators and RegTech providers, the strategic goals for eflow, and the balance between innovation and compliance.\u003c/p\u003e\n\u003ch2 id=\"the-impact-of-global-regulatory-harmonisation-on-the-regtech-market\"\u003e\u003cstrong\u003eThe impact of global regulatory harmonisation on the RegTech market\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eGlobal regulatory harmonisation has become a key focus for many financial institutions and regulators as markets become more interconnected and the need for consistent standards increases. Jonathan views this development positively for the RegTech industry.\u003c/p\u003e\n\u003cp\u003e“I think it will only help. I think the more standardisation there is, the better the markets will be,” he explains. “Surveillance is largely in this place already in that the major markets—Singapore, Hong Kong, Europe, the US, and the UK—have very similar regulatory regimes in terms of what they\u0026rsquo;ve got, albeit with different approaches to implementation of rules. The MAS has a more collaborative approach with businesses than the enforcement first approach of the SEC for example.”\u003c/p\u003e\n\u003cp\u003eJonathan notes that the definitions of common forms of market manipulation, such as spoofing, layering, wash trading, and insider trading, are already consistent across these markets. “The forms and standards of market manipulation and insider dealing definitions are largely very, very similar. So I think they\u0026rsquo;re already there in terms of what\u0026rsquo;s looked for. Greater cooperation, I’d say, will be the next place to go.”\u003c/p\u003e\n\u003cp\u003eHowever, Jonathan acknowledges the potential for fragmentation due to national interests. “Is there any danger of tribalism whereby one regulator or a government wants to look after their market and maintain a greater degree of control? I think everyone wants to exclude bad actors from their markets,” he remarks.\u003c/p\u003e\n\u003cp\u003eJonathan stresses the importance of cooperation between regulators, particularly when it comes to identifying and addressing market abuse. “There is communication between regulators. Making others aware of who the bad actors are and why they\u0026rsquo;re suspected of market manipulation or market abuse in their own individual markets would be helpful; especially when it crosses regulatory regimes - such as communication between the EU and the US.”\u003c/p\u003e\n\u003cp\u003eThe greater the communication between global regulators, the easier it will be to identify patterns of abuse across markets, leading to stronger enforcement and improved market integrity.\u003c/p\u003e\n\u003ch2 id=\"regulatory-developments-and-their-impact-on-regtech-firms\"\u003e\u003cstrong\u003eRegulatory developments and their impact on RegTech firms\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhen considering the future of regulation, Jonathan points to both opportunities and potential threats for RegTech firms. One significant concern is the possibility of a regulatory rollback in key markets such as the US.\u003c/p\u003e\n\u003cp\u003e“For me, the biggest existential threat is the rolling back of the regulatory environment, which you might see in a highly politicised American environment,” Jonathan explains. He suggests that a shift toward self-regulation could undermine the progress made in market oversight. “Self-regulation by the markets\u0026hellip; I think history has shown that the markets are \u003cem\u003egenerally\u003c/em\u003e good at self-regulating, but when they\u0026rsquo;re bad, they’re awful and risks can move beyond the conceptual to the existential.”\u003c/p\u003e\n\u003cp\u003eJonathan is cautious about the risks of deregulation, particularly in light of past financial crises. “We’re still feeling the aftereffects of bailing out pretty much every bank in the Western world. Do we want that again, just to say that we\u0026rsquo;re self-regulating? It’s too big a risk, personally.”\u003c/p\u003e\n\u003cp\u003eThe tightening or loosening of regulations will have a significant impact on RegTech firms, shaping their role in maintaining market integrity. A strong regulatory framework ensures demand for advanced surveillance and compliance tools, whereas deregulation could stifle innovation in the industry.\u003c/p\u003e\n\u003ch2 id=\"the-evolving-relationship-between-regulators-and-regtech-providers\"\u003e\u003cstrong\u003eThe evolving relationship between regulators and RegTech providers\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe relationship between regulators and RegTech providers has evolved significantly in recent years, with regulators increasingly recognising the value of engaging with industry experts. Jonathan highlights how open regulators, such as the UK’s Financial Conduct Authority (FCA), have been to engaging with RegTech vendors like eflow.\u003c/p\u003e\n\u003cp\u003e“I’ve been invited by the regulator, the FCA, to come in and chat to them. I can’t say what about in detail, but they are open to speaking to vendors,” Jonathan explains. This marks a shift in how regulators interact with the industry, moving from a more closed approach to one that values input from experts who are developing the tools needed for market oversight.\u003c/p\u003e\n\u003cp\u003eJonathan notes that these interactions are not about forming partnerships but rather about discussing the practical application of new technologies, such as AI and machine learning. “I can say from the time I’ve been on the vendor side, they’ve been very open to discussing things. This is not about making us their new surveillance partner, but at least chatting about topics such as AI, machine learning, and what our plans are.”\u003c/p\u003e\n\u003cp\u003eThis evolving relationship underscores the importance of collaboration between regulators and RegTech providers. As Jonathan points out, vendors have the resources and expertise to create solutions, while regulators bring the broader market oversight perspective and access to large data sets. This collaboration will be vital as regulations and technologies continue to develop over the coming years.\u003c/p\u003e\n\u003ch2 id=\"strategic-goals-for-eflows-future\"\u003e\u003cstrong\u003eStrategic goals for eflow\u0026rsquo;s future\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eLooking ahead, Jonathan shares eflow\u0026rsquo;s long-term strategic goals, emphasising the company’s commitment to staying at the forefront of the industry through product innovation and technology advancements.\u003c/p\u003e\n\u003cp\u003e“Strategically, we want to make the product as good as it can be, and that includes things like having really high-quality order book replays, which will be coming in this year,” Jonathan says. Order book replay functionality allows firms to recreate past trading environments, helping compliance teams better analyse market events and trading patterns.\u003c/p\u003e\n\u003cp\u003eAdditionally, eflow Global is focusing on the development of AI and machine learning capabilities to enhance their systems’ ability to detect cross-product manipulation and dynamically adjust alert parameters. “We’re also looking at the ability to use AI and machine learning to affect our clients\u0026rsquo; parameterization of alerts and thresholds, which will be really useful.”\u003c/p\u003e\n\u003cp\u003eThese innovations, combined with a focus on cross-product manipulation detection, will ensure eflow Global remains at the forefront of RegTech advancements, helping clients better manage their compliance obligations and maintain market integrity.\u003c/p\u003e\n\u003ch2 id=\"balancing-innovation-with-risk-management-and-compliance\"\u003e\u003cstrong\u003eBalancing Innovation with Risk Management and Compliance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eIn an industry that constantly evolves, innovation is essential. However, balancing the need for innovation with the risk management and compliance demands of the market is a delicate task. Jonathan explains how eflow approaches this balance by focusing on the practical needs of their clients while pushing the boundaries of what is technologically possible.\u003c/p\u003e\n\u003cp\u003e“Innovation is generally a good thing in that we can spend as much money as we want innovating things. It’s then up to firms to say we want it or we don’t, so you learn by default in terms of how it’s picked up by firms,” Jonathan says. He emphasizes that the firm’s innovations are driven by two key factors: the compliance demands of their clients and the available resources within the company.\u003c/p\u003e\n\u003cp\u003eJonathan mentions three major areas of focus for eflow’s innovation efforts: “I mentioned order book replays, which are something that compliance firms and trading firms will welcome in relation to high-frequency trading (HFT) and algorithmic trading. The ability to identify cross-product manipulation is something that risk management firms and banks, for example, would love to have but isn’t currently available in the market. And dynamic parameterization would help clients refine their risk.”\u003c/p\u003e\n\u003cp\u003eHowever, Jonathan acknowledges that not every innovation will be immediately adopted by the market. “The proof of the pudding is in the eating and how the market absorbs our ideas. If no one wants it, some might see this as a waste of a development cycle. But does that matter? You learn by both the development lifecycle \u003cem\u003eand\u003c/em\u003e customer feedback.”\u003c/p\u003e\n\u003cp\u003eeflow Global carefully allocates resources to ensure that their innovations align with both market needs and available capacity. As Jonathan explains, “We don’t have an infinite pot of money, we have a limited number of high-quality developers, like every firm does, and we need to use that time wisely.”\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs the RegTech industry continues to evolve, firms like eflow Global are at the forefront of innovation, responding to both regulatory demands and market needs. Jonathan Dixon’s insights offer a valuable perspective on the challenges and opportunities facing the industry. Global regulatory harmonisation, the relationship between regulators and RegTech providers, and the balance between innovation and compliance will shape the future of RegTech.\u003c/p\u003e\n\u003cp\u003eBy staying focused on long-term goals, embracing emerging technologies, and maintaining close collaboration with regulators and clients, eflow Global aims to lead the way in ensuring market integrity in an increasingly complex and interconnected financial environment.\u003c/p\u003e\n","date_published":"2025-21-03T14:46:00+0000"},{"title":"Rhetoric meets reality: What Trump 2.0 means for financial regulation","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/rhetoric-meets-reality-what-trump-2-0-means-for-financial-regulation/","summary":"\u003ch2 id=\"trumps-first-steps\"\u003eTrump\u0026rsquo;s first steps\u003c/h2\u003e\n\u003cp\u003eDuring his first month in office, President Donald Trump signed 70 executive orders, 12 proclamations, and 17 memoranda. From border security measures to federal workforce reforms, his administration has pursued a broad and ambitious agenda, with multiple high-profile initiatives competing for attention.\u003c/p\u003e\n\u003cp\u003eTrump’s approach to public policy is defined by deregulation, especially in rhetoric. In his first term, he introduced the \u003cem\u003ePresidential Executive Order on Reducing Regulation and Controlling Regulatory Costs\u003c/em\u003e in 2016, which established a “two-for-one” rule - requiring the removal of two existing regulations for every new one introduced. Now, in his latest term, the commitment to deregulation appears even more aggressive.\u003c/p\u003e\n\u003ch3 id=\"key-executive-orders-related-to-regulation\"\u003eKey executive orders related to regulation\u003c/h3\u003e\n\u003cp\u003e\u003ca href=\"https://www.whitehouse.gov/presidential-actions/2025/01/unleashing-prosperity-through-deregulation/\"\u003eUnleashing Prosperity Through Deregulation\u003c/a\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eTrump’s latest executive order raises the bar, building on his previous policy of removing two regulations for every new one, he is now calling for the elimination of ten regulations for each new one introduced.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e\u003ca href=\"https://www.whitehouse.gov/presidential-actions/2025/02/ensuring-accountability-for-all-agencies/\"\u003eEnsuring Accountability For All Agencies\u003c/a\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThis executive order mandates that all federal agencies, including independent ones, submit draft regulations for White House review before they can be published in the Federal Register. The goal is to align all executive branch actions with presidential priorities and increase government accountability.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e\u003ca href=\"https://www.whitehouse.gov/presidential-actions/2025/01/strengthening-american-leadership-in-digital-financial-technology/\"\u003eStrengthening American Leadership in Digital Financial Technology\u003c/a\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThis order aims to provide regulatory clarity and certainty in financial technology by promoting technology-neutral regulations, transparent decision-making, and well-defined jurisdictional boundaries. It seeks to support innovation in digital assets, permissionless blockchains, and distributed ledger technologies while fostering a more inclusive digital economy.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"trumps-rationale-for-deregulation\"\u003eTrump’s rationale for deregulation\u003c/h3\u003e\n\u003cp\u003eTrump’s rhetoric on deregulation remains consistent with his first term, emphasising economic growth, individual freedom, and reduced bureaucracy. His administration argues that overregulation stifles business, raises costs, and limits consumer choice.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e“President Trump will halt the job-killing and inflation-driving regulatory blitz of the Biden administration.”\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e“Overregulation stops American entrepreneurship, crushes small businesses, reduces consumer choice, discourages innovation, and infringes on the liberties of American citizens. It also contributes to the high cost of living, including by driving up energy prices.”\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eDeregulation has also garnered support from parts of the financial sector. Goldman Sachs CEO David Solomon expressed optimism about engaging in constructive discussions to enhance transparency and consistency in capital regulations, signaling that banks will actively lobby for changes under Trump’s leadership.\u003c/p\u003e\n\u003ch3 id=\"feasibility\"\u003eFeasibility\u003c/h3\u003e\n\u003cp\u003eRemoving regulations is more difficult than halting new ones. Most deregulatory actions must undergo the notice-and-comment process and potential judicial review. Trump’s previous deregulation efforts faced legal challenges, with many being overturned or delayed. However, he did demonstrate that regulatory costs can be reduced - his first term lowered regulatory costs by an estimated $11,000 per household.\u003c/p\u003e\n\u003cp\u003eThe Congressional Review Act (CRA) permits only the repeal of very recent regulations, limiting rapid, large-scale deregulation. While he used it effectively in his first term to repeal 16 Obama-era rules, most deregulation must go through the lengthy Administrative Procedure Act (APA) process, requiring public notice, comment periods, and legal justification - often leading to court challenges and delays.\u003c/p\u003e\n\u003cp\u003eA more realistic scenario is targeted deregulation in key areas; Major Wall Street banks see the Trump administration as an opportunity to limit proposed changes to capital regulations established after the 2007-2009 financial crisis. Their objectives include modifying or cancelling the Basel Endgame capital requirements, reducing the capital surcharge for global banks, adjusting leverage constraints, and overhauling the Federal Reserve’s annual stress tests.\u003c/p\u003e\n\u003cp\u003eSurveillance and recordkeeping obligations do not appear to be primary targets for deregulation, as they have little direct connection to inflation and are critical for financial oversight and market integrity. However, given the administration\u0026rsquo;s broad anti-regulation stance, secondary rule changes \u003cem\u003ecould\u003c/em\u003e still emerge if industry lobbying intensifies.\u003c/p\u003e\n\u003ch3 id=\"a-word-on-cryptocurrencies\"\u003eA word on Cryptocurrencies\u003c/h3\u003e\n\u003cp\u003eWhen Trump took office, the crypto community watched closely, fueled by speculation about a potential Bitcoin reserve. But the inauguration speech came and went - without a single mention of digital assets. While crypto is central to its investors, it remains a lower priority on the national stage, where issues like war, border security, and inflation take precedence.\u003c/p\u003e\n\u003cp\u003eThe rumors about a Bitcoin reserve were largely overblown. During his campaign, Trump’s actual stance was more measured - he pledged not to sell Bitcoin acquired through criminal seizures, but that’s a far cry from actively accumulating it as part of a national strategy. It was, in fact, Cynthia Lummis who first proposed the “\u003ca href=\"https://www.congress.gov/bill/118th-congress/senate-bill/4912\"\u003eBitcoin Act\u003c/a\u003e” in July, 2024, encouraging the Department of the Treasury to purchase one million Bitcoins over a five-year period and hold the Bitcoins in trust for the United States. All Bitcoins acquired under this bill would be held for at least 20 years unless used to retire outstanding federal debt. Her recent appointment to Chair of the Senate Panel on Digital Assets demonstrates Trump’s support of the Act and, for many, signals increased likelihood that such a Bill will be passed.\u003c/p\u003e\n\u003cp\u003eWhile federal clarity remains elusive, crypto adoption is progressing at the state level.\u003c/p\u003e\n\u003cp\u003eAt the time of writing, 20 states have pending approvals for Bitcoin reserves, with two already greenlit. Despite federal hesitations, proactive state-level actions reflect a clear intention to stay ahead of the inevitable nation-state adoption that appears poised to begin.\u003c/p\u003e\n\u003cimg src=\"https://lh7-rt.googleusercontent.com/docsz/AD_4nXdtcc9GJVBGRP_03ZcYZJvRxLnbJepHmtmplrE0kJxi1RHXeRU2SDeigYApQWJNuol1KYD8VCJqprHF2QqZgpDwJmx3RpFuh93VqKNMr9opEDg5ksxQQq_pacuhbdMHMLicy5A_oA?key=0RiqY8DN8MkEIzZZlsr429_M\" height=\"453\" width=\"624\" /\u003e\n\u003cp\u003eMore recently, the Trump administration has taken a clearer stance with a new crypto executive order. The focus is on dismantling what many referred to as “Chokepoint 2.0” under Biden - an enforcement-heavy regulatory approach led by previous SEC Chair, Gary Gensler, that left market participants frustrated and uncertain. The shift in direction signals an ambition to position the US as a global leader in digital assets.\u003c/p\u003e\n\u003cp\u003eA government-backed industry focus group has been formed, with initial priorities centered on stablecoin regulations and securities classification. Trump has also maintained his pledge to shut down any chance of a central bank digital currency (CBDC). Surveillance and compliance measures remain an open question, but before those discussions can happen, the foundational regulatory framework needs to take shape. Progress is underway, but meaningful clarity will take time.\u003c/p\u003e\n\u003ch3 id=\"regulation-in-flux-clearer-rules-or-new-challenges\"\u003eRegulation in flux: Clearer rules or new challenges?\u003c/h3\u003e\n\u003cp\u003eTalk of deregulation efforts often raise as many questions as answers. While the goal may be clearer rules, will these reforms truly deliver clarity, or are firms entering an era of heightened complexity as they navigate overlapping and evolving requirements? Regulatory evolution demands a dynamic, risk-intelligent approach. Removing regulatory red tape is not a green light to reduce controls. Instead, regulatory change must be considered within a broader market abuse risk assessment, with controls being influenced by a myriad of factors.\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003e\u003cstrong\u003eComprehensive risk mapping:\u003c/strong\u003e Conduct a granular assessment of market abuse and regulatory risks - across all relevant jurisdictions, with a potential bias towards the highest level of regulation - establishing a clear baseline of inherent risks across the organisation.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eControl overlay and risk calibration:\u003c/strong\u003e Systematically overlay existing controls against identified inherent risks. This critical comparison reveals residual risk - the exposure that remains after control mechanisms are applied. The delta between inherent and controlled risks offers strategic insights into your risk management effectiveness.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eRisk-based remediation:\u003c/strong\u003e Conduct a detailed analysis to identify business units and product lines with the highest residual risk profiles. This targeted approach enables:\u003c/li\u003e\n\u003c/ol\u003e\n\u003cul\u003e\n\u003cli\u003ePrecise resource allocation\u003c/li\u003e\n\u003cli\u003eIdentification of areas requiring enhanced control mechanisms\u003c/li\u003e\n\u003cli\u003eStrategic opportunities to streamline or remove redundant controls\u003c/li\u003e\n\u003cli\u003eData-driven prioritisation of risk mitigation efforts\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eRegulations may shift, but your compliance framework shouldn’t have to. eflow provides the flexibility and technology firms need to stay ahead - adapting to regulatory changes without unnecessary complexity. Whatever the direction of policy, we ensure your compliance processes remain seamless, efficient, and built for the long term.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/#product-cards\"\u003eClick here for more information on our regulatory solutions\u003c/a\u003e or \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a consultation\u003c/a\u003e with our team of experts.\u003cbr\u003e\u003c/p\u003e\n","date_published":"2025-12-03T13:35:00+0000"},{"title":"The ultimate guide to regulatory reporting automation","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/the-ultimate-guide-to-regulatory-reporting-automation/","summary":"\u003cp\u003eFinancial institutions today face an unprecedented volume and velocity of regulatory reporting requirements. The introduction of complex frameworks such as MiFIR, EMIR Refit, SFTR, Dodd-Frank, and ASIC reporting has reshaped compliance from a back-office obligation into a firm-wide priority. Coupled with the rise of real-time and T+1 mandates, the margin for error has all but disappeared.\u003c/p\u003e\n\u003cp\u003eManual workflows and legacy systems, once sufficient for periodic submissions, now pose significant risks: operational drag, inconsistent data, and costly compliance breaches. The traditional approach is no longer sustainable for firms juggling cross-jurisdictional obligations and fragmented data sources.\u003c/p\u003e\n\u003cp\u003eEnter automation, a whole new world and even more challenges. However, with the right technologies in place, AI-powered validation, integrated reporting pipelines, and adaptive compliance workflows, firms can reduce risk. There is also a knock-on effect, streamlining operations and improving regulatory responsiveness. This guide lays out a clear, step-by-step roadmap for compliance, risk, and operations for leaders ready to transform their reporting through intelligent automation.\u003c/p\u003e\n\u003ch2 id=\"the-core-components-of-regulatory-reporting-automation\"\u003e\u003cstrong\u003eThe core components of regulatory reporting automation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eTo automate regulatory reporting effectively, firms need a framework built around five core components, which we cover in this section. These elements ensure accuracy, efficiency, and adaptability across the full reporting cycle and create critical audit trails.\u003c/p\u003e\n\u003ch3 id=\"trade-and-transaction-data-capture\"\u003e\u003cstrong\u003eTrade and transaction data capture\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThere are several issues to consider in this area, which include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eFront-to-back trade life-cycle capture - capturing trade data from order inception to settlement.\u003c/li\u003e\n\u003cli\u003eMulti-system integration - utilise data from OMS, EMS, back-office, and market data feeds.\u003c/li\u003e\n\u003cli\u003eData normalisation and enrichment - convert structured and unstructured data into a unified format for compliance purposes.\u003c/li\u003e\n\u003cli\u003eCross-jurisdictional data mapping - handled by divergent reporting fields and formats, including EMIR, MiFIR, SFTR, Dodd-Frank, and more.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"automated-data-validation-and-enrichment\"\u003e\u003cstrong\u003eAutomated data validation and enrichment\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAI is particularly useful regarding data validation and enrichment, which is critical, but this must be accurate. There are numerous aspects to this area, such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eEntity and transaction validation – verifying the accuracy and completeness of LEIs, UTIs, \u003ca href=\"https://www.isin.org/isin-process/\"\u003eISIN\u003c/a\u003es, and timestamps.\u003c/li\u003e\n\u003cli\u003eRule-based enrichment - an automated process which fills in missing fields based on experience and contextual data.\u003c/li\u003e\n\u003cli\u003eReal-time rule validation - based on a predefined regulatory rule set, flags, and error correction, helps avoid rejections by repositories and regulators.\u003c/li\u003e\n\u003cli\u003eAI-driven accuracy improvement - the ability to integrate rule sets and machine learning will improve enrichment and successful submissions over time.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"regulatory-rule-interpretation-and-standardisation\"\u003e\u003cstrong\u003eRegulatory rule interpretation and standardisation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eCross-border trading and multi-jurisdictional businesses further highlight the importance of rule interpretation and standardisation. This includes various topics such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eDynamic jurisdictional mapping - identifying applicable regulations based on trade characteristics across counterparties, instruments and countries.\u003c/li\u003e\n\u003cli\u003eRegulation-specific logic - the ability to identify and adapt reporting to different requirements, adjusting submission logic based on regulations and updates.\u003c/li\u003e\n\u003cli\u003eAI-enabled compliance tracking - monitoring, and automatically introducing rule changes into workflows enhances reporting standards and time for client-facing services.\u003c/li\u003e\n\u003cli\u003eStandardised regulatory taxonomy mapping - the importance of harmonising internal classifications with external reporting frameworks.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"submission-and-reporting-automation\"\u003e\u003cstrong\u003eSubmission and reporting automation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe reality is that the level of regulatory reporting today means automation is not an option; it\u0026rsquo;s a necessity. There are many developments which are helping the industry move away from manual submission, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSeamless reporting pipelines - the use of APIs for direct, secure submissions to trade repositories and regulatory bodies.\u003c/li\u003e\n\u003cli\u003eReal-time schedule reporting - as settlement times continue to fall, we are moving away from T+1 regulatory reporting to intraday and then real-time submission.\u003c/li\u003e\n\u003cli\u003eAutomated generation of disclosure reports - vital for internal monitoring and regulatory liabilities, their value is often overlooked.\u003c/li\u003e\n\u003cli\u003eError handling and retries - automated submissions are a game-changer, but the ability to automate the detection and resubmission of field reports and corrected data is priceless.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"post-submission-reconciliation-and-exception-handling\"\u003e\u003cstrong\u003ePost-submission reconciliation and exception handling\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eEver-growing regulatory obligations mean there is a need for post-submission reconciliation and identifying misreporting. Ongoing developments in technology are assisting across the board:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eAnomaly detection with machine learning - the ability to identify issues between internal and regulatory reports is imperative, often identifying systemic misreporting.\u003c/li\u003e\n\u003cli\u003eTrade break resolution - RegTech dashboards allow mismatches between reported and executed trades to be rectified, facilitating report corrections and resubmission.\u003c/li\u003e\n\u003cli\u003eOngoing compliance dashboards - the visual representation of regulatory KPIs and submission statuses allow compliance teams to prioritise resources via real-time alerting.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"how-automation-helps-with-common-pitfalls-in-regulatory-reporting\"\u003e\u003cstrong\u003eHow automation helps with common pitfalls in regulatory reporting\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs the regulatory landscape becomes more complicated and liabilities increase, several common pitfalls in regulatory reporting will inevitably emerge. Thankfully, RegTech and high levels of automation are helping to solve the most frequent, such as:\u003c/p\u003e\n\u003ch3 id=\"data-inconsistencies-and-reporting-errors\"\u003e\u003cstrong\u003eData inconsistencies and reporting errors\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eMany firms operate with fragmented infrastructures, which involve multiple data sources, manual input, and inconsistent formats. This can lead to common reporting errors, but, thankfully, there is a range of automated fixes.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eAI-driven \u003ca href=\"https://kb.synology.com/en-nz/DSM/help/DSM/StorageManager/storage_pool_data_scrubbing?version=7\"\u003edata scrubbing\u003c/a\u003e - using pre-set rules and formats, together with machine learning, malformed and missing data can be automatically corrected.\u003c/li\u003e\n\u003cli\u003eTrade normalisation workflows - it’s more important than ever that data fields are aligned across both internal and external systems, the bedrock of accurate reporting.\u003c/li\u003e\n\u003cli\u003eReal-time validation rules - the ability to validate data and flag discrepancies before submissions saves time, money, and effort.\u003c/li\u003e\n\u003cli\u003eAutomated enrichment - with so many different data feeds, cutting-edge AI systems can locate, validate, and enrich data.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"failure-to-meet-reporting-deadlines\"\u003e\u003cstrong\u003eFailure to meet reporting deadlines\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhether through manual batching, siloed teams or systems being asked to run beyond their capacity, many firms are failing to meet their regulatory reporting guidelines. Ongoing investment in RegTech is making a huge difference, automating a number of critical fixes:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eEvent-driven submission engines - automated reporting based on trade life-cycle events.\u003c/li\u003e\n\u003cli\u003eReal-time data ingestion - ensuring continuous validation, enrichment and submission of trade data.\u003c/li\u003e\n\u003cli\u003eException alerting - an early flag system that warns compliance teams about potential bottlenecks and threats to reporting timelines.\u003c/li\u003e\n\u003cli\u003eScalable architecture - unlike manual processes, automated RegTech is easily scalable as volumes and regulatory obligations increase.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"regulatory-divergences-across-jurisdictions\"\u003e\u003cstrong\u003eRegulatory divergences across jurisdictions\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eYou will already be aware of conflicting rules and formats across EMIR, MiFIR, SFTR, Dodd-Frank, MAS, and ASIC, making reporting extremely confusing. Compliance teams can quickly become overwhelmed with the complexity of rule variations and constant updates. Thankfully, there are automated fixes which include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003ePreconfigured compliance templates - tailored rule mappings help to avoid jurisdictional uncertainty and ensure accurate submissions.\u003c/li\u003e\n\u003cli\u003eDynamic jurisdictional routing - automated filtering ensures that trades are reported to the appropriate regulator based on counterparty, geography and asset class\u003c/li\u003e\n\u003cli\u003eAI-based rule interpretation - the automated updating of regulatory changes supports a constantly changing reporting logic.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"audit-and-record-keeping-deficiencies\"\u003e\u003cstrong\u003eAudit and record-keeping deficiencies\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs we have seen in the US, with the SEC handing out multi-million dollar fines, this is an area of particular interest for regulators. Incomplete order trails, sub-standard record keeping and inefficient archiving are three key issues. Using new AI systems, it is now possible to utilise:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eImmutable audit trails - to capture every record change and timestamp, ensuring complete transparency and traceability.\u003c/li\u003e\n\u003cli\u003eBlockchain-based records - tamper-proof compliance logs are now possible using blockchain technology.\u003c/li\u003e\n\u003cli\u003eSearchable trade repositories - interactive dashboards allow seamless access to historical trades, reports and exception resolution.\u003c/li\u003e\n\u003cli\u003eComprehensive dashboards - providing complete visibility and transparency to compliance teams and auditors is essential to regulatory reporting.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"a-step-by-step-guide-to-implementing-regulatory-automation\"\u003e\u003cstrong\u003eA step-by-step guide to implementing regulatory automation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eNow that we have the pieces of the regulatory jigsaw, the next step is implementing the elements relevant to your firm, maximising operational efficiencies and value for money.\u003c/p\u003e\n\u003ch3 id=\"step-1-assess-current-reporting-infrastructure\"\u003e\u003cstrong\u003eStep 1: Assess current reporting infrastructure\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eBefore you make any changes, it\u0026rsquo;s crucial to identify the current foundations on which your reporting responsibilities are built. This means auditing your existing system and mapping the existing workflow, allowing you to spot inefficiencies and potential risks. At this point, you also need to identify fragmentation in your structure and data silos which may need to be brought on board.\u003c/p\u003e\n\u003ch3 id=\"step-2-define-regulatory-reporting-requirements\"\u003e\u003cstrong\u003eStep 2: Define regulatory reporting requirements\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eOn the surface, this seems like a relatively simple task, but in today\u0026rsquo;s environment, it is becoming more challenging to identify which rules and jurisdictions apply to your operations and clients. A detailed list of reporting obligations by asset class will help you determine your regulatory span and flag any potential changes going forward. Existing service level agreements may need to be updated to reflect shorter timelines, quality and reporting thresholds.\u003c/p\u003e\n\u003ch3 id=\"step-3-select-an-automation-solution\"\u003e\u003cstrong\u003eStep 3: Select an automation solution\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThere is no one-size-fits-all regarding financial services and regulatory liabilities; each business has its own intricacies that define its regulatory obligations. The key is choosing services and operations relevant to your business to minimise investment and maximise the benefits. Various issues, such as assessing core capabilities, integration readiness, vendor support, updates, and potential scalability, will dictate the vendor and services you choose.\u003c/p\u003e\n\u003ch3 id=\"step-4-integrate-with-trade-and-risk-systems\"\u003e\u003cstrong\u003eStep 4: Integrate with trade and risk systems\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe key to a successful automated regulatory reporting solution is connectivity, data flow, integration of market data, speed, and accuracy. When choosing the correct package, you also need to consider operational risk and IT security policies. Third-party vendors can help by reviewing your requirements, discussing available solutions, and designing a package tailored to your specific needs.\u003c/p\u003e\n\u003ch3 id=\"step-5-implement-automated-reconciliation-and-validation\"\u003e\u003cstrong\u003eStep 5: Implement automated reconciliation and validation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eMachine learning and rules-based reconciliation/validation are critical to any internal regulatory system. It is essential to identify data inconsistencies before reports are sent to regulators or trade repositories. Once anomalies have been identified, internal rules will dictate the level of escalation and resolution, and the appropriate issues will be automatically documented. Comprehensive dashboards provide visibility into error rates, time-to-resolution metrics, and overall reporting completeness.\u003c/p\u003e\n\u003ch3 id=\"step-6-conduct-parallel-testing-and-dummy-runs\"\u003e\u003cstrong\u003eStep 6: Conduct parallel testing and dummy runs\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs tempting as it may be to rush the integration of a new automated RegTech system, it\u0026rsquo;s critical to undergo parallel testing and dummy runs. This will identify areas that may need tweaks and any incompatibilities while alerting you to additional issues that may require automation. Many repositories and regulators operate sandbox environments where you can test new systems via dummy submissions. It\u0026rsquo;s also important to \u0026ldquo;set traps\u0026rdquo; for incoming systems to ensure they can handle issues such as missing fields or rejected submissions. Last but not least, ensure you get feedback from the compliance team!\u003c/p\u003e\n\u003ch3 id=\"step-7-go-live-and-establish-continuous-monitoring\"\u003e\u003cstrong\u003eStep 7: Go live and establish continuous monitoring\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIt\u0026rsquo;s one thing to convert or integrate new cutting-edge technology into your existing systems; it\u0026rsquo;s another thing to go live without continuous monitoring. Many firms find it easier to launch incrementally, going live by asset class, region or regulator.\u003c/p\u003e\n\u003cp\u003eThe constant flow of real-time data, correction reports, and adaptation to new regulations requires priceless feedback loops. While ongoing reviews may identify areas of concern, scheduled periodic reviews can examine inefficiencies, bottlenecks, and several performance metrics more in-depth to measure efficiency and accuracy gains.\u003c/p\u003e\n\u003ch2 id=\"best-practices-for-optimising-regulatory-reporting-automation\"\u003e\u003cstrong\u003eBest practices for optimising regulatory reporting automation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eYou have done your research, spoken with the vendors, run the old and new systems in tandem, and decided to implement a new package of focused RegTech services. What next? To maximise the benefits of automated regulatory reporting, we have listed several best practices.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eImplement an end-to-end data pipeline\u003c/li\u003e\n\u003cli\u003eUse AI for predictive compliance adjustments\u003c/li\u003e\n\u003cli\u003eLeverage cloud-based compliance solutions\u003c/li\u003e\n\u003cli\u003eEnable real-time exception monitoring and resolution\u003c/li\u003e\n\u003cli\u003eEnsure ongoing staff training and compliance readiness\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eFrom speaking with clients, we know that it can take a while to identify and tweak existing services to create the best package, but this is a stage that can\u0026rsquo;t be rushed. When you also consider the best practices listed above, the long-term benefits can be huge. This is before we even consider the significant unrestricted potential benefits of machine learning, i.e., learning on the job.\u003c/p\u003e\n\u003ch2 id=\"how-eflow-enables-scalable-regulatory-reporting-automation\"\u003e\u003cstrong\u003eHow eflow enables scalable regulatory reporting automation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAt the heart of \u003ca href=\"https://eflowglobal.com/the-path-ecosystem/\"\u003eeflow’s platform\u003c/a\u003e is a commitment to making regulatory reporting easier, smarter, faster, and scalable. Designed for modern compliance teams, eFlow combines advanced regulatory intelligence with powerful automation tools to keep firms ahead of shifting global mandates.\u003c/p\u003e\n\u003ch3 id=\"regulatory-intelligence-and-automated-compliance-tracking\"\u003e\u003cstrong\u003eRegulatory intelligence and automated compliance tracking\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eOur AI-driven rule engines continuously interpret and adapt to evolving regulations, automatically updating workflows to ensure firms remain compliant with frameworks like EMIR, MiFIR, Dodd-Frank, and MAS. No manual re-coding. No lag. Just real-time compliance alignment.\u003c/p\u003e\n\u003ch3 id=\"end-to-end-trade-reporting-automation\"\u003e\u003cstrong\u003eEnd-to-end trade reporting automation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eeflow seamlessly connects with trade repositories and regulators, including DTCC, FCA, ESMA, SEC, and more. The process is fully automated from trade capture to submission, removing friction and reducing risk across multi-asset, multi-jurisdictional operations.\u003c/p\u003e\n\u003ch3 id=\"real-time-exception-handling-and-auditability\"\u003e\u003cstrong\u003eReal-time exception handling and auditability\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhen something doesn’t look right, you’ll know immediately. Our real-time dashboards detect and flag discrepancies as they arise, enabling fast, AI-assisted resolution. Immutable audit logs ensure a transparent trail for every action, providing full traceability for internal oversight or regulatory review.\u003c/p\u003e\n\u003cp\u003eWith eflow, compliance becomes proactive, not reactive; driving confidence, efficiency, and long-term scalability.\u003c/p\u003e\n\u003ch2 id=\"conclusion-the-future-of-regulatory-reporting-is-automation\"\u003e\u003cstrong\u003eConclusion: The future of regulatory reporting is automation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eFor financial institutions navigating today’s fast-moving regulatory landscape, automation is no longer a luxury; it’s a necessity. As reporting obligations grow more complex and deadlines tighten, firms must move beyond manual processes to stay compliant, efficient, and competitive.\u003c/p\u003e\n\u003cp\u003eLeading firms already embrace AI-driven validation, real-time exception monitoring, and seamless reporting workflows to reduce risk and drive operational resilience. The opportunity isn’t just to keep pace but to lead.\u003c/p\u003e\n\u003cp\u003eAt eflow, we equip firms with scalable RegTech solutions that adapt as regulations evolve so compliance becomes a strategic asset, not a constraint. If you\u0026rsquo;re ready to modernise your reporting infrastructure and reduce regulatory friction, we would \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003ewelcome a conversation\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-11-03T17:20:00+0000"},{"title":"How Regtech is shaping the future of crypto compliance","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/how-regtech-is-shaping-the-future-of-crypto-compliance/","summary":"\u003ch2 id=\"digital-asset-regulation\"\u003eDigital asset regulation\u003c/h2\u003e\n\u003cp\u003eAs cryptocurrencies edge closer to mainstream adoption, they face significant regulatory challenges. Initially attractive for their decentralisation and lack of government control, cryptocurrencies require greater structure, organisation, and regulation to fully integrate into the financial ecosystem. Effective regulation is critical to sustaining growth in the digital asset space, balancing innovation with investor protection while encouraging broader participation from retail and institutional investors.\u003c/p\u003e\n\u003cp\u003eRegtech is poised to play a pivotal role in this transformation, becoming an essential ally in shaping the future of digital assets. Current Regtech systems can adapt to digital asset platforms as regulatory frameworks emerge; however, this will require stakeholder collaboration. On a fundamental level, will full acceptance require potential compromises to the original anonymous and decentralised nature of these assets?\u003c/p\u003e\n\u003ch2 id=\"the-evolution-of-digital-asset-regulation\"\u003e\u003cstrong\u003eThe evolution of digital asset regulation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhether regulators were too slow to react or dismissive of the growing interest in digital assets, mainly cryptocurrencies, they are well behind the development curve. While the UK and European Union authorities now have several key legislative frameworks, work still needs to be done.\u003c/p\u003e\n\u003cp\u003eIn the UK, there are several acts which now cover digital assets, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eFinancial Services and Markets Act 2000 (FSMA)\u003c/li\u003e\n\u003cli\u003eEconomic Crime and Corporate Transparency of 2023\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThen we have the Financial Services and Markets Bill, which is currently being debated in Parliament and seeks to establish a comprehensive regulatory framework for stablecoins and other crypto assets.\u003c/p\u003e\n\u003cp\u003eIn the European Union, digital asset regulations include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eMarket in Crypto Regulation (MiCA)\u003c/li\u003e\n\u003cli\u003eAnti-Money-Laundering Directive (AMLD5)\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe US authorities have a broader regulatory landscape that involves federal and state regulations. Looking at the federal scenario, digital assets are now part of the legislative outreach of:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThe Securities and Exchange Commission\u003c/li\u003e\n\u003cli\u003eCommodity Futures Trading Commission\u003c/li\u003e\n\u003cli\u003eFinancial Crimes Enforcement Network\u003c/li\u003e\n\u003cli\u003eInternal Revenue Service\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eRecently, several financial institutions received authorisation to trade Bitcoin ETFs even though the broader regulations for digital assets have not yet been completed. Does this suggest that the SEC has accepted digital assets as an integral part of the future financial ecosystem?\u003c/p\u003e\n\u003cp\u003eOn a global basis, we have the introduction of the OECD’s:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eCrypto Asset Reporting Framework (CARF) / DAC8\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe UK, EU, and SEC have taken an aggressive stance regarding the trading and regulation of digital assets such as cryptocurrencies. Alternatively, if we look towards the East, regulators in Hong Kong and Singapore have taken a different approach, more receptive to digital assets as they look to become global hubs of the future.\u003c/p\u003e\n\u003cp\u003eCurrently, the regulatory scene is a patchwork of rules and guidance with different timescales and approaches to the growing popularity of digital assets.\u003c/p\u003e\n\u003ch3 id=\"key-drivers-of-regulation\"\u003e\u003cstrong\u003eKey drivers of regulation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eLooking forward, there are many prominent and not-so-obvious drivers when it comes to regulations, which include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eInvestor protection\u003c/li\u003e\n\u003cli\u003eFinancial stability\u003c/li\u003e\n\u003cli\u003eAnti-money-laundering\u003c/li\u003e\n\u003cli\u003eCounterterrorist financing\u003c/li\u003e\n\u003cli\u003eTax compliance\u003c/li\u003e\n\u003cli\u003eMarket integrity\u003c/li\u003e\n\u003cli\u003eInvestor/institutional access\u003c/li\u003e\n\u003cli\u003eTechnological innovation\u003c/li\u003e\n\u003cli\u003eDigital sovereignty\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIronically, many central banks seek to create their own digital currencies while regulators are not as appreciative of their potential. There is no doubt that tighter regulations are on the way, with formal structures and more significant legal burdens sure to fall on digital asset platforms. However, these developments don’t come without their unique challenges.\u003c/p\u003e\n\u003ch2 id=\"regulatory-challenges-unique-to-cryptocurrencies\"\u003e\u003cstrong\u003eRegulatory challenges unique to cryptocurrencies\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe relatively unique nature of cryptocurrencies has prompted several challenges for regulators. It will be interesting to see how they address these, as this will determine the level of control in the future.\u003c/p\u003e\n\u003ch3 id=\"identifying-individuals\"\u003e\u003cstrong\u003eIdentifying individuals\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAnonymity and pseudonymity are, to a certain extent, ingrained in the culture of digital assets and the trading process. Blockchains work on public ledgers linked to specific wallet addresses rather than particular individuals. This issue has been addressed by insisting that trading platforms and those creating digital wallets request Know Your Customer and Anti-Money Laundering documentation.\u003c/p\u003e\n\u003ch3 id=\"cross-border-transactions\"\u003e\u003cstrong\u003eCross-border transactions\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIt is fair to say that cryptocurrencies transcend national borders, enabling seamless global transactions. As mentioned above, the current patchwork of international regulations makes it difficult, if not impossible, to trace the illicit flow of digital assets. Eventually, this will require coordinated enforcement actions and regulators working together to create a global regulatory structure that protects participants while not overly restricting innovation.\u003c/p\u003e\n\u003ch3 id=\"technological-complexity\"\u003e\u003cstrong\u003eTechnological complexity\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhile cryptocurrencies are currently the primary target for regulators, technological advancements now facilitate the likes of decentralised finance (DeFi), smart contracts and multi-chain ecosystems. Consequently, the next few years will be a steep learning curve for regulators, especially with DeFi, where transactions are undertaken directly between the buyer and the facilitator, cutting out the traditional central third party. Does this make current enforcement mechanisms ineffective?\u003c/p\u003e\n\u003cp\u003eNational and global regulators face fundamental challenges regarding the way digital assets are currently traded. A more structured approach could reduce the appeal for some investors and potentially stifle innovation. In contrast, some investors and institutions won\u0026rsquo;t be able to consider digital assets without formal structure and protection.\u003c/p\u003e\n\u003ch2 id=\"the-power-of-regtech-in-transforming-crypto-oversight\"\u003e\u003cstrong\u003eThe power of RegTech in transforming crypto oversight\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhile those trading digital assets may enjoy a degree of anonymity, RegTech can dictate the route to regulation. This will require cooperation between all stakeholders, but when it comes to RegTech, some of the areas to consider include:-\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eBlockchain analytics\u003c/li\u003e\n\u003cli\u003eSmart contract verification\u003c/li\u003e\n\u003cli\u003eRisk intelligence\u003c/li\u003e\n\u003cli\u003eStreamlined reporting\u003c/li\u003e\n\u003cli\u003eCombining advanced algorithms with human oversight\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe ability to detect illegal activity across blockchains or audit smart contracts before deployment is a powerful tool. The key to long-term regulation and a more formal structure is the compliance of trading platforms with global standards.\u003c/p\u003e\n\u003cp\u003eAs we have seen in recent months, regulators and governments worldwide have various tools at their disposal. In the UK, for example, the FCA instructed banks to effectively ban transactions with digital asset platforms. This relatively blunt tool has given the authorities more time to consider their approach to more formal regulation without nullifying the benefits of digital assets.\u003c/p\u003e\n\u003ch3 id=\"regtech-solutions-in-action\"\u003e\u003cstrong\u003eRegTech solutions in action\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eDue to the nature of the RegTech industry, it is essential to consider real-life situations when creating tools to monitor trades and apply regulations. We have put together some real-life examples that demonstrate the challenges and results.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eMitigating fraud on NFT marketplaces\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eEven though cryptocurrencies currently dominate the digital assets scene, it’s important to recognise other tradable assets. Non-Fungible Tokens (NFTs) have increased in popularity in recent years, attracting the interest of both bona fide traders and criminal gangs. RegTech tools can now monitor platform trades and identify potential fraudulent activity (for example, in areas such as fine art) and their origins. These measures enhance transparency and trust, which are critical to any financial market.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eEnsuring compliance on decentralised exchanges\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe introduction of cutting-edge RegTech solutions now facilitates the monitoring of decentralised exchanges in relation to illegal activity, which is often focused on anti-money-laundering compliance. These tools can analyse blockchain transactions, alerting platforms and regulators to suspicious activity while still being unable to access or identify specific accounts. Maintaining the core principles and the need for regulatory compliance is vital for the integrity and trust in decentralised exchanges.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eCross jurisdiction reporting\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe introduction of the OECD’s Crypto Asset Reporting Framework (CARF) is an important stepping stone to global regulations. RegTech tools that can connect with this system benefit from centralised data collection, the chance to map to specific jurisdictions, and the ability to ensure compliance with local laws. A central hub, this framework reduces administration for exchanges and issuers, enabling seamless adherence to evolving global standards.\u003c/p\u003e\n\u003ch2 id=\"the-future-of-regtech-in-crypto-compliance\"\u003e\u003cstrong\u003eThe future of RegTech in crypto compliance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe ability to regulate and control a digital asset would be challenging in a traditional environment, but removing central third parties makes this activity even more difficult. Looking ahead, there are numerous ways in which RegTech solutions can assist with digital asset compliance, such as:-\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eProactive compliance tools can use predictive analytics to project regulatory shifts in crypto markets.\u003c/li\u003e\n\u003cli\u003eDecentralised identity solutions will use blockchain technology to incorporate and streamline KYC processes.\u003c/li\u003e\n\u003cli\u003eRegTech companies can bridge the gap between digital assets, trading platforms, and regulators, eventually leading to unified regulations.\u003c/li\u003e\n\u003cli\u003eThe ongoing integration of AI into RegTech and the broader regulatory framework creates a dynamic element to compliance and monitoring.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIt’s important to remember that technological advancements in areas such as digital assets can often be integrated into RegTech and broader compliance. While these are just some of the ways in which RegTech solutions are expected to maintain a proactive role going forward, we are just scratching the surface of AI and ML technologies.\u003c/p\u003e\n\u003ch2 id=\"eflows-crypto-compliance-solutions\"\u003e\u003cstrong\u003eeflow\u0026rsquo;s crypto compliance solutions\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhile regulators may have ignored cryptocurrencies in the early days, it is the role (or is that responsibility?) of RegTech solution providers to address the obvious regulatory and compliance issues. Our technology is flexible and can adapt to the diverse and evolving needs of the digital asset industry. This is best reflected in our announcement in June 2024, which saw Frankfurt-based \u003ca href=\"https://eflowglobal.com/21x-selects-eflow-regulatory-technology/\"\u003eFinTech 21X sign up\u003c/a\u003e for our award-winning digital compliance tools.\u003c/p\u003e\n\u003cp\u003e21X implemented our trade surveillance, best execution and transaction reporting to support its mission to build Europe\u0026rsquo;s first fully regulated distributed ledger technology (DLT) exchange. The exchange will facilitate security token and crypto asset trading within stringent regulatory controls. As a regulated financial institution, 21X needed to demonstrate the same level of regulatory adherence when developing its cutting-edge exchange.\u003c/p\u003e\n\u003cp\u003eWe work closely with clients to create a personalised RegTech solution which addresses all of their issues while ensuring there is scope for scalability going forward. The fact that we can accommodate what is a relatively complex market - that of digital assets - demonstrates our forward-thinking proactive approach. As the spotlight continues to fall on digital assets, we are well positioned to benefit from the need for regulatory surveillance, assisting with:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eBuilding trust in digital asset markets\u003c/li\u003e\n\u003cli\u003eOperational efficiencies\u003c/li\u003e\n\u003cli\u003eLong-term market stability\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThese regulatory solutions don’t just fall into place; they often take years to plan and test before they are launched to the market.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eDigital assets, particularly cryptocurrencies, present numerous challenges for regulators and those operating in this space. While the market has increased exponentially in recent years, there is still limited trust and concerns regarding market stability, which are crucial if it is to go mainstream.\u003c/p\u003e\n\u003cp\u003eConsequently, we urge crypto firms to embrace our RegTech solution so that they can proactively navigate the evolving regulatory landscape. Due to regulators\u0026rsquo; relatively unique challenges with digital assets, our proactive and flexible approach is essential in bridging the gap between trading platforms and regulations.\u003c/p\u003e\n\u003cp\u003eIf you are currently operating a digital asset exchange or plan to incorporate digital assets into your broader offerings, we would welcome the chance to discuss future compliance and regulations. Our forward-thinking approach is paying dividends for our clients, allowing us to provide help and guidance in this complex space.\u003c/p\u003e\n","date_published":"2025-24-02T17:26:00+0000"},{"title":"The role of technology in streamlining transaction reporting","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/the-role-of-technology-in-streamlining-transaction-reporting/","summary":"\u003cp\u003eWith the introduction of EMIR Refit in the UK and EU, and a litany of fines issued throughout the year, 2024 was a landmark year for transaction reporting regulation.\u003c/p\u003e\n\u003cp\u003eWith ever-shifting regulatory guidance and the development of new technologies, many financial firms are now looking to enhance their reporting procedures. While potential fines can strain cash flow, the real danger lies in the immeasurable reputational damage, a problem exacerbated by the competitive nature of the financial services industry.\u003c/p\u003e\n\u003cp\u003eA single misstep can erode the trust between clients and advisers, a loss far more damaging than any financial penalty. This brings us to the focus of this article, the role of technology in streamlining transaction reporting and why an automated solution/relationship with an experienced vendor is now the chosen route for many financial firms.\u003c/p\u003e\n\u003ch2 id=\"understanding-transaction-reporting\"\u003e\u003cstrong\u003eUnderstanding transaction reporting\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhile transaction reporting plays a critical role in fulfilling regulatory obligations, it also plays broader role in financial markets.:\u003c/p\u003e\n\u003ch3 id=\"market-integrity\"\u003e\u003cstrong\u003eMarket integrity\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe key to market integrity is trust - the trust that all investors and traders operate on a level playing field. Maintaining a clear record of all transactions supports trust in markets and creates an environment of relative stability. Transparency and accountability are also two words heavily associated with investment markets — both supported by the global regulatory transaction reporting framework.\u003c/p\u003e\n\u003ch3 id=\"prosecuting-illegal-traders\"\u003e\u003cstrong\u003eProsecuting illegal traders\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eA review of the 1980s and 1990s reveals the relative complexity of insider trading prosecutions and the challenges faced by regulators. In recent times, the introduction of new technology to facilitate transaction reporting has not only helped to identify suspicious transactions and instances of insider trading but also ensured there is a comprehensive audit trail of trading activity. This is critical to supporting prosecutions and is now acting as a deterrent for those seeking illicit gains.\u003c/p\u003e\n\u003ch3 id=\"regulatory-oversight\"\u003e\u003cstrong\u003eRegulatory oversight\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eFinancial markets are adept at changing and adapting to new trends and financial instruments. Consequently, it is critical that regulators are able to maintain accurate oversight of market activity, alerting them to issues of illegal trading and unethical activities. Analysis of transaction reports also enables regulators to identify new trends and potentially new types of market abuse and then take action much quicker than in previous years.\u003c/p\u003e\n\u003cp\u003eBecause of the historically close relationship between the EU and the UK, the FCA has retained the vast majority of MiFID regulations. There has been a limited divergence in some areas, but on the whole, the UK and the EU are singing from the same regulatory hymn book. In the US, the Dodd-Frank regulations have been extended in light of the 2007/8 financial crisis, now taking in a broader range of investment instruments.\u003c/p\u003e\n\u003ch2 id=\"technological-advancements-in-transaction-reporting\"\u003e\u003cstrong\u003eTechnological advancements in transaction reporting\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe role of technological developments on the act of transaction reporting has been profound. Beyond simply improving processing power, recent technological developments have introduced the ability to compare and contrast suspicious trading patterns against historical data, greatly increasing the ability of regulators to spot potential red flags. Limited human involvement in the end-to-end transaction reporting process has also significantly improved accuracy levels and removed any element of bias.\u003c/p\u003e\n\u003ch3 id=\"benefits-of-technology-in-transaction-reporting\"\u003e\u003cstrong\u003eBenefits of technology in transaction reporting\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eTo say there have been significant advances since 1993 would be an understatement. Today, the entire transaction reporting process is automated from start to finish, integrates and collates a huge number of data points, and can be reported in almost instantaneously.\u003c/p\u003e\n\u003cp\u003eThe collation and automated analysis of trade data facilitates the creation of transaction reports to fulfil various regulatory obligations. The ongoing integration of AI, and especially ML, into the transaction reporting process makes it much easier to identify and record instances of market abuse and insider trading.\u003c/p\u003e\n\u003cp\u003eWhile regulators and the financial community have a proactive mindset and strong appetite to pursue the criminal fraternity, these are still reactive measures.\u003c/p\u003e\n\u003cp\u003eThe benefits of new technology stretch far and wide, taking in issues such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eReduced errors\u003c/li\u003e\n\u003cli\u003eEnrichment of data\u003c/li\u003e\n\u003cli\u003eCost savings\u003c/li\u003e\n\u003cli\u003eDeeper insight into transaction data\u003c/li\u003e\n\u003cli\u003eBetter decision-making\u003c/li\u003e\n\u003cli\u003ePotential scalability\u003c/li\u003e\n\u003cli\u003eInvaluable flexibility\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWhen we strip away the layers of technological advancement and examine the outcomes, one thing stands out: a reduction in false flags. There will invariably be cases that approach the boundaries of market abuse or insider trading. Still, by comparing and contrasting current activity against illegal activity in the past, the picture is now much clearer.\u003c/p\u003e\n\u003cp\u003eAddressing false flags is a time-intensive process for financial institutions, leading to additional costs, and often involves regulators. False flags are particularly relevant for eflow and the \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\"\u003eTZTR Transaction Reporting\u003c/a\u003e services we offer. Embracing the latest technology within a structure that identifies and utilises the experience and expertise of our company, we have created a focused transaction reporting service, reducing the number of false flags.\u003c/p\u003e\n\u003cp\u003eThe introduction of third parties such as eflow has seen many financial institutions outsourcing their regulatory and compliance obligations. This approach allows them to leverage our established expertise and leadership in the industry, left to focus on their core operations.\u003c/p\u003e\n\u003ch2 id=\"future-trends-in-transaction-reporting-technology\"\u003e\u003cstrong\u003eFuture trends in transaction reporting technology\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eInvestment in the broader FinTech sector has been particularly volatile in recent years. However, it\u0026rsquo;s interesting to note that investment in WealthTech and, more recently, RegTech has held up exceptionally well. The ongoing integration of AI and ML allows systems to learn from historical data and analyse and adapt to real-time information. This ensures that the reporting process is continually developing, optimising, and becoming even more efficient.\u003c/p\u003e\n\u003cp\u003eThere will always be a degree of protectionism when it comes to regulators and regulations, whether for financial services, consumer products or any other sector. Interestingly, regulators have been keener to communicate in recent years, finding a comfortable middle ground and working with broadly compatible regulations. RegTech solutions are helping to streamline overlapping and conflicting regulations and encouraging a move towards global standardisation.\u003c/p\u003e\n\u003cp\u003eAs markets become more integrated and traders can transact in overseas markets at the touch of a button, a united approach to regulations is required. Rest assured, if those looking to undertake market abuse and insider trading spot weakness in the system, they will exploit it. While regulators across the globe are in constant communication and discussing future frameworks, it is down to companies such as eflow to lead the way in putting these theoretical talks and new ideas into practice.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eTechnology is transforming lives and businesses, and having a growing influence on finance. As trading volumes increase and investment strategies become more complex, the original transaction reporting processes of 1993 are now considered to be from a prehistoric age. Today, we can automate the end-to-end transaction reporting process and create the appropriate regulatory summaries. Real-time analysis also means that potentially suspect trading can be identified relatively quickly.\u003c/p\u003e\n\u003cp\u003eMany observers believe that we are just scratching the surface regarding AI and ML, reflected in the ways in which structured and unstructured data is used today. Just a few years ago, the automated analysis of unstructured data was expensive, available to very few and not considered economical or efficient. The situation is very different today. Indeed, unstructured data such as voice, email or other communications can often flag potential illegal activity before it starts.\u003c/p\u003e\n\u003cp\u003eAs an integral part of your company, perhaps a compliance officer or a board director, the repercussions of any errors or oversights in your regulatory procedures could prove expensive. We are not just talking in financial terms; we are talking about reputational damage, which will very often far outweigh any penalties and fines.\u003c/p\u003e\n\u003cp\u003eIf you would like to discuss our cutting-edge services and the long-term benefits of outsourcing elements of your regulatory and compliance obligations, don\u0026rsquo;t hesitate to \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a consultation\u003c/a\u003e.\u003cbr\u003e\u003c/p\u003e\n","date_published":"2025-17-02T11:36:00+0000"},{"title":"Technology Innovations in Regtech: AI, Blockchain, and Automation","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/technology-innovations-in-regtech-ai-blockchain-and-automation/","summary":"\u003ch2 id=\"ai-blockchain-and-crypto-regulation\"\u003e\u003cstrong\u003eAI, blockchain and crypto regulation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThis week, we examine how emerging technologies such as artificial intelligence (AI), blockchain, and automation are shaping the future of regulatory technology (Regtech). To provide valuable insights into these developments, we spoke with Jonathan Dixon, Head of Surveillance at eflow. Jonathan is a leader in the Regtech space with over a decade of experience spanning client, vendor, exchange, and consultancy roles. His deep understanding of market surveillance and compliance makes him a key authority on the technological innovations driving the industry forward.\u003c/p\u003e\n\u003cp\u003eAt eflow, Jonathan plays a pivotal role in ensuring that products are continuously refined to meet market demands. He also works closely with clients, conducting market surveillance abuse health checks and helping companies adhere to best practices in compliance. His perspective offers critical insights into how technologies like AI, machine learning, blockchain, and automation are transforming the Regtech landscape and addressing the complexities of modern financial markets.\u003c/p\u003e\n\u003cp\u003eIn this article, we explore Jonathan’s views on key technological advancements, their potential to enhance market integrity, and the future role of Regtech in an increasingly digital and decentralized financial ecosystem.\u003c/p\u003e\n\u003ch2 id=\"the-impact-of-cryptocurrencies-and-blockchain-on-market-integrity\"\u003e\u003cstrong\u003eThe impact of cryptocurrencies and blockchain on market integrity\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eBlockchain technology and the rise of cryptocurrencies have introduced new dynamics to financial markets, creating both opportunities and challenges in maintaining market integrity. According to Jonathan, the rapid growth of digital assets, particularly the emergence of cryptocurrency exchange-traded funds (ETFs), has already started to create demand for more robust Regtech solutions.\u003c/p\u003e\n\u003cp\u003e“As MiCA comes into effect, as we start moving more into crypto regulation, there will be requirements for firms to engage with. The bigger firms already do it—Coinbase, Kraken, Binance, Bitfinex, Bitstamp—and many others will as well,” Jonathan explains. This highlights how the major players in the cryptocurrency space are adapting to regulatory pressures as governments and financial institutions look to increase oversight.\u003c/p\u003e\n\u003cp\u003eThe introduction of cryptocurrency ETFs represents a significant step in the institutionalisation of digital assets, which in turn raises questions about market integrity and the need for enhanced surveillance mechanisms. “Now there\u0026rsquo;s big demand for cryptocurrency ETFs. They are going to have to consider market integrity and that’s not just for Bitcoin but also Ethereum, as there\u0026rsquo;s now an Ethereum ETF,” Jonathan adds, noting the broader regulatory implications as digital assets become a more mainstream component of global markets.\u003c/p\u003e\n\u003cp\u003eThe rise of blockchain-based assets demands sophisticated tools for ensuring transparency and preventing market manipulation. Regtech solutions will need to evolve to address these challenges, offering new levels of oversight that can maintain confidence in rapidly growing digital asset markets.\u003c/p\u003e\n\u003ch2 id=\"ai-and-machine-learnings-role-in-advancing-regtech\"\u003e\u003cstrong\u003eAI and machine learning’s role in advancing Regtech\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eArtificial intelligence (AI) and machine learning (ML) are poised to significantly enhance Regtech’s ability to address regulatory compliance and market surveillance challenges. However, Jonathan highlights the complexity of harnessing these technologies effectively. On the one hand, firms are using AI for advanced trading strategies, while on the other hand, the same technology must be utilised to identify and mitigate market abuse.\u003c/p\u003e\n\u003cp\u003eThe implementation of AI in Regtech is multifaceted, and it will require continuous adaptation to counteract the potential misuse of AI in financial markets.\u003c/p\u003e\n\u003cp\u003eLarge language models (LLMs), a subset of AI, are already proving useful in analysing vast amounts of unstructured data, such as emails, chat logs, and communications, to detect intent and identify market abuse. “Large language models have a space in eComms; they have the potential to derive intent from communications across unstructured data,” Jonathan explains.\u003c/p\u003e\n\u003cp\u003eMachine learning is also increasingly used to refine the surveillance process, reducing false positives by improving the quality of alerts generated by compliance systems. Jonathan points out how AI can enhance risk scoring and parameterisation in Regtech platforms: “Machine learning can be used to help provide risk scores for alerts and also to help with the dynamic parameterisation of models.” This ability to dynamically adjust risk parameters based on historical data and client-specific needs will allow firms to respond more effectively to potential risks.\u003c/p\u003e\n\u003cp\u003eIn essence, AI and machine learning are becoming indispensable in enhancing the efficiency and accuracy of market surveillance, enabling firms to identify high-risk activities quickly while reducing the volume of poor quality false-positive alerts.\u003c/p\u003e\n\u003ch2 id=\"innovations-in-data-analytics-to-enhance-market-surveillance\"\u003e\u003cstrong\u003eInnovations in data analytics to enhance market surveillance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWith the ever-increasing volume of market data generated daily, innovations in data analytics are critical to maintaining market surveillance and integrity. Jonathan stresses the importance of utilizing large data sets to uncover patterns and correlations between different instruments and asset classes, which can play a vital role in detecting market manipulation.\u003c/p\u003e\n\u003cp\u003e“I think this is where it comes back to looking at larger data sets and big data. And that also goes hand-in-hand with cross-product events,” Jonathan explains. The ability to identify correlations between different instruments and markets is essential for a more comprehensive understanding of market behaviour and potential risks.\u003c/p\u003e\n\u003cp\u003eThese innovations in data analytics allow Regtech solutions to delve deeper into the complex relationships between various financial products and markets, enabling firms to spot anomalies that might indicate market abuse. As Jonathan points out, understanding historical trading patterns is key: “We define [market abuse] based on things that have happened before\u0026hellip; You have to base it off historical trading patterns.”\u003c/p\u003e\n\u003cp\u003eThe continued development of data analytics tools will empower Regtech platforms to interpret larger datasets more accurately, thereby enhancing the effectiveness of market surveillance across a broader range of asset classes and financial products.\u003c/p\u003e\n\u003ch2 id=\"automations-role-in-regulatory-compliance-and-market-oversight\"\u003e\u003cstrong\u003eAutomation’s role in regulatory compliance and market oversight\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAutomation is increasingly recognised as a powerful tool for streamlining regulatory compliance processes and enhancing the efficiency of market oversight. However, Jonathan underscores the limitations of relying solely on automated systems for compliance, particularly when it comes to addressing regulatory expectations.\u003c/p\u003e\n\u003cp\u003e“The scope for dealing with regulatory expectations is limited. And the reason for that is turning around to the regulator and going, ‘We didn’t look at this alert because the AI said so,’ or ‘The automated process said so,’ lacks explainability or accountability” Jonathan warns. While automation can significantly enhance the speed and accuracy of identifying risks, it is critical that firms retain control over decision-making processes and remain accountable to regulators.\u003c/p\u003e\n\u003cp\u003eJonathan emphasises that automation should assist in prioritising and filtering risks, allowing firms to focus their resources where they are most needed: “The job of Regtech firms like eflow is to help you get to your risk quicker and understand what\u0026rsquo;s important and what isn\u0026rsquo;t. Now we can do that by risk scoring, we can do that by suggesting assessment changes.”\u003c/p\u003e\n\u003cp\u003eAutomation can be used to streamline repetitive tasks, such as generating alerts and managing large data flows. However, Jonathan advises that firms must strike a balance between automated processes and human oversight to ensure the quality and accuracy of decision-making. “If we\u0026rsquo;re automating that process, I would argue why generate these alerts in the first place. If they’re so low quality that they don’t require human intervention at any level,” he adds, emphasising the importance of refining systems to avoid generating unnecessary alerts.\u003c/p\u003e\n\u003cp\u003eJonathan also points out that in many cases, automated processes still require human oversight in the form of quality assurance, making it clear that complete automation is not always the most practical or effective solution. “Even if you generate 10,000 trading alerts and close them all out automatically, you\u0026rsquo;re still probably going to be obligated to do QA or quality assurance on 10% or 15% of them,” he explains.\u003c/p\u003e\n\u003cp\u003eWhile automation can bring efficiency, firms must ensure that they continue to assess risks and maintain control over compliance processes, particularly in sensitive areas like market surveillance.\u003c/p\u003e\n\u003ch2 id=\"the-future-of-real-time-compliance-monitoring\"\u003e\u003cstrong\u003eThe future of real-time compliance monitoring\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe concept of real-time compliance monitoring has gained considerable attention in recent years, with firms looking for ways to detect and respond to market abuse as it happens. However, Jonathan expresses caution about the practical application of real-time monitoring in most regulatory environments.\u003c/p\u003e\n\u003cp\u003e“Real time monitoring assumes every analyst is desperately waiting for an alert to come in, which is invariably not the case. Being an analyst for many years, you\u0026rsquo;re sitting there working on your backlog and high-priority cases,” Jonathan explains. He suggests that while real-time monitoring might be appropriate in certain contexts—such as exchanges that need to act quickly on large moves—it is not necessarily a priority for most firms.\u003c/p\u003e\n\u003cp\u003eJonathan acknowledges that real-time monitoring could be valuable for halting trades during significant market moves or identifying manipulation, but he argues that most firms will benefit more from systems that allow for thorough analysis of historical data. “For exchanges, I see a rationale together with the cessation of trade activity and a temporary halt on stocks or assets that might need it, but generally, yeah, I’m a bit sceptical,” he notes.\u003c/p\u003e\n\u003cp\u003eIn his view, unstructured data analysis will continue to be an essential tool for identifying intent and building a holistic picture of market abuse. “There is value in the analysis of unstructured data whereby people are talking about doing things before they\u0026rsquo;ve done them,” Jonathan says. However, he cautions that detecting intent from communications must be complemented by actual market activity to create a complete view of potential wrongdoing.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs the Regtech industry continues to evolve, technologies like AI, blockchain, data analytics, and automation will play an increasingly important role in enhancing market integrity and regulatory compliance. Jonathan Dixon’s insights underscore the importance of staying at the forefront of technological innovation while maintaining a balance between automation and human oversight.\u003c/p\u003e\n\u003cp\u003eAI and machine learning offer powerful tools for analysing unstructured data and refining risk parameters, while blockchain and cryptocurrencies present new challenges and opportunities for market surveillance. Automation can streamline compliance processes but must be employed carefully to ensure accountability. The future of Regtech will likely involve a combination of real-time monitoring for certain markets and more comprehensive data analysis to maintain long-term oversight and market transparency.\u003c/p\u003e\n","date_published":"2025-07-02T15:59:10+0000"},{"title":"Unpacking FINRA’s Annual Regulatory Oversight Report: Findings, failings and best practices from 2024","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/finra-regulatory-oversight-report/","summary":"\u003cp\u003eThe Financial Industry Regulatory Authority (FINRA) has published their latest (2024) \u003ca href=\"https://www.finra.org/sites/default/files/2024-01/2024-annual-regulatory-oversight-report.pdf\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eAnnual Regulatory Oversight Report\u003c/strong\u003e\u003c/a\u003e (the Report).\u003c/p\u003e\n\u003cp\u003eMember firms are encouraged to incorporate relevant elements of the report’s findings into their compliance programs in a manner tailored to its activities. In this blog, we break down the findings and key recommendations related to manipulative trading that member firms should consider as they plan for the year ahead.\u003c/p\u003e\n\u003ch2 id=\"threshold-calibration-of-surveillance-controls\"\u003eThreshold calibration of surveillance controls\u003c/h2\u003e\n\u003cp\u003eRobust, data-driven threshold calibration has long been a regulatory expectation of a firm’s trade surveillance system, but this year’s report emphasizes the importance of frequent reassessment to reflect the rapid evolution of market conditions. Static thresholds can leave firms vulnerable, particularly when changes in customer behavior or market dynamics go unaddressed.\u003c/p\u003e\n\u003ch2 id=\"noteworthy-failures-identified-by-finra\"\u003e“Noteworthy” failures identified by FINRA\u003c/h2\u003e\n\u003cp\u003eFINRA identified several recurring issues in some firms\u0026rsquo; threshold calibration practices, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eInadequate design:\u003c/strong\u003e Thresholds were not “reasonably designed” to detect manipulative trading activities. Firms failed to account for factors such as market class, security type, and inclusion of customer and proprietary trading data, often resulting in thresholds that were too high or too low.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eInfrequent assessment:\u003c/strong\u003e Firms did not evaluate thresholds often enough, missing critical changes in market conditions or their customer base.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"best-practices-for-threshold-calibration\"\u003eBest practices for threshold calibration\u003c/h2\u003e\n\u003ch3 id=\"comprehensive-data-analysis\"\u003eComprehensive data analysis\u003c/h3\u003e\n\u003cp\u003eRegularly review customer and proprietary trading data to detect schemes like cross-market manipulation. This includes analyzing patterns in correlated securities such as stocks, exchange-traded products (ETPs), and options.\u003c/p\u003e\n\u003ch3 id=\"tailor-surveillance-systems-by-product-class\"\u003eTailor surveillance systems by product class\u003c/h3\u003e\n\u003cp\u003eAdapt supervisory systems to address the unique risks associated with different types of trading activity. For example, thresholds should reflect the nuances of manipulative order entry and trading in listed and OTC equities, options, and fixed-income products like Treasuries.\u003c/p\u003e\n\u003ch3 id=\"prioritise-dynamic-adjustments\"\u003ePrioritise dynamic adjustments\u003c/h3\u003e\n\u003cp\u003eEstablish a framework for periodic reassessment, ensuring thresholds remain aligned with market risks and firm-specific exposures.\u003c/p\u003e\n\u003ch2 id=\"the-importance-of-holistic-surveillance\"\u003eThe importance of holistic surveillance\u003c/h2\u003e\n\u003cp\u003eFINRA underscores the need for multi-dimensional surveillance that minimizes blind spots by monitoring trading activity across customers, platforms, and time frames. Firms are urged to focus on coordinated or long-term manipulation strategies, particularly during securities distribution and aftermarket activities.\u003c/p\u003e\n\u003ch2 id=\"noteworthy-surveillance-deficiencies-highlighted-by-finra\"\u003e“Noteworthy” surveillance deficiencies highlighted by FINRA\u003c/h2\u003e\n\u003ch3 id=\"inadequate-written-supervisory-procedures-wsps\"\u003eInadequate Written Supervisory Procedures (WSPs)\u003c/h3\u003e\n\u003cp\u003eMany firms lacked clear processes for detecting and escalating manipulative conduct. WSPs often failed to account for diverse order flows, such as those from retail, institutional, proprietary, or foreign sources.\u003c/p\u003e\n\u003ch3 id=\"surveillance-gaps\"\u003eSurveillance gaps\u003c/h3\u003e\n\u003cp\u003eFirms did not adequately monitor for manipulation patterns, review exception reports, or document findings. External sources of red flags, such as regulatory inquiries or alerts, were underutilized.\u003c/p\u003e\n\u003ch2 id=\"best-practices-for-holistic-surveillance\"\u003eBest practices for holistic surveillance\u003c/h2\u003e\n\u003ch3 id=\"enhanced-detection-frameworks\"\u003eEnhanced detection frameworks\u003c/h3\u003e\n\u003cp\u003eTailor WSPs to ensure oversight of all order flows, including proprietary and cross-border activities.\u003c/p\u003e\n\u003ch3 id=\"make-use-of-external-data\"\u003eMake use of external data\u003c/h3\u003e\n\u003cp\u003eIncorporate insights from regulatory inquiries, third-party alerts, and public data to identify additional red flags.\u003c/p\u003e\n\u003ch3 id=\"training-and-escalation-protocols\"\u003eTraining and escalation protocols\u003c/h3\u003e\n\u003cp\u003eTrain staff comprehensively on identifying and addressing manipulative trading patterns. Establish clear escalation and resolution processes for flagged activities to ensure swift and effective action.\u003c/p\u003e\n\u003ch5 id=\"reviewing-pre--and-post-trade-controls\"\u003eReviewing Pre- and Post-Trade controls\u003c/h5\u003e\n\u003cp\u003eFINRA highlights the role of trade surveillance data in shaping firms’ broader risk management strategies. Shifts in customer trading behavior should prompt firms to reassess pre- and post-trade supervisory controls to maintain consistency across their entire compliance framework.\u003c/p\u003e\n\u003ch2 id=\"typologies-and-practices-enhancing-surveillance-programs\"\u003eTypologies and practices: Enhancing surveillance programs\u003c/h2\u003e\n\u003cp\u003eFINRA’s findings also call attention to specific trading typologies, emphasising the need for firms to address these challenges through robust, tailored surveillance systems:\u003c/p\u003e\n\u003ch3 id=\"momentum-ignition-trading\"\u003eMomentum ignition trading\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eLayering and spoofing:\u003c/strong\u003e Detecting non-bona fide orders placed to bait market participants into reacting and executing trades on the opposite side of the market.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eCross-product manipulation:\u003c/strong\u003e Monitoring transactions that manipulate the price of an underlying security, influencing the pricing of overlying options positions. This includes strategies such as marking the close or mini-manipulation.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"wash-trading\"\u003eWash trading\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eMonitoring related accounts:\u003c/strong\u003e Identifying and monitoring accounts acting in concert, as flagged in wash/pre-arranged trading surveillance reports.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eAccount opening documentation:\u003c/strong\u003e Reviewing trading activity in relation to the information provided during account opening to detect potential wash trading aimed at collecting liquidity rebates.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"exchange-traded-products-etps\"\u003eExchange-traded products (ETPs)\u003c/h3\u003e\n\u003cp\u003eFINRA highlights the need for robust supervisory systems to prevent the misuse of material, non-public information and detect manipulative strategies specific to ETPs. Best practices include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eEstablishing strong information barriers to prevent data leakage and misuse of material, non-public information.\u003c/li\u003e\n\u003cli\u003eReviewing trading activities that exploit ETP-specific processes, such as creation/redemption mechanisms and information leakage related to portfolio composition files.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"dynamic-solutions-for-dynamic-risks\"\u003eDynamic solutions for dynamic risks\u003c/h3\u003e\n\u003cp\u003eAntiquated trade surveillance approaches often fail due to their reliance on one-size-fits-all threshold calibration. Diverse trading characteristics across instruments - ranging from AIM-listed stocks to FTSE 100 companies, or government and corporate bonds - render uniform thresholds inherently problematic. For instance, a price movement that may indicate suspicious activity in one asset class could represent normal volatility in another.\u003c/p\u003e\n\u003cp\u003eeflow Global\u0026rsquo;s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZTS Trade Surveillance\u003c/strong\u003e\u003c/a\u003e solution addresses this challenge by offering dynamic and adaptable configurations. Leveraging advanced analytics, TZTS can be customized to market abuse typologies while considering key trading variables, such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eAssets traded:\u003c/strong\u003e Tailoring controls to the specific characteristics of different asset classes.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eActors involved:\u003c/strong\u003e Accounting for variations in behavior between institutional and retail participants.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eTrading methods:\u003c/strong\u003e Monitoring diverse strategies, from high-frequency trading to manual order entry.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eVenues accessed:\u003c/strong\u003e Ensuring comprehensive coverage across all trading platforms and exchanges.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eeflow\u0026rsquo;s holistic approach to trade surveillance ensures that all orders and trades, including cancelled and amended ones, are monitored. This capability is crucial for detecting manipulative practices like spoofing, where false orders are used to mislead other market participants.\u003c/p\u003e\n\u003cp\u003eFurthermore, eflow offers a dedicated sandbox environment for testing and refining threshold configurations in a no-risk setting. These environments allow firms to simulate various market conditions, ensuring thresholds remain both robust and adaptive to changing dynamics. By incorporating conditional parameters that adjust for factors like volatility and liquidity, eflow equips firms to effectively address the complexities of modern markets while staying ahead of regulatory expectations.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eBook a consultation\u003c/strong\u003e\u003c/a\u003e with eflow’s experts to find out how eflow’s solutions can help you.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n","date_published":"2025-03-02T11:32:00+0000"},{"title":"Brokers: Unlocking commercial opportunities with trade surveillance","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/brokers-unlock-opportunities/","summary":"\u003cp\u003eAs the regulatory scrutiny of financial markets increases, broking firms are under particular pressure to implement stringent regulatory controls across all aspects of their trading activity.\u003c/p\u003e\n\u003cp\u003eGlobal regulators have pinpointed broking firms as high risk due to the frequency and value of transactions that they manage on behalf of clients. As a result, we have seen a significant increase in the volume and severity of enforcement actions being taken against broking firms that fail to meet the compliance standard expected of them.\u003c/p\u003e\n\u003cp\u003eWhile the financial impact of enforcement action is self-evident, with almost \u003ca href=\"https://eflowglobal.com/q4-2024-enforcements-a-closer-look-at-where-regulators-took-action/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003e$80m in fines handed out in Q4 2024\u003c/strong\u003e\u003c/a\u003e alone, broker firms are increasingly using their regulatory controls as a commercial differentiator in a highly competitive market.\u003c/p\u003e\n\u003ch3 id=\"building-reputational-credibility-through-compliance\"\u003eBuilding reputational credibility through compliance\u003c/h3\u003e\n\u003cp\u003eAs the number of broking firms has accelerated in recent years, new entrants, and even established players, find themselves in a position where competitive differentiation is key.\u003c/p\u003e\n\u003cp\u003eWhile there are many ways in which firms may approach this challenge, being able to demonstrate a robust commitment to regulatory compliance is emerging as a key strategy. It should go without saying that any broking firm has a legal and moral obligation to ensure that they have appropriate controls in place to prevent market abuse from taking place.\u003c/p\u003e\n\u003cp\u003eHowever, the rigour of these controls and their ability to protect market integrity and investors can vary from a ‘tick box’ approach to a fully comprehensive regulatory strategy. Firms that adopt the second approach are not only far less likely to fall foul of regulatory action, but they are also clearly establishing themselves as a more credible investment partner for existing and prospective clients.\u003c/p\u003e\n\u003ch3 id=\"case-study-eflows-tzts-trade-surveillance-solution-in-action\"\u003eCase study: eflow’s TZTS Trade Surveillance solution in action\u003c/h3\u003e\n\u003cp\u003eeflow were approached by \u003ca href=\"https://primefxcfd.com/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003ePrime FX CFD\u003c/strong\u003e\u003c/a\u003e\u003cstrong\u003e,\u003c/strong\u003e a CFD broker based in St Lucia. They needed to implement a credible and robust trade surveillance solution to support both a high standard of regulatory compliance and the ongoing growth of their client base and related trading activity.\u003c/p\u003e\n\u003cp\u003ePrime FX CFD’s senior management team have decades of experience spanning financial institutions operating in regulated markets and had a clear plan of how they wanted their regulatory strategy to operate.\u003c/p\u003e\n\u003cp\u003e“Stringent regulatory controls are at the heart of our business model”, they explained. “We want to align our business with the ‘gold standard’ of regulations that you would expect of a tier one institution operating in highly regulated jurisdictions.”\u003c/p\u003e\n\u003cp\u003e“While there isn’t a regulatory requirement for us to take this approach, we believe that by doing so we clearly demonstrate our commitment to the highest standards of internal controls and delivering a premium experience for our clients.”\u003c/p\u003e\n\u003cp\u003ePrime FX CFD has now implemented eflow’s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZTS Trade Surveillance\u003c/strong\u003e\u003c/a\u003e system from which they will manage all aspects of their trade surveillance processes. By implementing this solution, they not only have the peace of mind that comes with using proven technology that is trusted by more than 140 clients globally but also have future-proofed their trade surveillance processes as the business grows.\u003c/p\u003e\n\u003cp\u003e“As our business grows, it’s imperative that our trade surveillance technology can scale with us. eflow’s TZTS system will help us to automate previously manual processes, strengthen our end-to-end regulatory controls, and operate more efficiently”, they commented.\u003c/p\u003e\n\u003ch3 id=\"the-need-for-robust-trade-surveillance\"\u003eThe need for robust trade surveillance\u003c/h3\u003e\n\u003cp\u003eTrade surveillance is crucial in any regulatory landscape, but in markets with stringent rules, it becomes even more vital. \u003ca href=\"https://eflowglobal.com/brokers-embracing-regulatory-technology/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eBrokers need to actively monitor trading activities\u003c/strong\u003e\u003c/a\u003e to ensure that they are compliant with both local and international regulations. With regulators increasingly demanding that broking firms demonstrate stringent and robust regulatory controls, the lack of a well-established surveillance system can jeopardise a broker’s ability to implement their clients’ trades seamlessly and efficiently.\u003c/p\u003e\n\u003cp\u003eA strong trade surveillance system is designed to flag suspicious activities and unusual trading patterns that could indicate potential market manipulation, insider trading, or other forms of non-compliant behaviour. Such systems help brokers identify suspicious behaviour or high-risk clients and helps to protect both their clients and themselves from unwanted regulatory attention.\u003c/p\u003e\n\u003ch3 id=\"proactive-steps-for-brokers\"\u003eProactive steps for brokers\u003c/h3\u003e\n\u003cp\u003eBrokers that want to mitigate against the risk of regulatory enforcement action should consider the following steps as part of a holistic compliance strategy:\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eInvesting in technology\u003c/strong\u003e: Technology solutions can automate the process of monitoring trades and detecting suspicious activities immediately. These tools can provide brokers with alerts and insights into unusual trading patterns, allowing them to take swift action.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eCollaborating with compliance experts:\u003c/strong\u003e Engaging with compliance specialists can help brokers stay ahead of the curve. These experts can assist in navigating the complex regulatory landscape and ensure that brokers are in full compliance with both regional and international laws.\u003c/p\u003e\n\u003cp\u003eBy leveraging a single regulatory tech partner with in-house compliance expertise, such as eflow, brokers can seamlessly demonstrate that they have robust systems in place to meet regulatory requirements that may exceed the standards of their home country.\u003c/p\u003e\n\u003ch3 id=\"find-out-more-about-how-eflows-solutions-can-help-you\"\u003eFind out more about how eflow’s solutions can help you\u003c/h3\u003e\n\u003cp\u003eRequest a no obligation consultation call with our team of regulatory experts at a time that suits you \u003ca href=\"\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003ehere\u003c/strong\u003e\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eThey can offer advice and guidance on how to meet your \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003etrade surveillance\u003c/strong\u003e\u003c/a\u003e, \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eeComms surveillance\u003c/strong\u003e\u003c/a\u003e, \u003ca href=\"https://eflowglobal.com/tz-best-execution-and-transaction-cost-analysis/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003ebest execution\u003c/strong\u003e\u003c/a\u003e and \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003etransaction reporting\u003c/strong\u003e\u003c/a\u003e obligations, as well as explaining how our solutions could help.\u003c/p\u003e\n","date_published":"2025-22-01T11:32:00+0000"},{"title":"Q4 2024 enforcements: A closer look at where regulators took action","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/q4-2024-enforcements-a-closer-look-at-where-regulators-took-action/","summary":"\u003cp\u003eIn the fourth quarter of 2024, enforcement action related to market conduct across six jurisdictions reached a combined value of almost $80 million. In this blog, we delve into the detail to see what’s driven this regulatory activity.\u003c/p\u003e\n\u003cimg src=\"/images/q4-typologies.png\" title=\"Fines totalled $79.5 million in Q4\" height=\"335\" width=\"729\" /\u003e\n\u003ch2 id=\"noteworthy-cases-in-q4-2024\"\u003eNoteworthy cases in Q4 2024\u003c/h2\u003e\n\u003ch3 id=\"complex-market-manipulation-unearthed-in-france\"\u003eComplex market manipulation unearthed in France\u003c/h3\u003e\n\u003cp\u003eIn a \u003ca href=\"https://www.amf-france.org/en/news-publications/news-releases/enforcement-committee-news-releases/amf-enforcement-committee-imposes-fines-totalling-eu4150000-four-legal-entities-and-three-natural\"\u003e\u003cu\u003edecision\u003c/u\u003e\u003c/a\u003e on 11 December 2024, the Autorité des marchés financiers (AMF), imposed fines totalling €4,150,000 for market manipulation and the dissemination of false or misleading information.\u003c/p\u003e\n\u003cp\u003eThe case revolves around Auplata, its former CEO Didier Tamagno, its auditors RSM Paris, and Pierre Vannineuse, a key figure in the European High Growth Opportunities (EHGO) SF fund. Auplata was found to have misled investors by not disclosing a crucial clause in a financing agreement signed in October 2017. This clause, which impacted the cost of financing, was omitted from the company\u0026rsquo;s press release, giving investors an inaccurate understanding of the deal. The failure to properly explain the clause, the subsequent earn-outs, and the impact on the company’s going concern analysis in the 2017 financial statements further compounded the misinformation. These actions were attributed to Tamagno’s oversight as CEO and RSM Paris’ failure to identify the discrepancies during the audit.\u003c/p\u003e\n\u003cp\u003eThe enforcement also found that the EHGO SF fund, led by Vannineuse, engaged in price manipulation by selling a significant number of Auplata shares, disregarding commitments to retain shares and limit the volume of sales. This unauthorized disposal of shares distorted market prices and violated public communication norms. As a result, both the fund\u0026rsquo;s management entities, European High Growth Opportunities Manco SA and Alpha Blue Ocean Inc., along with Vannineuse, were fined for their involvement in the manipulation of Auplata’s share price. The fines, ranging from €50,000 to €1,500,000, reflect the severity of the misconduct.\u003c/p\u003e\n\u003ch3 id=\"landmark-insider-trading-case-concluded-in-hong-kong\"\u003eLandmark insider trading case concluded in Hong Kong\u003c/h3\u003e\n\u003cp\u003eOn November 28, 2024, Hong Kong’s Market Misconduct Tribunal (MMT) \u003ca href=\"https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=24PR203\"\u003e\u003cu\u003esanctioned\u003c/u\u003e\u003c/a\u003e Li Han Chun, former CEO of China Forestry Holdings, and his investment vehicle, Top Wisdom Overseas Holdings, for insider trading and false disclosures. The tribunal ordered them to disgorge $353 million (~$45M USD), reflecting profits avoided through the illegal sale of 119 million China Forestry shares in early 2011.\u003c/p\u003e\n\u003cp\u003eThe tribunal found that Li Han Chun and former chairman Li Kwok Cheong knowingly authorised false or misleading statements in China Forestry’s IPO prospectus, 2009 financial reports, and annual results announcements. These documents overstated revenue by up to 99.99% and concealed fraudulent activities, including falsified forestry rights certificates, fake customer transactions, and fabricated bank statements.\u003c/p\u003e\n\u003cp\u003eThe insider trading occurred after Li Han Chun attended a December 2010 pre-audit meeting with auditors KPMG, where he learned that the company’s rampant falsifications were likely to be exposed. Acting on this knowledge, Li Han Chun sold his holdings through a share placement, avoiding significant financial losses as the company’s stock faced imminent collapse.\u003c/p\u003e\n\u003cp\u003eBoth executives were barred from serving as directors or managers in Hong Kong corporations and from trading securities for five years. They were also ordered to cover legal costs incurred by the Government and Securities and Futures Commission (SFC).\u003c/p\u003e\n\u003ch2 id=\"systems-and-controls-come-under-scrutiny-in-the-uk\"\u003eSystems and controls come under scrutiny in the UK\u003c/h2\u003e\n\u003cp\u003eWhen it comes to risk management, no one can afford to be complacent. Regulators have continued to pursue what are commonly referred to as “gatekeeper failures” this year. We have seen multiple high-profile cases in which control weaknesses have allowed suspicious trades to fly under the radar, and the FCA highlighted one more case to round out the year.\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003e\u0026lsquo;MBL’s ineffective systems and controls meant that one of its employees could, at least for a time, hide trading losses which cost the firm millions to unwind.’\u003c/strong\u003e\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eFinancial Conduct Authority\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003eOn 26 November 2024, the FCA \u003ca href=\"https://www.fca.org.uk/news/press-releases/mbl-fined-serious-control-failures-allowed-trader-conceal-over-400-fictitious-trades\"\u003e\u003cu\u003efined\u003c/u\u003e\u003c/a\u003e Macquarie Bank Limited (MBL) £13 million for serious control failures that allowed a trader to conceal over 400 fictitious trades. Between June 2020 and February 2022, a trader on MBL’s London Metals and Bulks Trading Desk, recorded fictitious trades in an attempt to hide his trading losses. These trades went undetected due to significant weaknesses in MBL’s systems and controls, which the bank had been previously warned about but failed to address in a timely manner.\u003c/p\u003e\n\u003cp\u003eThe lack of effective internal controls allowed a relatively junior employee to bypass three key safeguards for over 20 months. As a result, the fictitious trades cost MBL approximately USD $57.8 million to unwind, although they did not affect customers or the wider market. The FCA also banned the individual from the financial services industry for acting dishonestly, and they would have been fined £72,000 had their application for financial hardship not been successful. The case highlights the importance of robust internal controls to detect and address risks early, especially risks originating within the organisation.\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003e\u0026lsquo;This should serve as an example to those we regulate; risk can come from within. You need the right systems to identify it so it can be tackled early.\u0026rsquo;\u003c/strong\u003e\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eFinancial Conduct Authority\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003ch3 id=\"short-selling-violations-in-the-us\"\u003eShort selling violations in the US\u003c/h3\u003e\n\u003cp\u003eQ4 2024 also saw an uptick in short selling cases, particularly in the US:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eIn November 2024, the SEC \u003ca href=\"https://solutions-atlantic.com/u-s-sec-fines-for-short-selling-violations-2/\"\u003e\u003cu\u003echarged\u003c/u\u003e\u003c/a\u003e FiveT Capital AG for violating Rule 105 by buying stocks in public offerings for advisory clients while short selling the same stocks during a prohibited period. The firm agreed to cease and desist from these violations and pay a total of $1,593,294.73 in disgorgement, $357,199.05 in prejudgment interest, and a civil penalty of $805,000.\u003c/li\u003e\n\u003cli\u003eIn December, FINRA imposed a $3 million \u003ca href=\"https://fxnewsgroup.com/forex-news/institutional/finra-imposes-3m-fine-on-j-p-morgan-securities/#:~:text=J.P.%20Morgan%20Securities%20LLC%20has,has%20agreed%20to%20a%20censure.\"\u003e\u003cu\u003efine\u003c/u\u003e\u003c/a\u003e on J.P. Morgan Securities for inaccurately reporting short interest positions over a period from June 2008 to August 2024. The inaccurate reporting involved approximately 820,000 short interest positions with around 77 billion shares, stemming from multiple causes impacting the firm’s short interest reporting at different times.\u003c/li\u003e\n\u003cli\u003eIn an ongoing \u003ca href=\"https://www.sec.gov/newsroom/press-releases/2024-89\"\u003e\u003cu\u003ecase\u003c/u\u003e\u003c/a\u003e against Andrew Left and Citron Capital, the SEC and DOJ have levied charges for a $20 million fraud scheme, emphasising a concerning risk typology — “short-and-distort” campaigns. In these cases, traders short stocks and then deliberately spread false or disparaging rumors to drive the stock price down, profiting from the misinformation. This case highlights the ongoing threat posed by such manipulative strategies, where market participants leverage market rumors to further their financial interests, undermining both market integrity and investor confidence.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"our-thoughts\"\u003eOur thoughts\u003c/h3\u003e\n\u003cp\u003eRegulators are sharpening their focus on firms that fail to detect and address complex misconduct in real-time. But detecting suspicious activity is no longer simply about identifying a handful of flagrant violations, it’s about spotting subtle patterns that indicate deliberate manipulation, such as the \u0026ldquo;short-and-distort\u0026rdquo; scheme highlighted above. The challenge lies not only in capturing this activity but in proving the links between trades, false information, and price movements.\u003c/p\u003e\n\u003cp\u003eTo address this, firms must go beyond traditional monitoring tools. Advanced surveillance platforms that leverage relational mapping and data analytics are becoming essential. By integrating diverse data streams - communications, disclosures, and trading activity - these systems can identify and track suspicious behaviours across the full scope of market interactions and provide a clearer picture of intent. Without such comprehensive systems, firms risk not only regulatory fines but a serious erosion of market integrity, as manipulative practices continue to undermine investor confidence.\u003c/p\u003e\n\u003cp\u003eFor more information on eflow’s regulatory technology and how it can enable firms to combat the threat of market abuse, \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eclick here\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2025-20-01T11:32:03+0000"},{"title":"Digital Operational Resilience Act (DORA) - What is it and why is it important?","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/digital-operational-resilience-act-dora-what-is-it-and-why-is-it-important/","summary":"\u003cp\u003eThe Digital Operational Resilience Act (DORA) has been a hot topic for several months now, but January 2025 finally sees the new regulatory framework come into force for EU-regulated entities. In this blog, we explore why it’s being implemented, what this means for impacted firms, and how eflow has responded to ensure that our regulatory technology meets all the associated criteria.\u003c/p\u003e\n\u003ch2 id=\"what-is-dora\"\u003e\u003cstrong\u003eWhat is DORA?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003e\u003ca href=\"https://www.esma.europa.eu/esmas-activities/digital-finance-and-innovation/digital-operational-resilience-act-dora\"\u003eDORA is a regulatory framework introduced by the European Union\u003c/a\u003e to enhance the operational resilience of financial entities, ensuring they can withstand and recover from operational disruptions caused by cybersecurity threats or other risks. DORA applies to all EU-regulated entities and their critical service providers.\u003c/p\u003e\n\u003ch3 id=\"why-is-dora-needed\"\u003e\u003cstrong\u003eWhy is DORA needed?\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThanks to the rapid digitisation of financial services over the last few decades, the use of information and communication technology (ICT) and digital tools is fundamental to how the sector operates. While some firms choose to develop their own in-house technological infrastructure, many organisations select external technology vendors to supply various systems that enable them to serve their clients quickly, safely and conveniently.\u003c/p\u003e\n\u003cp\u003eHowever, while the use of technology offers firms a wide range of operational benefits, it also increases their potential exposure to risk depending on the vendor they choose to work with. This is due to the fact that many third-party technology vendors are not directly supervised or subject to the same level of regulatory scrutiny as the firm itself.\u003c/p\u003e\n\u003cp\u003eIf this risk is not managed appropriately, it can lead to the disruption of service delivery by the firm in question, as well as other financial entities. In a worse case scenario, widespread disruption to the financial services industry could result in significant economic implications on a global scale. As a result, ensuring that firms are operating to the highest standards of digital operational resilience is vitally important.\u003c/p\u003e\n\u003ch3 id=\"eflows-commitment-to-compliance-and-security\"\u003e\u003cstrong\u003eeflow’s commitment to compliance and security\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAt eflow, we are committed to meeting the highest standards of operational resilience and compliance. As a critical third-party service provider, we have enhanced our systems, processes and controls to align with DORA’s stringent requirements. This ensures that our services continue to meet our clients’ needs securely and reliably.\u003c/p\u003e\n\u003cp\u003eTo ensure that we deliver the highest standards of service to our clients, we have implemented the following measures:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eEnhanced risk management frameworks\u003c/strong\u003e: Upgrading our risk management practices to meet DORA’s expectations for identifying, assessing, and mitigating risks.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eIncident reporting and transparency\u003c/strong\u003e: Ensuring timely notifications and detailed reporting of any incidents that may affect service continuity.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eThird-party risk assessments\u003c/strong\u003e: Collaborating with our clients to meet DORA’s requirements for assessing and managing risks related to third-party providers.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eOperational resilience testing\u003c/strong\u003e: Conducting regular, comprehensive testing of our systems to ensure their resilience and reliability under various scenarios.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eGovernance and oversight\u003c/strong\u003e: Strengthening our internal governance to meet regulatory demands and provide you with the assurance of our ongoing compliance.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eAt the moment, DORA only applies to EU-regulated entities or branches. eflow has taken the decision to apply the policies and procedures to all of our clients’ systems to ensure that they all benefit from the highest standards of digital operational resiliency.\u003c/p\u003e\n\u003ch2 id=\"our-recommendations-for-impacted-firms\"\u003e\u003cstrong\u003eOur recommendations for impacted firms\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhile we are taking significant steps to ensure compliance, your organisation may also have responsibilities under DORA. We recommend:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eReviewing your internal policies to ensure they align with DORA requirements.\u003c/li\u003e\n\u003cli\u003eConducting risk assessments of your critical service providers.\u003c/li\u003e\n\u003cli\u003eCollaborating with external vendors to share information and fulfil mutual obligations.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIf you have any questions about DORA or how eflow’s regulatory technology meets the required standards, please do not hesitate to \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003econtact us\u003c/a\u003e and our team will be delighted to help.\u003cbr\u003e\u003c/p\u003e\n","date_published":"2025-15-01T16:34:05+0000"},{"title":"Best execution compliance in a global context","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/best-execution-compliance-in-a-global-context/","summary":"\u003cp\u003eIn the fast-paced world of global finance, where literally every second counts and market volatility is accepted as the norm, ensuring clients get the best execution is more than a priority; it\u0026rsquo;s a regulatory necessity. Relatively simple in theory, in practice, best execution regulation has evolved into a complex global challenge, with expanding markets, technological advancements, and ever-evolving regulations in Europe, the US, and further afield.\u003c/p\u003e\n\u003cp\u003eRegtech companies now face a challenging balancing act: delivering compliance across diverse jurisdictions while managing obstacles from data integration to cross-border market dynamics. This article considers the critical role of best execution compliance, the challenges faced by firms trying to navigate it, and the innovative solutions emerging from the Regtech sector, paving the way forward.\u003c/p\u003e\n\u003ch2 id=\"the-global-regulatory-landscape-and-best-execution-compliance\"\u003e\u003cstrong\u003eThe global regulatory landscape and best execution compliance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eTo address best execution compliance requirements across numerous markets and jurisdictions, it\u0026rsquo;s important to appreciate the diverse nature of current regulations and the impact on and challenges faced by the Regtech sector.\u003c/p\u003e\n\u003ch3 id=\"diverse-regulatory-standards\"\u003e\u003cstrong\u003eDiverse regulatory standards\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhen it comes to best execution, the global regulatory landscape is still somewhat varied, though growing more standardised with each passing year. As financial markets have grown increasingly globalised, there has been a clear move towards international harmonisation of regulatory standards. Best execution is just one such area that has been impacted by this trend.\u003c/p\u003e\n\u003cp\u003eGenerally speaking, regulatory stances shift towards the dominant regulations from major market players, such as MiFID in the EU, and the SEC’s rules in the US. While other countries and regions will fight to maintain a degree of independence when it comes to regulations, they will need to adhere to the more dominant regulations to encourage confidence amongst global institutions and investors.\u003c/p\u003e\n\u003cp\u003eFor the time being, however, the fact of the matter is that there exists a degree of variability across regulatory jurisdictions. As such, the main challenge for both financial institutions and Regtech providers is aligning local variations and formats across multiple jurisdictions.\u003c/p\u003e\n\u003ch3 id=\"impact-on-regtech\"\u003e\u003cstrong\u003eImpact on Regtech\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eOutsourcing the monitoring of regulatory responsibilities is now commonplace across the financial services industry. There are two primary reasons for this:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eCost savings\u003c/strong\u003e: Maintaining in-house teams focused on different market regulations is costly and time-consuming.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eTechnological advances\u003c/strong\u003e: Cutting-edge Regtech innovations have significantly reduced time requirements by enabling the use of diverse data types.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThis enables financial institutions to focus on core strengths—client interactions, investment strategies, and growth—while knowing that advanced Regtech systems handle best execution compliance, a benefit well-regarded by regulators.\u003c/p\u003e\n\u003cp\u003eIn this section, we will explain how these diverse standards impact the development and implementation of Regtech solutions.\u003c/p\u003e\n\u003ch2 id=\"data-management-and-integration-challenges\"\u003e\u003cstrong\u003eData management and integration challenges\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eData management is a very complex area in the \u003ca href=\"https://www.globenewswire.com/fr/news-release/2024/10/31/2972350/0/en/Global-RegTech-Business-Report-2024-2029-Key-Trends-Recent-Launches-Partnerships-and-Collaborations-Influencing-the-Rapidly-Growing-Multi-Billion-Dollar-Market.html\"\u003eRegtech market\u003c/a\u003e. It involves ingesting and analysing both structured and unstructured data to monitor ongoing best execution compliance while flagging any potential infringements or shortcomings. Aside from the challenges of converting different data types into more useful formats, there’s also the issue of integrating data from multiple systems into a single compliance platform.\u003c/p\u003e\n\u003ch3 id=\"data-collection-and-quality\"\u003e\u003cstrong\u003eData collection and quality\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhen integrating data from diverse global sources, the focus is on quality and accuracy. Among other factors, this can be impacted by different formats and field variance across jurisdictions. As mentioned above, global regulators are working more closely together than ever before to align the type, depth, and format of data made available for compliance issues, but data harmonisation remains a challenge.\u003c/p\u003e\n\u003cp\u003eIn an attempt to more closely integrate into the global investment market, many of the peripheral markets and associated regulators are now aligning their operations with leading counterparts. This introduces a critical element of trust and could be the difference between financial institutions operating in different jurisdictions. As global standards emerge regarding data collection quality, this makes it easier to tweak and make changes in the future.\u003c/p\u003e\n\u003ch3 id=\"data-integration\"\u003e\u003cstrong\u003eData integration\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eCollecting different forms of data than reformatting while maintaining accuracy is a challenge in itself. Beyond that, an additional challenge is found in the integration of data from different systems, different markets, and pertaining to different asset classes.\u003c/p\u003e\n\u003ch4 id=\"recent-example\"\u003e\u003cstrong\u003eRecent example\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eMonitoring best execution in one particular market in isolation is dangerous, as we saw with the US subprime mortgage crash in 2007. At the height of the housing boom, mortgages were approved where the client had little chance of ever fulfilling their financial obligations. The leading financial institutions quickly sliced and diced these arrangements, creating income and capital-focus bonds that often failed to reflect the underlying risks.\u003c/p\u003e\n\u003cp\u003eThe complexity of these arrangements and the challenges in connecting them back to the original mortgages meant it was near impossible to accurately reflect the growing risk. When the housing market cooled, the default rate on subprime mortgages increased, leading to the collapse of what had become a huge mortgage-backed bond sector.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eLack of interconnectivity\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eIf financial institutions and regulators had been able to connect systems, markets, and different asset classes, creating a complete virtual paper trail, warning signs would have emerged much sooner. This brings us to the issue of streamlining data integration and ensuring consistency so that Regtech companies, financial institutions, and regulators can join the dots.\u003c/p\u003e\n\u003ch2 id=\"technological-infrastructure-and-real-time-monitoring\"\u003e\u003cstrong\u003eTechnological infrastructure and real-time monitoring\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eEnhancements in technological infrastructure are critical when it comes to best execution regulations and the wider regulatory framework. There is also the holy grail of real-time monitoring, which is, for many, the ultimate goal, but is it really achievable?\u003c/p\u003e\n\u003ch3 id=\"technological-demands\"\u003e\u003cstrong\u003eTechnological demands\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs with any investment transaction, it\u0026rsquo;s essential to address the risks and potential rewards of ongoing investment in technological infrastructure. We know that using advanced analytics, AI, and machine learning undoubtedly improves monitoring capabilities, but what\u0026rsquo;s the ultimate aim? In the world of business, there is an inevitable trade-off between investment and return, and it is no different for technology. Does the industry need to invest a few hundred million dollars to capture the outstanding 0.001% of questionable transactions?\u003c/p\u003e\n\u003cp\u003eIn many ways, real-time monitoring is a fallacy because as soon as the data is received, many would argue systems are taking a reactive rather than proactive approach. This is at odds with the definition of real-time monitoring, but in reality, it is as close as we will get. Looking further down the line, the emergence of potential red flags will require the human touch at some point to decide whether further investigation is required.\u003c/p\u003e\n\u003ch3 id=\"scalability-and-costs\"\u003e\u003cstrong\u003eScalability and costs\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs a financial institution looking at Regtech compliance systems, scalability is one of the major attractions. This allows many financial institutions to grow with the confidence that cost-effective scalability of existing compliance systems is achievable. However, it is important to appreciate that widespread scalability can place pressure on the availability of skilled personnel and storage and processing capacity.\u003c/p\u003e\n\u003cp\u003eWe can\u0026rsquo;t simply continue scaling high-tech systems without appreciating, albeit expanding, broader capacity. There is also the ESG angle, with many investors, financial institutions, regulators, and governments more acutely aware of their wider responsibilities. To suggest that we can scale and expand technological capacity going forward is certainly naïve and potentially dangerous if not conducted in a controlled manner.\u003c/p\u003e\n\u003ch2 id=\"cross-border-compliance-and-market-dynamics\"\u003e\u003cstrong\u003eCross-border compliance and market dynamics\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe key to cross-border compliance, considering different market dynamics, is broad alignment across markets, financial institutions, and regulators. In many ways, you could argue that all parties are being forced to work together to accommodate an expanding global financial market.\u003c/p\u003e\n\u003ch3 id=\"cross-border-challenges\"\u003e\u003cstrong\u003eCross-border challenges\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThere are numerous examples of cross-border challenges, but one topical issue is cryptocurrency. Amid an ever-tightening regulatory burden in Europe, the UK, and the US, regulators in Hong Kong have taken a more accommodating and investor-friendly approach. Many would argue this has placed the region as the global cryptocurrency hub, which brings about its own global regulatory challenges.\u003c/p\u003e\n\u003cp\u003eThis market is relatively early in its regulatory journey within an emerging but not yet finished structure. So, not only are there best execution compliance issues to address in local markets, but in many ways, this perfectly reflects cross-border/global challenges amidst the need to build trust and confidence.\u003c/p\u003e\n\u003cp\u003eOn a more basic level, there are other issues to consider, such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eVarying market structures\u003c/li\u003e\n\u003cli\u003eTrading hours\u003c/li\u003e\n\u003cli\u003eLiquidity\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eFor example, liquidity is one issue often overlooked when it comes to best execution compliance. Without a reasonable level of liquidity, you may be dealing on the best screen/market price, but can you guarantee to a client that this is a fair valuation?\u003c/p\u003e\n\u003ch3 id=\"market-dynamics\"\u003e\u003cstrong\u003eMarket dynamics\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs a basic point, it\u0026rsquo;s helpful to look back and see how far compliance and, more lately, Regtech companies have come in recent years. We can only imagine the challenges faced by more manual-focused compliance processes on a local and global scale, taking in issues such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eMarket volatility\u003c/li\u003e\n\u003cli\u003eGeopolitical changes\u003c/li\u003e\n\u003cli\u003eEmerging markets\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThese are still significant issues today for technology development, and more cooperation between global regulators has, to a certain extent, enhanced the ways they are monitored. We are not suggesting that these issues are more controllable in the current environment; they are just situations that are more transparent.\u003c/p\u003e\n\u003ch3 id=\"strategic-solutions\"\u003e\u003cstrong\u003eStrategic solutions\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhile the introduction of AI and machine learning has significantly improved the delivery of compliance monitoring technology, it doesn\u0026rsquo;t really change the fundamentals. While this article is focused on best execution regulations, the concept of strategic solutions is broader.\u003c/p\u003e\n\u003cp\u003eWorking closely with financial institutions and market operators, Regtech companies constantly collaborate with global regulators while monitoring market conditions. Taking a step back, it’s important to separate the theory of global regulation from the practice of using cutting-edge technology to enhance transparency and compliance.\u003c/p\u003e\n\u003cp\u003eUltimately, unless all of the global entities involved in financial markets, transactions, and regulation work together, singing perhaps not from the same hymn sheet but from a similar hymn sheet, the potential of technological advances will not be fulfilled.\u003c/p\u003e\n\u003ch2 id=\"eflows-advanced-execution-monitoring-solutions\"\u003e\u003cstrong\u003eeflow’s advanced execution monitoring solutions\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eCompliance demands extend beyond simple trade reporting in today\u0026rsquo;s rapidly evolving regulatory environment. Financial institutions require dynamic tools to ensure \u003ca href=\"https://eflowglobal.com/tz-best-execution-and-transaction-cost-analysis/\"\u003ebest execution\u003c/a\u003e while maintaining data accuracy, transparency, and auditability across global jurisdictions. eflow offers a comprehensive suite of execution monitoring services designed to address these challenges efficiently and effectively.\u003c/p\u003e\n\u003ch4 id=\"best-execution-monitoring\"\u003e\u003cstrong\u003eBest execution monitoring\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eeflow’s platform uses analytics and machine learning to track execution quality instantly, identifying issues like price slippage and delays as they happen.\u003c/p\u003e\n\u003ch4 id=\"customisable-compliance\"\u003e\u003cstrong\u003eCustomisable compliance\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eFirms can set region-specific parameters (e.g., MiFID II, FINRA) to align with local regulations while maintaining global best execution standards.\u003c/p\u003e\n\u003ch4 id=\"automated-audit-trails\"\u003e\u003cstrong\u003eAutomated audit trails\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eeflow provides detailed transaction records and customisable reports, simplifying internal audits and regulatory reviews.\u003c/p\u003e\n\u003ch4 id=\"easy-system-integration\"\u003e\u003cstrong\u003eEasy system integration\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eeflow’s platform integrates with legacy systems, minimising disruptions and reducing compliance upgrade costs.\u003c/p\u003e\n\u003ch2 id=\"why-choose-eflow\"\u003e\u003cstrong\u003eWhy choose eflow?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eBy combining advanced analytics with monitoring, customisable parameters, and robust reporting capabilities, eflow provides financial institutions with a sophisticated, reliable compliance solution that can adapt to the ever-changing landscape of global regulations. With eflow’s tools, firms can confidently ensure \u003ca href=\"https://eflowglobal.com/best-execution-and-beyond-whats-happening-to-rts-27-28-post-brexit/\"\u003ebest execution compliance\u003c/a\u003e, reduce operational risks, and maintain trust with clients and regulators alike.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhen looking at best execution compliance globally, it is important to appreciate how this contributes to trust in individual markets and the emerging global market. Similarly to the contagion we saw during the corporate financial crisis, an emerging mistrust in one market can quickly be replicated in others. This gradual reduction in trust can cause significant market volatility and, as we have seen in recent times, potentially expensive intervention by central banks, governments and regulators to reinstate trust and markets.\u003c/p\u003e\n\u003cp\u003eRegulators worldwide are working together to create a more structured approach to global investment regulations and compliance. While this is an ongoing process, many believe that the future challenges lie in connecting activity in different markets, such as equity markets, derivatives, and futures (and their numerous variations).\u003c/p\u003e\n\u003cp\u003eAs a financial institution, it is important that you continue to invest in advanced technologies, especially with increased regulatory compliance obligations. At eflow, we provide the latest in transaction monitoring and best execution analysis services. Using cutting-edge technology, we are able to monitor and analyse data extremely quickly, creating the appropriate red flags for further investigation.\u003c/p\u003e\n","date_published":"2025-13-01T14:32:05+0000"},{"title":"As US regulators clamp down, how are other regulators managing eComms surveillance?","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/as-us-regulators-clamp-down-how-are-other-regulators-managing-ecomms-surveillance/","summary":"\u003cp\u003eOn 13 December 2024, the Financial Conduct Authority (FCA) issued a \u003ca href=\"https://www.fca.org.uk/publication/correspondence/portfolio-letter-fca-strategy-contracts-difference-2024.pdf\" target=\"_blank\" rel=\"noopener\"\u003e\u003cu\u003ePortfolio Letter\u003c/u\u003e\u003c/a\u003e to providers of Contracts for Difference (CFDs), highlighting critical risks and urging firms to take immediate action.\u003c/p\u003e\n\u003cp\u003eThe FCA’s letter addresses a wide range of topics relevant to CFD providers, including consumer duty, firm failure, operational resilience, and diversification risks. For the purpose of this blog, we will focus on market integrity - specifically, the challenges of preventing market abuse and the importance of robust trade surveillance to detect and mitigate suspicious trading activities.\u003c/p\u003e\n\u003cp\u003eThose who fail to address the outlined risks face the prospect of “swift and assertive action”. This communication serves as a call to action for CFD providers to review their frameworks, strengthen controls, and align with the FCA’s expectations.\u003c/p\u003e\n\u003ch3 id=\"portfolio-inclusion-criteria\"\u003ePortfolio inclusion criteria\u003c/h3\u003e\n\u003cp\u003eThe letter is addressed to firms earning “significant” revenue from providing CFDs and related products, such as Spread Bets and Rolling Spot Forex, to retail and professional clients.\u003c/p\u003e\n\u003cp\u003eThe portfolio includes two primary categories of firms:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003ePrincipals: These are firms that operate directly as CFD providers, offering a wide range of products to their clients. They often serve as the main counterparty to transactions and carry the primary responsibility for maintaining market integrity and adhering to regulatory expectations.\u003c/li\u003e\n\u003cli\u003eDistributors: A smaller subset of firms acts as introducers or intermediaries. While they might not offer CFDs directly, they often play a role in client onboarding and may provide ancillary services. Their activities are still under scrutiny due to their potential to contribute to risks in the ecosystem.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"market-integrity\"\u003eMarket integrity\u003c/h3\u003e\n\u003cp\u003eThe FCA has raised concerns about market abuse risks within the CFD portfolio, driven by a surge in Suspicious Transaction and Order Reports (STORs). These reports frequently point to insider dealing and manipulative practices orchestrated by individuals or organised criminal groups (OCGs). Criminals are exploiting vulnerabilities in firms’ surveillance systems through mechanisms such as mule accounts, obfuscated overseas aggregated accounts (OOAAs), and copy trading schemes.\u003c/p\u003e\n\u003ch3 id=\"emerging-threats\"\u003eEmerging threats\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eOOAAs:\u003c/strong\u003e As highlighted in the FCA’s \u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-80#ar-top\"\u003eMarket Watch 80\u003c/a\u003e, some firms are inadvertently facilitating market abuse by processing transactions made by OOAAs. These accounts often conceal the identities of Ultimate Beneficial Owners (UBOs), enabling previously off-boarded clients or high-risk entities to resume trading undetected. This lack of transparency heightens the risk of market manipulation and undermines firms’ risk management efforts.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eCopy trading schemes:\u003c/strong\u003e Bad actors are leveraging copy trading as a tool to execute spoofing strategies, particularly in illiquid stocks. Spoofing tactics, such as narrowing spreads, are initiated through master accounts and then mirrored in real-time by multiple linked copy accounts. This approach amplifies trading volumes while dispersing risk across accounts, making it more difficult for firms to identify and mitigate suspicious activity.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe FCA plans to undertake specific, targeted assessments of firms’ surveillance arrangements, with a particular focus on the quality and frequency of STOR submissions.\u003c/p\u003e\n\u003ch3 id=\"fcas-recommendations-on-ooaas\"\u003eFCA’s recommendations on OOAAs\u003c/h3\u003e\n\u003cp\u003eThe FCA has identified OOAAs as a major vulnerability in the CFD sector. In cases where these accounts are operated in less stringent regulatory environments, they are often being exploited by criminals to facilitate market abuse. The primary concern lies in their ability to obscure the identities of UBOs, enabling high-risk individuals, including previously off-boarded clients, to trade undetected.\u003c/p\u003e\n\u003ch2 id=\"what-should-firms-be-doing\"\u003eWhat should firms be doing?\u003c/h2\u003e\n\u003cp\u003eTo mitigate these risks, the FCA has issued clear recommendations for firms dealing with OOAAs:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003e\u003cstrong\u003eCommunicate and collaborate:\u003c/strong\u003e Communicate a zero-tolerance approach to market abuse, and communicate openly with regulators and enforcement agencies, both domestic and international.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eDue diligence:\u003c/strong\u003e Require OOAAs (both prospective and existing), which execute for anonymised UBOs, to provide information about their systems and controls to prevent market abuse. This might include:\u003c/li\u003e\n\u003c/ol\u003e\n\u003cul\u003e\n\u003cli\u003eA description of market abuse surveillance arrangements, risk tolerance and risk framework, including thresholds within that framework for taking steps to manage risks, such as terminating accounts.\u003c/li\u003e\n\u003cli\u003eThe nature of underlying clients (e.g. individuals, retail, professional, high net worth, corporate).\u003c/li\u003e\n\u003cli\u003eThe number of clients deemed high risk, and how these are identified.\u003c/li\u003e\n\u003cli\u003eConfirming whether OOAAs will provide the identities of relevant UBOs, if the FCA authorised firm is concerned about particular trades.\u003c/li\u003e\n\u003c/ul\u003e\n\u003col start=\"3\"\u003e\n\u003cli\u003e\u003cstrong\u003eData-driven surveillance:\u003c/strong\u003e When firms cannot access UBO data, focus must shift to behavioural analysis.\u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-77\"\u003e\u003cu\u003eMarket Watch 77\u003c/u\u003e\u003c/a\u003e, published in February 2024, gives some particular examples to look out for;\u003c/li\u003e\n\u003c/ol\u003e\n\u003cul\u003e\n\u003cli\u003eClients regularly generating Suspicious Transaction and Order Reports (STORs).\u003c/li\u003e\n\u003cli\u003eSeveral clients trading in the same security for the first time.\u003c/li\u003e\n\u003cli\u003eTrades that consistently precede market-moving events, such as mergers or earnings announcements.\u003c/li\u003e\n\u003cli\u003eMonitoring whether trades significantly exceed expected volumes for specific instruments or account types.\u003c/li\u003e\n\u003cli\u003eAssessing whether trades originate from high-risk jurisdictions or obfuscated sources (e.g., OOAAs concealing UBOs).\u003c/li\u003e\n\u003cli\u003ePatterns of synchronised trading across multiple accounts, particularly in illiquid securities.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"conclusion\"\u003eConclusion\u003c/h3\u003e\n\u003cp\u003eCEOs must ensure their firms not only understand the rules but also have the tools and processes to enforce them effectively. By 31 January 2025, every firm should have a clear plan in place, approved at Board level, to address the risks outlined in the FCA’s letter.\u003c/p\u003e\n\u003cp\u003eThe ability to translate behaviour into actionable intelligence is critical. If you can’t definitively determine who your clients are, focus on what they do. Behaviour is often the clearest indicator of risk.\u003c/p\u003e\n\u003cp\u003eAdvanced trade surveillance tools, such as eflow’s TZTS technology (link) are essential, offering rapid detection of suspicious behaviour like spoofing, insider trading, and many more. These systems must also be able to adapt, through the reconfiguration of thresholds to match evolving risks - whether it’s trading in illiquid securities, patterns linked to high-risk jurisdictions, or activity that exceeds predefined norms.\u003c/p\u003e\n\u003cp\u003eThe next steps are clear: review your surveillance frameworks, recalibrate for high-risk behaviours, and engage your Board to ensure oversight and accountability. The FCA has made its expectations known, firms must act quickly and decisively.\u003c/p\u003e\n","date_published":"2025-06-01T10:34:42+0000"},{"title":"Market Integrity in Focus: FCA’s Call to Action for CFD Providers","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/market-integrity-in-focus-fca-s-call-to-action-for-cfd-providers/","summary":"\u003cp\u003eOn 13 December 2024, the Financial Conduct Authority (FCA) issued a \u003ca href=\"https://www.fca.org.uk/publication/correspondence/portfolio-letter-fca-strategy-contracts-difference-2024.pdf\" target=\"_blank\" rel=\"noopener\"\u003e\u003cu\u003ePortfolio Letter\u003c/u\u003e\u003c/a\u003e to providers of Contracts for Difference (CFDs), highlighting critical risks and urging firms to take immediate action.\u003c/p\u003e\n\u003cp\u003eThe FCA’s letter addresses a wide range of topics relevant to CFD providers, including consumer duty, firm failure, operational resilience, and diversification risks. For the purpose of this blog, we will focus on market integrity - specifically, the challenges of preventing market abuse and the importance of robust trade surveillance to detect and mitigate suspicious trading activities.\u003c/p\u003e\n\u003cp\u003eThose who fail to address the outlined risks face the prospect of “swift and assertive action”. This communication serves as a call to action for CFD providers to review their frameworks, strengthen controls, and align with the FCA’s expectations.\u003c/p\u003e\n\u003ch3 id=\"portfolio-inclusion-criteria\"\u003ePortfolio inclusion criteria\u003c/h3\u003e\n\u003cp\u003eThe letter is addressed to firms earning “significant” revenue from providing CFDs and related products, such as Spread Bets and Rolling Spot Forex, to retail and professional clients.\u003c/p\u003e\n\u003cp\u003eThe portfolio includes two primary categories of firms:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003ePrincipals: These are firms that operate directly as CFD providers, offering a wide range of products to their clients. They often serve as the main counterparty to transactions and carry the primary responsibility for maintaining market integrity and adhering to regulatory expectations.\u003c/li\u003e\n\u003cli\u003eDistributors: A smaller subset of firms acts as introducers or intermediaries. While they might not offer CFDs directly, they often play a role in client onboarding and may provide ancillary services. Their activities are still under scrutiny due to their potential to contribute to risks in the ecosystem.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"market-integrity\"\u003eMarket integrity\u003c/h3\u003e\n\u003cp\u003eThe FCA has raised concerns about market abuse risks within the CFD portfolio, driven by a surge in Suspicious Transaction and Order Reports (STORs). These reports frequently point to insider dealing and manipulative practices orchestrated by individuals or organised criminal groups (OCGs). Criminals are exploiting vulnerabilities in firms’ surveillance systems through mechanisms such as mule accounts, obfuscated overseas aggregated accounts (OOAAs), and copy trading schemes.\u003c/p\u003e\n\u003ch3 id=\"emerging-threats\"\u003eEmerging threats\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eOOAAs:\u003c/strong\u003e As highlighted in the FCA’s \u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-80#ar-top\"\u003eMarket Watch 80\u003c/a\u003e, some firms are inadvertently facilitating market abuse by processing transactions made by OOAAs. These accounts often conceal the identities of Ultimate Beneficial Owners (UBOs), enabling previously off-boarded clients or high-risk entities to resume trading undetected. This lack of transparency heightens the risk of market manipulation and undermines firms’ risk management efforts.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eCopy trading schemes:\u003c/strong\u003e Bad actors are leveraging copy trading as a tool to execute spoofing strategies, particularly in illiquid stocks. Spoofing tactics, such as narrowing spreads, are initiated through master accounts and then mirrored in real-time by multiple linked copy accounts. This approach amplifies trading volumes while dispersing risk across accounts, making it more difficult for firms to identify and mitigate suspicious activity.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe FCA plans to undertake specific, targeted assessments of firms’ surveillance arrangements, with a particular focus on the quality and frequency of STOR submissions.\u003c/p\u003e\n\u003ch3 id=\"fcas-recommendations-on-ooaas\"\u003eFCA’s recommendations on OOAAs\u003c/h3\u003e\n\u003cp\u003eThe FCA has identified OOAAs as a major vulnerability in the CFD sector. In cases where these accounts are operated in less stringent regulatory environments, they are often being exploited by criminals to facilitate market abuse. The primary concern lies in their ability to obscure the identities of UBOs, enabling high-risk individuals, including previously off-boarded clients, to trade undetected.\u003c/p\u003e\n\u003ch2 id=\"what-should-firms-be-doing\"\u003eWhat should firms be doing?\u003c/h2\u003e\n\u003cp\u003eTo mitigate these risks, the FCA has issued clear recommendations for firms dealing with OOAAs:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003e\u003cstrong\u003eCommunicate and collaborate:\u003c/strong\u003e Communicate a zero-tolerance approach to market abuse, and communicate openly with regulators and enforcement agencies, both domestic and international.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eDue diligence:\u003c/strong\u003e Require OOAAs (both prospective and existing), which execute for anonymised UBOs, to provide information about their systems and controls to prevent market abuse. This might include:\u003c/li\u003e\n\u003c/ol\u003e\n\u003cul\u003e\n\u003cli\u003eA description of market abuse surveillance arrangements, risk tolerance and risk framework, including thresholds within that framework for taking steps to manage risks, such as terminating accounts.\u003c/li\u003e\n\u003cli\u003eThe nature of underlying clients (e.g. individuals, retail, professional, high net worth, corporate).\u003c/li\u003e\n\u003cli\u003eThe number of clients deemed high risk, and how these are identified.\u003c/li\u003e\n\u003cli\u003eConfirming whether OOAAs will provide the identities of relevant UBOs, if the FCA authorised firm is concerned about particular trades.\u003c/li\u003e\n\u003c/ul\u003e\n\u003col start=\"3\"\u003e\n\u003cli\u003e\u003cstrong\u003eData-driven surveillance:\u003c/strong\u003e When firms cannot access UBO data, focus must shift to behavioural analysis.\u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-77\"\u003e\u003cu\u003eMarket Watch 77\u003c/u\u003e\u003c/a\u003e, published in February 2024, gives some particular examples to look out for;\u003c/li\u003e\n\u003c/ol\u003e\n\u003cul\u003e\n\u003cli\u003eClients regularly generating Suspicious Transaction and Order Reports (STORs).\u003c/li\u003e\n\u003cli\u003eSeveral clients trading in the same security for the first time.\u003c/li\u003e\n\u003cli\u003eTrades that consistently precede market-moving events, such as mergers or earnings announcements.\u003c/li\u003e\n\u003cli\u003eMonitoring whether trades significantly exceed expected volumes for specific instruments or account types.\u003c/li\u003e\n\u003cli\u003eAssessing whether trades originate from high-risk jurisdictions or obfuscated sources (e.g., OOAAs concealing UBOs).\u003c/li\u003e\n\u003cli\u003ePatterns of synchronised trading across multiple accounts, particularly in illiquid securities.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"conclusion\"\u003eConclusion\u003c/h3\u003e\n\u003cp\u003eCEOs must ensure their firms not only understand the rules but also have the tools and processes to enforce them effectively. By 31 January 2025, every firm should have a clear plan in place, approved at Board level, to address the risks outlined in the FCA’s letter.\u003c/p\u003e\n\u003cp\u003eThe ability to translate behaviour into actionable intelligence is critical. If you can’t definitively determine who your clients are, focus on what they do. Behaviour is often the clearest indicator of risk.\u003c/p\u003e\n\u003cp\u003eAdvanced trade surveillance tools, such as eflow’s TZTS technology (link) are essential, offering rapid detection of suspicious behaviour like spoofing, insider trading, and many more. These systems must also be able to adapt, through the reconfiguration of thresholds to match evolving risks - whether it’s trading in illiquid securities, patterns linked to high-risk jurisdictions, or activity that exceeds predefined norms.\u003c/p\u003e\n\u003cp\u003eThe next steps are clear: review your surveillance frameworks, recalibrate for high-risk behaviours, and engage your Board to ensure oversight and accountability. The FCA has made its expectations known, firms must act quickly and decisively.\u003c/p\u003e\n","date_published":"2025-06-01T10:34:42+0000"},{"title":"Compliant Communication: ESMA’s Guidance for Safe Pre-Close Calls ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/compliant-communication-esma-s-guidance-for-safe-pre-close-calls/","summary":"\u003cp\u003eThe European Securities and Markets Authority (ESMA) and some national competent authorities (NCAs) have observed \u0026ldquo;high-volatility episodes\u0026rdquo; in EU equities shortly after pre-close calls. Pre-close calls are the final opportunity for firms to provide analysts with a clear understanding of recent performance ahead of quarterly or half-year earnings releases, when listed companies must avoid communicating with market participants to prevent selective information disclosure. These \u0026ldquo;quiet periods\u0026rdquo; typically last between two to four weeks, depending on company policy, regulatory requirements, and market practices.\u003c/p\u003e\n\u003cp\u003eDuring these calls, only public non-material information should be shared.\u003c/p\u003e\n\u003cp\u003eIf the only information provided is public and non-material, it should not impact share price. However, ESMA’s recent observations suggest that, in some cases, material or market-sensitive information may be shared or inferred by participants, whether through pre-close calls or coincidentally around the same time.\u003c/p\u003e\n\u003cp\u003eESMA has clarified that it is up to individual NCAs to pursue any supervisory actions. However, in the short term, ESMA issued a \u003ca href=\"https://www.esma.europa.eu/sites/default/files/2024-05/ESMA74-1103241886-945_ESMA_Statement_on_Pre-close_calls.pdf\" target=\"_blank\" rel=\"noreferrer noopener\"\u003estatement\u003c/a\u003e to issuers about the legislative framework governing pre-close calls and highlighted good practices to minimise risks.\u003c/p\u003e\n\u003ch2 id=\"inside-information-the-rules\"\u003eInside Information: The Rules\u003c/h2\u003e\n\u003cp\u003eESMA started by reiterating that pre-close calls are subject to public disclosure of inside information rules set out in Article 17 of the Market Abuse Regulation (MAR). Key points:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eIssuers must disclose inside information that directly concerns them as soon as possible. The information should be made available to the public in a timely, complete, and accurate manner, and be maintained on the issuer’s website for at least five years.\u003c/li\u003e\n\u003cli\u003eEmission allowance market participants must publicly disclose relevant inside information, including the capacity and utilisation of installations.\u003c/li\u003e\n\u003cli\u003eDisclosure of inside information can be delayed if immediate disclosure may harm the issuer’s legitimate interests, if the delay is not likely to mislead the public, and confidentiality is maintained.\u003c/li\u003e\n\u003cli\u003eFinancial institutions may delay the disclosure of inside information to preserve financial stability, provided that confidentiality is ensured, it serves the public interest, and approval is obtained from the relevant authority.\u003c/li\u003e\n\u003cli\u003eIf the confidentiality of delayed inside information is compromised, it must be disclosed immediately.\u003c/li\u003e\n\u003cli\u003eWhen inside information is disclosed to third parties in the ordinary course of duties, it must be made public simultaneously or promptly.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"esmas-guidance-for-pre-close-calls\"\u003eESMA’s guidance for pre-close calls\u003c/h3\u003e\n\u003cp\u003eESMA also highlights some “good practices” that have been observed across issuers to mitigate risks, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\n\u003cp\u003eConducting a \u003cstrong\u003ethorough assessment\u003c/strong\u003e of the information to be disclosed during pre-close calls ** ** to ensure that no insider information is inadvertently shared.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003e\u003cstrong\u003eAnnouncing pre-close calls\u003c/strong\u003e well in advance, with details such as the date, location (if applicable), topics to be discussed, and intended participants.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eMaking materials used in pre-closed calls \u003cstrong\u003epublicly available on the issuer’s website\u003c/strong\u003e, including slides, notes and other materials that may be used during pre-close calls to ensure equal access to the same insights and data.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003e\u003cstrong\u003eRecording pre-close calls\u003c/strong\u003e and making the records available to NCAs, creating an official audit-trail of what was discussed. Some issuers even made these recordings publicly available.\u003c/p\u003e\n\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThese practices aim to prevent the disclosure of non-public information, mitigate any unfair advantage if such information is shared, and promote transparency for all stakeholders. The goal is to not only adhere to compliance standards but also actively uphold market integrity.\u003c/p\u003e\n\u003ch3 id=\"following-the-thread-of-regulation-whats-next\"\u003eFollowing the thread of regulation: what’s next?\u003c/h3\u003e\n\u003cp\u003eWe have closely followed the actions of regulators to understand their thinking and interpret their process and predict what’s next. This latest statement fits the trend: increasingly targeted, deeper scrutiny of market abuse factors. See some of the key regulatory milestones below:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003e\u003cstrong\u003eMonitoring\u003c/strong\u003e: regulators realised that off-channel communications are difficult to monitor and therefore insider trading and other abuses are difficult to detect. They issued record fines for Whatsapp conversations involving market participants.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eRecordkeeping\u003c/strong\u003e: once communications are brought on-channel, firms need robust systems and controls to maintain records of such conversations such that they can be analysed and audited.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eDetection:\u003c/strong\u003e Regulators are increasingly starting to demand that firms connect the dots, with all business communications conducted on monitored channels., This, together with systems to store \u003cstrong\u003ethe\u003c/strong\u003e data, should allow firms \u003cstrong\u003eto have\u003c/strong\u003e everything they need to detect and prevent market abuse.\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003eIn their latest statement on pre-close calls, ESMA identifies a period of concentrated communication, analyses coinciding market activity and identifies a suspicious trend. Importantly, ESMA suggests ways that firms can monitor and manage these risks themselves. ESMA, like other regulators, is pushing for detection and they are doing so with the use of multiple types of data:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eCommunications data:\u003c/strong\u003e The communications surrounding pre-close calls were identified as a source of risk.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eMarket data:\u003c/strong\u003e Price volatility around the time of pre-close calls were identified as a reason for suspicion.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eTrade execution records:\u003c/strong\u003e Ultimately, it is each firm’s trading records which will complete the picture and identify possible bad actors.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIf ESMA can connect these dots, then firms can too, and must, if they wish to identify market abuse and avoid regulatory penalties. ESMA and other regulators are now converging on the need for integrated surveillance.\u003c/p\u003e\n\u003ch3 id=\"detecting-insider-trading-with-integrated-surveillance\"\u003eDetecting insider trading with integrated surveillance\u003c/h3\u003e\n\u003cp\u003eEffective surveillance requires a holistic approach. This includes integrating data from multiple, disparate, data sources to create a complete view of trading activity and communication patterns, putting it into context by overlaying broader market movements. It also requires advanced algorithms to analyse these vastly different data types as one at scale, with timing and other contextual information considered. Only then can firms ensure that insider trading is detected and addressed, upholding market integrity and remaining narrowly ahead of the regulatory curve. For a full breakdown on integrated surveillance, download our free \u003ca href=\"https://lp.eflowglobal.com/integrating-ecomms-and-trade-surveillance-ebook-0?_gl=1*1sm7icp*_gcl_au*MjY0MTc2NjUzLjE3Mjk1MDY5NjU.*_ga*ODQ1OTgxNjk4LjE3MDQyOTczNTE.*_ga_G691L4QB7E*MTczMTQxMzczNS42Ny4wLjE3MzE0MTM3MzUuNjAuMC4w\" target=\"_blank\" rel=\"noreferrer noopener\"\u003eeBook\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eThis may seem like a high bar. But insider dealing isn’t overt—bad actors will do whatever they can to mask their behaviour, so firms must be able to make use of all the information available to them. Anything less leaves stones unturned, opening the firm to regulatory and reputational hits.\u003c/p\u003e\n\u003cp\u003eeflow has closely monitored trends in market abuse and its regulation since 2004. And we have been building an off-the-shelf integrated surveillance platform ever since. To quickly bring your firm up to speed with the latest solutions in market abuse, trade and eComms surveillance, \u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noreferrer noopener\"\u003eget in touch\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2024-16-12T15:10:00+0000"},{"title":"Navigating the complexities of best execution legislation","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/navigating-the-complexities-of-best-execution-legislation/","summary":"\u003cp\u003eBefore the \u0026ldquo;Big Bang\u0026rdquo; of deregulation in 1986, which led to a period of self-regulation, there had been little specific financial services legislation. We can look back to the Prevention of Fraud (Investments) Act 1939, various adjustments in 1958, the authorisation of insurance companies in 1967, and the licensing of banks under the Banking Act of 1979. There had been several industry codes, but there was little, if anything, in the way of legislation regarding best execution.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eReporting statistic:\u003c/strong\u003e Did you know that the introduction of MiFID II increased the number of transaction data points from 24 to 65?\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eAt the time, self-regulation within a predefined structure offered the best of both worlds for the financial services industry: flexibility within a recognised framework protecting investors and markets. However, it soon became apparent that in a changing world, with a significant increase in trading volumes and the growing influence of financial giants, self-regulation would eventually be replaced.\u003c/p\u003e\n\u003cp\u003eThere was significant movement on the regulatory front at the turn of the century, which resulted in:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eImplementation of MiFID I in 2007\u003c/li\u003e\n\u003cli\u003eExpansion under MiFID II in 2018\u003c/li\u003e\n\u003cli\u003ePost-Brexit adjustments from 2016\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eImmediately following Brexit, the UK and EU authorities appeared to be moving in the same direction regarding best execution legislation. However, there has been a degree of divergence in recent times, most notably with RTS 27 and RTS 28 reporting.\u003c/p\u003e\n\u003ch3 id=\"divergence-in-reporting\"\u003e\u003cstrong\u003eDivergence in reporting\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs of 2021, UK firms and execution venues operating under UK financial services regulations are no longer required to produce RTS 27 and RTS 28 reports. The guidance from ESMA was slightly different, advising firms and venues to “deprioritise” the reports from 2020 and 2022, respectively. There was also some conflict in the way that ESMA recognised CFD platforms and services as trading venues, even though they did not have access to the required information to produce the statutory reports.\u003c/p\u003e\n\u003cp\u003eThe RTS 27 report covered a number of execution quality metrics enabling investors and third parties to compare and contrast trade execution standards across different venues. RTS 28 was focused on the five main venues at which individual firms carried out the majority of their trade execution activity.\u003c/p\u003e\n\u003ch3 id=\"us-regulatory-adjustments\"\u003e\u003cstrong\u003eUS regulatory adjustments\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eLooking further afield to the USA, SEC Rule 606 was introduced in 2000 and amended in 2018 and 2023 to reflect an evolving market structure. Changes to Rule 606 have enhanced transparency for investors and also brought an array of different revenues under the umbrella of best execution regulations.\u003c/p\u003e\n\u003ch2 id=\"key-elements-of-best-execution-legislation\"\u003e\u003cstrong\u003eKey elements of best execution legislation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eIn essence, best execution legislation obligates firms carrying out investment business to obtain the best possible result for their clients when executing client orders. This obligation relates to transactions carried out by the firm or passed to others to execute. There are numerous factors, the most basic of which are:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003ePrice\u003c/li\u003e\n\u003cli\u003eCost\u003c/li\u003e\n\u003cli\u003eSpeed\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eBeyond these three core factors, there are also more complex considerations such as likelihood of execution under the prevailing market conditions, prompt and efficient settlement, the size of the transaction, and the nature of the business. All of these factors come together to create a transparent trading procedure that gives clients confidence and assists with market efficiency.\u003c/p\u003e\n\u003cp\u003eThe European Securities and Markets Authority (ESMA) published a consultation paper on 16 July 2024 covering order execution policies and obligations under MiFID II and MiFIR. The deadline for comments is 16 October 2024, and the final draft report must be submitted to the European Commission by 29 December 2024.\u003c/p\u003e\n\u003ch3 id=\"details-of-the-consultation\"\u003e\u003cstrong\u003eDetails of the consultation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe consultation paper was the result of research carried out by ESMA, which revealed several common issues in the best execution strategies of financial firms, such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eLimited documentation to justify the choice of execution venue\u003c/li\u003e\n\u003cli\u003eOnly disclosing generic information about order execution policies\u003c/li\u003e\n\u003cli\u003eLimited clarity that company execution policies were followed\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eUnder the consultation, investment firms will be encouraged to revisit their order execution policies to include the following:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eDetails of trading venues which ensure continuous best execution\u003c/li\u003e\n\u003cli\u003eIdentifying particular venues for different financial instruments/types of client\u003c/li\u003e\n\u003cli\u003eInformation used when seeking best execution with different venues\u003c/li\u003e\n\u003cli\u003eFurther details of automated trading services\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIn relation to the ongoing assessment of an investment firm\u0026rsquo;s order execution policies, they will need to set out clearly:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThe frequency and methodology used to monitor their order execution policy\u003c/li\u003e\n\u003cli\u003eIf monitoring is delegated to a third party, the process must be regularly assessed\u003c/li\u003e\n\u003cli\u003ePolicies must be reviewed at least annually\u003c/li\u003e\n\u003cli\u003eThe annual review process must include consideration for new execution venues\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe consultation also includes reference to execution policies about client instructions and the execution of client orders through the company\u0026rsquo;s own account dealing. Individual firms must set out:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eArrangements for dealing with specific instructions from clients\u003c/li\u003e\n\u003cli\u003eIdentify how orders with specific and non-specific client instructions are executed\u003c/li\u003e\n\u003cli\u003eDocument how client instructions might impact the venue used for best execution\u003c/li\u003e\n\u003cli\u003eDetail instances where client transactions may be executed via the company’s own trading account\u003c/li\u003e\n\u003cli\u003eHow potential conflicts of interest are identified, managed and prevented\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIt still remains to be seen whether the FCA will follow in ESMA footsteps, or if we will see a further divergence of policy and approach with regards to best execution legislation.\u003c/p\u003e\n\u003ch2 id=\"challenges-in-implementing-best-execution-legislation\"\u003e\u003cstrong\u003eChallenges in implementing best execution legislation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eHistorically, financial markets have been relatively adept at responding to emerging trends and new financial instruments. However, the exponential increase in the complexity of financial services over the past 20 years has caused serious challenges for global financial regulators. .\u003c/p\u003e\n\u003cp\u003eWhile the recent introduction of Consumer Duty Regulations has attempted to put client protection front and centre with the emergence of new checks, procedures and legal undertakings, a number of ongoing challenges still persist.\u003c/p\u003e\n\u003ch3 id=\"data-capture\"\u003e\u003cstrong\u003eData capture\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe use of cutting-edge technology has facilitated the capture of in-depth trading data, which is required to monitor best execution practices. This has also expanded the amount of data reviewed and analysed compared to years gone by. The increase in the number of data points from 24 to 65 required systems to be adjusted, but this certainly won\u0026rsquo;t be the last significant change.\u003c/p\u003e\n\u003ch3 id=\"potential-conflicts-of-interest\"\u003e\u003cstrong\u003ePotential conflicts of interest\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs we mentioned above, regarding the ongoing ESMA consultation, financial firms are now obliged to disclose how they identify and manage potential conflicts of interest. This doesn\u0026rsquo;t change the focus on best execution for clients, but it does address potentially unavoidable conflicts of interest.\u003c/p\u003e\n\u003ch3 id=\"regulatory-complexities\"\u003e\u003cstrong\u003eRegulatory complexities\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIn the immediate aftermath of Brexit, EU and UK financial regulators seemed to move in the same direction and appreciate the broader consequences of any significant diversions. Recently, there have been signs of slight divergence, although this is unlikely to be too dramatic as UK firms regularly trade with their EU counterparts and vice versa.\u003c/p\u003e\n\u003ch3 id=\"technology-infrastructure\"\u003e\u003cstrong\u003eTechnology infrastructure\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIn the past, many large financial institutions retained monitoring and regulatory activities in-house. As the regulatory landscape became more cluttered, in-depth, demanding, and expensive, implementing solutions from third-party vendors has become the preferred approach. This allows financial services firms to avoid the investment of time, money and human resources required to implement and maintain best execution monitoring systems in house.\u003c/p\u003e\n\u003cp\u003eThe growing number of outsourcing options has allowed financial institutions to focus on their core operations, enhance their business, and increase income. Due to the technological nature of best execution monitoring services, they are easily scalable and have significant capacity.\u003c/p\u003e\n\u003ch2 id=\"how-can-eflow-help-you-meet-your-best-execution-legislative-obligations\"\u003e\u003cstrong\u003eHow can eflow help you meet your best execution legislative obligations?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/tz-best-execution-and-transaction-cost-analysis/\"\u003eTZBE\u003c/a\u003e is eflow’s Best Execution and Transaction Cost Analysis (TCA) tool, that can accommodate a variety of trading platforms, financial instruments and asset classes. The combination of a considerable increase in trading volumes and regulatory obligations in recent years means that manual best execution testing is no longer an option.\u003c/p\u003e\n\u003cp\u003eBeyond simply monitoring for best execution, TZBE also provides:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eAutomated and streamlined best execution testing\u003c/li\u003e\n\u003cli\u003ePotential cost-saving insights into trading procedures\u003c/li\u003e\n\u003cli\u003eThe ability to evolve/grow with your business strategy\u003c/li\u003e\n\u003cli\u003eStrengthening of regulatory responses, avoiding penalties and fines\u003c/li\u003e\n\u003cli\u003eAutomated record-keeping saves time and enhances accuracy\u003c/li\u003e\n\u003cli\u003eThe opportunity to tailor the system to your specific requirements\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eOther benefits include automated data enrichment, testing against industry benchmarks and the archiving and indexing of historical data. There\u0026rsquo;s much more to consider than just a best execution monitoring service.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eTrading statistic:\u003c/strong\u003e As of 2024, 80% of trades in UK markets are executed electronically, helping brokers achieve best execution more efficiently.\u003c/em\u003e\u003c/p\u003e\n\u003ch2 id=\"the-future-of-best-execution-legislation\"\u003e\u003cstrong\u003eThe future of best execution legislation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAmid broader regulatory changes and enhanced obligations for financial services companies, it\u0026rsquo;s important not to lose track of the core focus: market integrity and client protection. The globalisation of investment markets has increased cross-border trading and could (potentially) bring different best execution regulations into play. In reality, it is in the best interests of regulators to work together, creating compatible regulations and reporting requirements to minimise the cost of monitoring best execution and maximising regulatory protection.\u003c/p\u003e\n\u003cp\u003eRather than individual financial institutions constantly investing in new technology and seeking global regulatory interconnection, eflow can react to changes and, working with third parties, encourage cooperation between regulators. This means that all clients benefit from this ongoing investment, not to mention the experience and expertise built up over the years.\u003c/p\u003e\n\u003ch2 id=\"case-studies\"\u003e\u003cstrong\u003eCase studies\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eIt is not difficult to see how conflicts of interest may emerge when it comes to best execution; it may be useful to look at practical case studies from recent times.\u003c/p\u003e\n\u003ch3 id=\"barclays-capitals-2-million-fine\"\u003e\u003cstrong\u003eBarclays Capital’s $2 million fine\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eBetween January 2014 and February 2019, US regulator FINRA discovered that \u003ca href=\"https://www.thetradenews.com/barclays-fined-2-million-for-best-execution-violations/\"\u003eBarclays Capital\u003c/a\u003e routed all customer orders through its own trading system, LX, before rerouting to competing venues where applicable. The regulator found evidence of a lower fill rate on the LX platform, which was detrimental to clients.\u003c/p\u003e\n\u003ch3 id=\"deutsche-bank-fined-2-million\"\u003e\u003cstrong\u003eDeutsche Bank fined $2 million\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eFINRA was again headline news in 2022, delivering a $2 million \u003ca href=\"https://www.finra.org/media-center/newsreleases/2022/finra-fines-deutsche-bank-securities-inc-2-million-best-execution\"\u003efine to Deutsche Bank\u003c/a\u003e for best execution violations. Unless otherwise requested by clients, the default routing path for client orders was through the company\u0026rsquo;s ATS trading platform, known as SuperX. Whether transactions were executed through the platform or rerouted to alternative venues, the regulator found inherent delays and occasions where orders were not fully executed.\u003c/p\u003e\n\u003ch3 id=\"globalink-securities-issued-200000-fine-and-a-restitution-order\"\u003e\u003cstrong\u003eGlobaLink Securities issued $200,000 fine and a restitution order\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003e\u003cbr\u003eIn addition to the $200,000 fine, \u003ca href=\"https://www.grcreport.com/post/finra-fines-globalink-securities-200k-for-unfair-pricing-best-execution-failures\"\u003eGlobaLink Securities\u003c/a\u003e was ordered to pay nearly £400,000 in restitution payments to customers. The company was found to have charged markups and markdowns ranging from 2.3% to 9.34% on 137 corporate bond transactions. This was despite the fact that the company’s clearing firm carried out the client transactions with no additional costs to GlobaLink Securities.\u003c/p\u003e\n","date_published":"2024-12-12T11:18:00+0000"},{"title":"The SEC’s record-breaking enforcement results for the fiscal year 2024","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/the-sec-s-record-breaking-enforcement-results-for-the-fiscal-year-2024/","summary":"\u003cp\u003eThe Securities and Exchange Commission (SEC) has unveiled its enforcement \u003ca href=\"https://www.sec.gov/newsroom/press-releases/2024-186\"\u003e\u003cu\u003eresults\u003c/u\u003e\u003c/a\u003e for fiscal year 2024, and the numbers tell a clear story. With a record-breaking $8.2 billion in financial remedies secured, the agency continues to solidify its role as a key enforcer of market integrity and investor protection. These results reflect not only the SEC\u0026rsquo;s ability to take on complex, high-impact cases but also its evolving focus on areas of systemic risk and emerging market challenges.\u003c/p\u003e\n\u003cp\u003eThe financial penalties issued this year are especially striking when compared to the overall decline in the number of enforcement actions. This trend suggests a shift in strategy: a greater focus on higher stakes, higher impact cases.\u003c/p\u003e\n\u003cp\u003eThe SEC’s enforcement activities shape the regulatory landscape, set precedents, and influence how firms approach their compliance obligations. For compliance professionals and market participants, understanding these trends is crucial for staying compliant and prepared for regulatory shifts. This blog explores some of the key themes that defined the SEC’s actions and offers insights into what these developments mean for the future of financial regulation.\u003c/p\u003e\n\u003ch2 id=\"quantitative-overview-the-numbers-that-define-fy-2024\"\u003eQuantitative overview: The numbers that define FY 2024\u003c/h2\u003e\n\u003cblockquote\u003e\n\u003cp\u003e“In fiscal year 2024, the Division continued to vigorously enforce the federal securities laws by recommending to the Commission high-impact enforcement actions addressing non-compliance throughout the securities industry and resulting in robust financial remedies”\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003e\u003cem\u003eSanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement.\u003c/em\u003e\u003c/p\u003e\n\u003cimg src=\"/images/sec-enforcement-table-smaller.png\" alt=\"SEC enforcement 2024\" height=\"450\" width=\"800\" /\u003e\n\u003cp\u003eThis data underscores the SEC’s strategic pivot in fiscal year 2024, prioritising fewer but more impactful enforcement actions. While the total number of actions dropped significantly, the record-breaking $8.2 billion in financial remedies - an increase of 65.7% from 2023 - demonstrates a focus on high-stakes cases with substantial consequences.\u003c/p\u003e\n\u003cp\u003eThe sharp rise in disgorgement and prejudgment interest (81.1%) highlights the SEC’s determination to strip ill-gotten gains, while the increase in civil penalties (32.9%) reinforces its commitment to punitive measures. The slight uptick in tips, complaints, and referrals (+3.7%) reflects a steady and continued increase in public engagement against market abuse.\u003c/p\u003e\n\u003ch3 id=\"key-cases-illustrating-quality-over-quantity\"\u003eKey cases: Illustrating quality over quantity\u003c/h3\u003e\n\u003cp\u003eThe SEC\u0026rsquo;s focus on impactful cases is exemplified by several landmark settlements:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003ca href=\"https://www.sec.gov/files/terraform-labs-pte-ltd-do-hyeong-kwon-final-judgment.pdf\"\u003eTerraform Labs ($4.5 Billion)\u003c/a\u003e: One of the largest securities fraud judgments ever, involving deceptive practices in crypto assets, reinforcing the SEC’s oversight of digital asset securities.\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"https://www.sec.gov/enforcement-litigation/administrative-proceedings/33-11302-s\"\u003eFirstEnergy Corp. ($100 Million)\u003c/a\u003e: A bribery scheme involving payments to a legislator to secure favorable regulatory actions.\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"https://www.sec.gov/newsroom/press-releases/2024-4\"\u003eSAP ($98 Million)\u003c/a\u003e: Foreign Corrupt Practices Act violations across multiple jurisdictions.\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"https://www.sec.gov/newsroom/press-releases/2024-140\"\u003eMacquarie ($79.8 Million)\u003c/a\u003e: Improper cross trades and overvaluation of illiquid assets, violating fiduciary duties.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"thematic-trends-what-defined-fy-2024-enforcement\"\u003eThematic trends: What defined FY 2024 enforcement?\u003c/h3\u003e\n\u003ch4 id=\"emerging-risks\"\u003eEmerging risks\u003c/h4\u003e\n\u003cp\u003eThe SEC demonstrated agility in tackling risks tied to emerging technologies and financial products:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eArtificial intelligence\u003c/strong\u003e: The SEC pursued firms like QZ Asset Management for falsely marketing AI-driven strategies. In a separate\u003ca href=\"https://www.sec.gov/newsroom/speeches-statements/gensler-ai-021324\"\u003e\u003cu\u003espeech\u003c/u\u003e\u003c/a\u003e titled “AI, Finance, Movies, and the Law” Chair Gary Gensler warned against \u0026ldquo;AI-washing\u0026rdquo; – exaggerated claims about AI capabilities – emphasizing truthful, specific disclosures to maintain investor trust.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eCryptocurrency\u003c/strong\u003e: High-profile crypto frauds like HyperFund ($1.7 billion) and NovaTech ($650 million) were dismantled, alongside compliance failures such as Silvergate Capital’s inadequate AML oversight. The SEC praised their “advanced data analytics and technology”, including crypto asset tracing, which proved instrumental in uncovering fraud, even in cases involving sophisticated international hacking.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eCybersecurity\u003c/strong\u003e: Cases against entities like the NYSE for failing to report cyber breaches emphasized the SEC’s insistence on robust data protection and prompt disclosure.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch4 id=\"market-abuse-and-insider-trading\"\u003eMarket abuse and insider trading\u003c/h4\u003e\n\u003cp\u003eThe Division investigated potential abuse of material non-public information (MNPI), resulting in some groundbreaking enforcements addressing a range of violations;\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003ca href=\"https://www.sec.gov/newsroom/press-releases/2024-6\"\u003eMorgan Stanley\u003c/a\u003e: Morgan Stanley \u0026amp; Co. LLC (fined $249m) and the former head of its equity syndicate desk, Pawan Passi (fined $250,000), with a multi-year fraud involving the disclosure of confidential information about the sale of large quantities of stock known as “block trades.”\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch4 id=\"insider-trading-and-market-manipulation\"\u003e\u003cstrong\u003eInsider trading and market manipulation\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eThe SEC’s charges against Morgan Stanley and Pawan Passi involve both insider trading and market manipulation, primarily stemming from the misuse of MNPI about upcoming block trades. By leaking this information to select investors, Morgan Stanley enabled them to pre-position trades, such as short-selling, which distorted market dynamics and created an unfair advantage. While the case exhibits elements of both insider trading and manipulation, the core violation lies in the unauthorized disclosure of MNPI, breaching confidentiality agreements and securities laws.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003ca href=\"https://www.sec.gov/enforcement-litigation/litigation-releases/lr-25970\"\u003eSEC v. Panuwat\u003c/a\u003e: This precedent-setting insider trading case involved trading in a peer company based on confidential acquisition information, expanding the scope of insider trading enforcement.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch4 id=\"encouraging-proactive-compliance\"\u003eEncouraging proactive compliance\u003c/h4\u003e\n\u003cp\u003eIn FY 2024, the SEC repeatedly emphasized the value of proactive compliance, both verbally and through action, commending the public companies, investment adviser, and broker-dealers that stepped forward to self-report and remediate securities law violations.\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e“The bottom line is this: you’re likely to experience better outcomes with cooperation than without it.”\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003e\u003cem\u003eGurbir S. Grewal, Former Director, Division of Enforcement\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eThose entities that meaningfully cooperated with the Division’s investigations benefitted from significantly reduced penalties - or in some cases, no penalties at all - demonstrating the SEC’s commitment to fostering a culture of transparency and accountability. Even large firms were able to achieve favorable resolutions by taking early, corrective action, reinforcing the importance of proactive measures in mitigating regulatory risks.\u003c/p\u003e\n\u003cp\u003eThe SEC’s whistleblower program also saw record engagement, with $255 million awarded and over 45,000 tips received. A notable $18 million penalty against J.P. Morgan for whistleblower retaliation reinforced the agency’s resolve to protect those exposing misconduct.\u003c/p\u003e\n\u003ch3 id=\"charting-the-secs-next-chapter\"\u003eCharting the SEC’s next chapter\u003c/h3\u003e\n\u003cp\u003eThe SEC is poised for a period of transformation as it transitions to new leadership, likely bringing a temporary slowdown in enforcement activity. Leadership changes often necessitate recalibration, with priorities reshaped to reflect evolving directives.\u003c/p\u003e\n\u003cp\u003eUnder the previous leadership, the SEC pursued aggressive enforcement actions, particularly in the cryptocurrency space, which drew both praise for its vigilance and criticism for perceived overreach. As the agency looks ahead, there is potential for a more measured and nuanced approach to crypto enforcement, focusing on clearer guidance and targeted interventions.\u003c/p\u003e\n\u003cp\u003eSimultaneously, the SEC may seize this opportunity to refocus its efforts on more traditional areas of concern, such as financial reporting, insider trading, and market manipulation - long-standing pillars of its regulatory mandate.\u003c/p\u003e\n\u003cp\u003eThis period of transition offers the SEC a chance not only to refine its enforcement agenda but also to explore innovative approaches that balance robust regulation with fostering a climate of financial innovation.\u003c/p\u003e\n","date_published":"2024-09-12T08:58:54+0000"},{"title":"What eflow saw at XLoD London - The challenges, insights and questions still to be answered","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/what-eflow-saw-at-xlod-london/","summary":"\u003ch1 id=\"what-eflow-saw-at-xlod-london---the-challenges-insights-and-questions-still-to-be-answered\"\u003eWhat eflow saw at XLoD London - The challenges, insights and questions still to be answered\u003c/h1\u003e\n\u003cp\u003eLast week, the eflow team was delighted to be part of \u003ca href=\"https://www.1lod.com/xlod\" target=\"_blank\" rel=\"noopener\"\u003eXLoD Global conference in London\u003c/a\u003e, an event that brings together regulators, industry practitioners and regulatory technology vendors from around the world.\u003c/p\u003e\n\u003cp\u003eAfter meeting existing clients, speaking to some of the world’s largest financial institutions, and sharing our expertise across a series of roundtable discussions, we’ve pulled together our thoughts on some of the hot topics of discussion.\u003c/p\u003e\n\u003ciframe src=\"https://www.linkedin.com/embed/feed/update/urn:li:share:7262753805891420160\" height=\"795\" width=\"504\" frameborder=\"0\" allowfullscreen=\"\" title=\"Embedded post\"\u003e\u003c/iframe\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003ch3 id=\"the-volume-of-ecomms-false-positives-are-a-major-problem-for-firms\"\u003eThe volume of eComms false positives are a major problem for firms\u003c/h3\u003e\n\u003cp\u003eIt won’t be much of a surprise that \u003ca href=\"/tz-ecomms-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eeComms surveillance \u003c/a\u003ewas one of the most talked about regulatory challenges of the show. The huge surge in \u003ca href=\"/global-regulatory-update-q3-2024/\" target=\"_blank\" rel=\"noopener\"\u003eenforcement action seen in the US this year\u003c/a\u003e, coupled with the FCA’s very public announcement that this a key focus area for them has clearly garnered the attention of regulatory professionals on both sides of the Atlantic.\u003c/p\u003e\n\u003cp\u003eSo, while awareness of the challenge is certainly not a problem, it appears that finding an operational solution is. After speaking with a number of large firms during the event, there appears to be a common thread - how do you reduce the massive volume of false positives generated by multiple eComms channels? Several firms independently told us that the sheer number of alerts were swamping their compliance teams, putting a strain on resources, and ultimately making it more difficult to review and identify messages that genuinely require further investigation.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eHow eflow helps:\u003c/strong\u003e Our\u003c/em\u003e \u003ca href=\"/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cem\u003eTZTS Trade Surveillance\u003c/em\u003e\u003c/a\u003e \u003cem\u003eand\u003c/em\u003e \u003ca href=\"/tz-ecomms-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cem\u003eTZEC eComms Surveillance \u003c/em\u003e\u003c/a\u003e\u003cem\u003esystems feature highly configurable alert parameters that can be configured in line with your firm’s specific risk strategy. As part of your system, you will also have access to an independent sandbox environment where alert parameters can be tested, refined and then promoted to your live system, enabling you to identify the perfect set up for your team.\u003c/em\u003e\u003c/p\u003e\n\u003ch3 id=\"can-ai-help-identify-where-thresholds-should-be-based-upon-model-feedback-loops\"\u003eCan AI help identify where thresholds should be based upon model feedback loops?\u003c/h3\u003e\n\u003cp\u003eThis was a topic that eflow explored as part of the \u003ca href=\"/fca-market-abuse-tech-sprint/\" target=\"_blank\" rel=\"noopener\"\u003eFCA’s recent Market Abuse Surveillance Tech Sprint\u003c/a\u003e. The use of an alert feedback loop allows machine learning to understand what should be considered a high or low value alert. As a result, we can then understand the commonalities within these results and apply them to the design of alert logic.\u003c/p\u003e\n\u003cp\u003eFor example, this could be the time traded before the release of Material Non-Public Information (MNPI) for an insider dealing alert, or the time for cancellations of a non-bona fide order for spoofing. These patterns will highlight the type of activity that a firm will consider to be high risk, which can then be applied to both risk scoring and the fine tuning of specific thresholds.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eHow eflow helps:\u003c/strong\u003e Our work as part of the FCA Tech Sprint is already being developed and enhanced for use across eflow’s products in the near future. We expect to make further announcements on the integration of this functionality during 2025.\u003c/em\u003e\u003c/p\u003e\n\u003ch3 id=\"can-ai-generated-risk-score-alerts-help-analysts-get-to-their-risk-quicker\"\u003eCan AI-generated risk score alerts help analysts get to their risk quicker?\u003c/h3\u003e\n\u003cp\u003ePerhaps unsurprisingly, the use of AI within regulatory technology remains a hot topic. However, while the last couple of years has seen an unrelenting ‘buzz’ around AI and the seemingly endless possibilities it offers, it does feel like the conversation has become a little more ‘realistic’ at this year’s event.\u003c/p\u003e\n\u003cp\u003eA recurring theme was around the use of AI-generated risk scoring of alerts and whether they can help compliance teams to identify risks quicker. This dovetailed nicely with one of the themes from the FCA’s Tech Sprint which eflow was invited to contribute to. Our opinion is that AI can play a vital role in helping analysts to identify the high value alerts that require higher amounts of attention, rather than having to sift through dozens of alerts to get there. We also believe that machine learning will help to understand the parameters that sit behind these alerts and offer suggestions on how they could be dynamically adjusted over time.\u003c/p\u003e\n\u003cp\u003eWhile there is no doubt that AI can (and already is) enhancing operational efficiency in a number of ways, it is important to remember that nothing can fully replace the expertise of an experienced regulatory professional. One should also always remember that it’s the firm and individuals who will be on the receiving end of any enforcement action, rather than the technology.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eHow eflow helps:\u003c/strong\u003e Our products use the latest technological advancements to aid operational efficiency wherever possible. In terms of AI, this is most evidently deployed in our TZEC eComms Surveillance system, which uses machine learning to identify linguistic trends at both a company and industry-wide level that are indicators of suspicious behaviour.\u003c/em\u003e\u003c/p\u003e\n\u003ch3 id=\"a-holistic-approach-to-surveillance-is-high-on-firms-agendas\"\u003eA holistic approach to surveillance is high on firms’ agendas\u003c/h3\u003e\n\u003cp\u003eHolistic surveillance is not a new topic, but it remains a key challenge that many firms have yet to find a compelling solution to. Specifically, we found that firms were keen to explore how technology could be used to leverage multiple data points to cut down on the volume of false positive alerts and improve investigation synergies.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eHow eflow helps:\u003c/strong\u003e Our integrated trade surveillance solution combines a firm’s structured trading data with unstructured communications data to provide ‘one true view’ of your market abuse risks. In doing so, it provides highly contextualised information that allows firms to easily link digital communications to suspicious trading activity and uncover previously inaccessible insights. This data is then ‘learnt’ by the system so that the use of similar language or terminology in the future is flagged for further investigation before any potentially non-compliant activity has taken place.\u003c/em\u003e\u003c/p\u003e\n\u003ch3 id=\"risk-assessing-your-programs-for-digital-assets\"\u003eRisk assessing your programs for digital assets\u003c/h3\u003e\n\u003cp\u003eWith digital assets once again at the forefront of people’s minds, ensuring that firms are MiCA ready is vital. With Title VI of MiCA requiring trade surveillance to be in place by 30th December 2024 (and grandfathering not possible for Trade Surveillance) CeFI exchanges with central limit order books and those offering advice on, and trading with, client funds will need to be compliant soon.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eHow eflow helps:\u003c/strong\u003e By offering a trade surveillance platform capable of handling large volumes of data 24/7, together with MiCA and ESMA/MAR- ready alert typologies, we are well placed to understand and mitigate your digital asset risk profile. It’s important to understand that with different tokens and liquidity profiles come different trading risks; eflow can create contextual parameters that avoid compliance teams being swamped with false positives and make sure they get to their risk quicker.\u003c/em\u003e\u003c/p\u003e\n\u003ch3 id=\"calibrating-your-trade-surveillance-strategy-for-multiple-asset-risk-profiles\"\u003eCalibrating your trade surveillance strategy for multiple asset risk profiles\u003c/h3\u003e\n\u003cp\u003eIt would be naive to think that a ‘one size fits all’ approach to trade surveillance is likely to meet either the demands of regulators, or the operational needs of firms dealing in multiple asset classes. So the question facing many firms is how do you test and calibrate models for different asset risk profiles and subsequent thresholds?\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eHow eflow helps:\u003c/strong\u003e eflow’s TZTS Trade Surveillance system features conditional parameters as part of its core functionality, providing firms with the ability to set different conditions for alerts for various types of trading activity. The parameters can be set for factors like market volatility, liquidity, or client type. For example, this means it can distinguish between activity driven by natural market fluctuations and those which may be suspicious.\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eThanks to this level of customisation, TZTS increases the accuracy of alerts and significantly reduces the number of false positives reported. This enables firms to have more confidence that their compliance teams are focusing on genuine threats, while also working more efficiently.\u003c/em\u003e\u003c/p\u003e\n\u003ch3 id=\"in-conclusion\"\u003eIn conclusion…\u003c/h3\u003e\n\u003cp\u003eThere’s little doubt that financial institutions are facing regulatory challenges that are becoming more sophisticated and nuanced each year. Based on our conversations, it’s reassuring to see that many firms are taking a proactive approach to these challenges which is directly in line with demands from regulators.\u003c/p\u003e\n\u003cp\u003eWith this in mind, assessing and identifying the technological tools that will help a firm to strengthen their regulatory governance while streamlining increasingly complex processes is vital. For more information on how eflow can support your firm’s regulatory strategy, \u003ca href=\"/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003erequest a no-obligation consultation call with our team of experts today\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2024-25-11T08:00:00+0000"},{"title":"Streamlining compliance: Tackling Fund Managers’ regulatory pain points","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/tackling-fund-managers-regulatory-pain-points/","summary":"\u003cp\u003eThe financial sector is full of regulatory complexities, and Fund Managers are no exception. As regulations become more stringent and data requirements grow more intricate, many firms struggle to keep up with their regulatory obligations. From fragmented systems to poor inter-departmental communications, these challenges can hinder a firm’s efficiency and expose it to unnecessary risks.\u003c/p\u003e\n\u003cp\u003eBased on conversations with industry professionals, we’ve identified some of the biggest pain points that Fund Managers are likely to face in their compliance processes. In this blog, we explore how innovative solutions, \u003ca href=\"https://eflowglobal.com/#class-leading-regulatory-compliance-solutions-from-eflow\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003elike those offered by eflow\u003c/strong\u003e\u003c/a\u003e, are transforming how Fund Managers approach their regulatory responsibilities - not only to meet the necessary requirements, but to do so in an efficient and robust way.\u003c/p\u003e\n\u003ch3 id=\"access-to-contextual-insights\"\u003e\u003cstrong\u003eAccess to contextual insights\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eUnderstanding the broader context behind compliance data is critical. However, many Fund Managers’ reporting processes do not consider the context of external factors like market events and news when analysing and investigating potentially suspicious activity. This means that signs of manipulative behaviour could be missed, or focus is drawn to the wrong areas.\u003c/p\u003e\n\u003cp\u003eeflow’s solutions bridge this gap by integrating relevant external information into its reporting functionality, creating a highly contextualised view of trading activity. Firms are then able to connect the dots between market movements, internal actions and outcomes within one centralised system. This means that they gain actionable insights that facilitate better decision making and more strategic compliance management.\u003c/p\u003e\n\u003ch3 id=\"breaking-down-silos-to-improve-communication\"\u003e\u003cstrong\u003eBreaking down silos to improve communication\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eEffective regulatory compliance depends on seamless collaboration across departments. However, in many Fund Managers, compliance, risk and legal teams operate in silos, leading to operational inefficiencies and miscommunication.\u003c/p\u003e\n\u003cp\u003eBy providing a centralised platform from which to coordinate regulatory investigations, eflow’s case management functionality removes this hurdle. It fosters transparency and streamlines communication across teams, providing one source of the truth. This unified approach allows firms to improve collaboration, drive greater accountability, and ultimately maintain their regulatory compliance more efficiently.\u003c/p\u003e\n\u003ch3 id=\"one-true-view-of-data\"\u003e\u003cstrong\u003e‘One true view’ of data\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eRegulators often require Fund Managers to consolidate data from multiple sources, which is no small feat when this data is siloed across multiple systems. Without an automated way of collating this data, this can be a difficult and time consuming task that is also prone to errors.\u003c/p\u003e\n\u003cp\u003eeflow eliminates the inefficiencies of manual processes by automating workflows such as data reconciliation and report generation. This automation not only reduces costs and removes some of the operational strain from stretched compliance teams, but also minimises the risk of errors, ensuring that regulatory reporting is accurate, timely and comprehensive.\u003c/p\u003e\n\u003ch3 id=\"regulatory-technology-designed-for-fund-managers\"\u003e\u003cstrong\u003eRegulatory technology designed for Fund Managers\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eeflow’s solutions have been designed to address the unique regulatory needs of Fund Managers. Through automation, data enrichment, and advanced monitoring tools, eflow empowers firms to overcome their compliance challenges.\u003c/p\u003e\n\u003cp\u003eFor instance, eflow’s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZTS\u003c/strong\u003e \u003c/a\u003etrade surveillance platform provides a highly configurable solution to monitor trading activity, helping Fund Managers detect and mitigate market abuse risks. Its comprehensive data enrichment, streamlined process automation and tailored reporting capabilities provides firms with the ability to mitigate the risk of market abuse more efficiently than ever before.\u003c/p\u003e\n\u003cp\u003eSimilarly, \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZTR\u003c/strong\u003e \u003c/a\u003estreamlines transaction reporting, a process that often drains resources across firms. It reduces the administrative burden on internal teams, improves the quality of data submissions, and simplifies exception handling through one holistic system.\u003c/p\u003e\n\u003cp\u003eAs digital communication channels become more of a focus for regulators, eComms surveillance has become indispensable. \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZEC\u003c/strong\u003e \u003c/a\u003eenables Fund Managers to monitor messages across multiple channels from a centralised hub, allowing firms to uncover communications that often precede instances of market abuse.\u003c/p\u003e\n\u003cp\u003eImproving performance is likely to be central to the strategy of all Fund Managers. \u003ca href=\"https://eflowglobal.com/tz-best-execution-and-transaction-cost-analysis/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZBE\u003c/strong\u003e \u003c/a\u003eaddresses best execution requirements, helping Fund Managers not only meet their obligations, but uncover invaluable trading insights that can be used to drive improvements to trading and operational effectiveness.\u003c/p\u003e\n\u003cp\u003eFind out how eflow could help your firm by \u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003ebooking a consultation\u003c/strong\u003e\u003c/a\u003e with one of our experts who can talk through your regulatory challenges, and provide you with a demo.\u003c/p\u003e\n","date_published":"2024-20-11T08:10:00+0000"},{"title":"FCA Market Watch 81: Transaction reporting data quality improves, but work still to be done","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fca-market-watch-81/","summary":"\u003cp\u003eThe FCA recently published Market Watch 81, its regular update on key regulatory matters and how firms can improve the quality of their reporting. This latest edition focuses on the Regulator’s supervision of the UK MiFID transaction reporting regime and covers their assessment of findings from skilled person reviews issued under section 166 FSMA to address transaction reporting failings.\u003c/p\u003e\n\u003cp\u003eThis work will be of particular relevance to firms that are subject to UK MiFID transaction reporting requirements, but will also be relevant for firms that have trade reporting obligations under UK EMIR and SFTR.\u003c/p\u003e\n\u003ch3 id=\"background-information\"\u003eBackground information\u003c/h3\u003e\n\u003cp\u003eThe \u003ca href=\"https://eflowglobal.com/market-watch-74-an-in-depth-look/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eFCA’s Market Watch 74\u003c/strong\u003e \u003c/a\u003ehighlighted that the quality of data being provided by firms as part of their transaction reporting has improved since 2018. However, while this positive trend is recognised by the Regulator, it also identified that firms still have room for improvement.\u003c/p\u003e\n\u003cp\u003eIncomplete or inaccurate transaction reports continue to be submitted by firms, with the FCA expressing particular concern around persistent data quality issues that reoccur despite being flagged to the firms in question. In some cases, these data quality issues continue to happen even after a firm has confirmed that action has been taken to remediate the reports in question.\u003c/p\u003e\n\u003cp\u003eThe FCA has examined such instances and has identified common reporting weaknesses that firms need to be aware of and address to avoid the risk of non-compliant reporting:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003echange management\u003c/li\u003e\n\u003cli\u003ereporting process and logic design\u003c/li\u003e\n\u003cli\u003edata governance\u003c/li\u003e\n\u003cli\u003econtrol framework\u003c/li\u003e\n\u003cli\u003egovernance, oversight and resourcing\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThese links in the chain of transaction reporting can be considered independently, although the FCA has stated that the data quality issues they are seeing are often as a result of a weakness in one area that then spreads to others (see figure 1 below). The Regulator’s commentary on each of these sections is expanded on below.\u003c/p\u003e\n\u003cimg src=\"/images/market-watch-81-diagram.png\" alt=\"Flow displaying 1. Change Management, 2. Reporting process and logic design, 3.  Data governance, 4. Control framework, 5. Governance, oversight and resourcing\" height=\"251\" width=\"812\" /\u003e\n\u003ch3 id=\"change-management\"\u003e\u003cstrong\u003eChange management\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eChange management is often a challenge for any type of organisation, but this is particularly the case for financial institutions which are often subject to intricate and sophisticated regulatory processes. For example, even a relatively small change to internal operations can result in variations to testing protocols, data mapping and other key factors that can fundamentally impact the quality of reporting.\u003c/p\u003e\n\u003cp\u003eThe FCA highlighted several key observations:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003ePoor change management is often a key reason for data quality issues. For example, some firms did not undertake business analysis to map out MiFID II requirements and were left with significant reporting gaps.\u003c/li\u003e\n\u003cli\u003eInsufficient documentation related to the decision making behind changes can create knowledge gaps. This can increase the complexity for firms in cases where they are required to remediate data quality issues, including back reporting.\u003c/li\u003e\n\u003cli\u003eThe outsourcing of change processes to third parties can often cause data quality issues, particularly in instances where there is inadequate oversight over the scope of deliverables or a lack of transaction reporting expertise within the firm itself.\u003c/li\u003e\n\u003cli\u003eChanges in personnel or staff turnover can result in data quality issues due to a lack of clear procedural policies that can be followed in the absence of key individuals.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"reporting-progress-and-logic-design\"\u003e\u003cstrong\u003eReporting progress and logic design\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eFor a transaction reporting system to operate effectively, controls must be supported by clear reporting processes and logic design documents. These documents should explain the rationale that underpins reporting processes and detail how they have been designed to meet regulatory and operational requirements.\u003c/p\u003e\n\u003cp\u003eThe FCA highlighted several key observations:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSome firms have interpreted regulatory requirements and designed their reporting logic without considering the firm’s business context. This has resulted in misreporting, such as populating RTS 22 field 36 (venue) with a trading venue market identifier code when reporting as a DEA user.\u003c/li\u003e\n\u003cli\u003eA poorly implemented transaction reporting process may result in resources being allocated to the project in an ad-hoc way, with poorly defined deliverables. This can sometimes result in manual processes that delay the submission of reports, create a backlog in exception management, and generate further complexity for firms when transaction reports need to be cancelled and amended.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"data-governance\"\u003e\u003cstrong\u003eData governance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAccurate transaction reporting is clearly heavily reliant on multiple internal and external data sources. The FCA highlights that even the smallest disconnect in the data management process can result in misreporting, while effective data governance can streamline data flows and enrich transaction reports at the appropriate stage of the reporting process.\u003c/p\u003e\n\u003cp\u003eThe FCA highlighted several key observations:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eMany firms gather data from various sources as part of their transaction reporting process. The fragmented nature of this approach increases the likelihood of errors occurring and process inefficiencies.\u003c/li\u003e\n\u003cli\u003ePoorly documented data lineage can damage the integrity of the data that underpins transaction reports. If this data is inaccurate, it can often go undetected, creating regulatory ‘blind spots’ and misreported transactions.\u003c/li\u003e\n\u003cli\u003ePoor record keeping severely hampers a firm’s ability to audit its records and correct historic transactions retrospectively. As a reminder, under UK MiFIR investment firms must keep relevant data relating to orders and transactions that they have carried out for five years.\u003c/li\u003e\n\u003cli\u003eInadequate security or change management processes for personal data can result in unauthorised modifications being made. This obviously presents a risk to the accuracy of transaction reports and could go unnoticed for an extended period of time.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"control-framework\"\u003e\u003cstrong\u003eControl framework\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIt goes without saying that firms must take all possible measures to ensure that their transaction reports are complete and accurate. This often takes the form of a control framework that is informed by a firm’s end-to-end transaction reporting process. Understanding this process and its vulnerabilities can direct control placement. \u003cbr\u003e\u003cbr\u003eThe FCA highlighted several key observations:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003ePoorly designed reconciliation processes are likely to prevent firms being able to identify underlying data quality issues.\u003c/li\u003e\n\u003cli\u003eSome firms undertake reconciliations on specific fields only, or on an irregular basis. This approach may not be sufficiently robust to identify all errors and omissions in their transaction reports or meet the RTS 22 requirements.\u003c/li\u003e\n\u003cli\u003eSome firms have failed to review or update their controls as reporting processes have evolved, which means that they are unlikely to align with Article 21(5) of MiFID Org Regs.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"governance-oversight-and-resourcing\"\u003e\u003cstrong\u003eGovernance, oversight and resourcing\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eRobust governance is crucial to maintaining the integrity of a transaction reporting process. Therefore, effective management oversight is essential in identifying any process or data-related issues, taking appropriate action, and ensuring that suitable resources are deployed to implement changes as required.\u003c/p\u003e\n\u003cp\u003eThe FCA highlighted several key observations:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eExcluding transaction reporting from a firm’s wider risk management framework can result in limited consideration of transaction reporting as an operational, compliance and reputational risk.\u003c/li\u003e\n\u003cli\u003eAppropriate MI is key in enabling senior management to fully understand, and act on, regulatory and operational risks of a firm’s transaction reporting. Without this, decision making can be impeded and cause risk management interventions to be delayed.\u003c/li\u003e\n\u003cli\u003eOrganisational structures and reporting lines should be clear and appropriate to support the effective oversight of transaction reporting risks and reporting issues.\u003c/li\u003e\n\u003cli\u003eUnclear terms of reference across various governance bodies can lead to a lack of awareness of specific procedures and prevent individuals from discharging their duties appropriately.\u003c/li\u003e\n\u003cli\u003eFirms should continuously review and improve their transaction reporting processes based on comprehensive oversight conducted by suitably experienced and qualified professionals. Firms should also have a formal Compliance Risk Assessment (CRA) process in place.\u003c/li\u003e\n\u003cli\u003eResponsibility for the management of the transaction reporting process should be clearly defined, with individuals being held accountable for process assessment, policies and procedures.\u003c/li\u003e\n\u003cli\u003eTransaction reporting functions should be suitably resourced to ensure operational effectiveness. Many firms do not have sufficient tooling or staff deployed to this process which can delay report submissions, exception management, implementation of regulatory changes, and remedial action being taken.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"how-eflows-transaction-reporting-technology-helps-firms-to-overcome-these-challenges\"\u003eHow eflow’s transaction reporting technology helps firms to overcome these challenges\u003c/h3\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eeflow’s TZTR platform\u003c/strong\u003e\u003c/a\u003e has been engineered to offer firms a robust, holistic and dynamic solution to the transaction reporting challenges identified in \u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-81\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eMarket Watch 81\u003c/strong\u003e\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eChange management\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eEvery client that is onboarded to TZTR benefits from a tailored system implementation that is managed by our in-house team of experts. This means that your system is configured to your exact specification and fully documented so that you have a comprehensive record of how your system operates.\u003c/p\u003e\n\u003cp\u003eOnce operational, TZTR is regularly upgraded as new functionality is released or regulatory requirements go live, offering you complete peace of mind that your system represents one true view of your transaction reporting.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eReporting process and logic design\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe TZTR platform is configured to align with your firm\u0026rsquo;s regulatory and operational requirements. These are fully documented as part of your system implementation so that you have a clear understanding of how the system operates and reports are generated, offering a ‘regulator ready’ view of your transaction reporting processes from start to finish.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eData governance\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eTZTR automatically ingests your trade data and cross-references all records against the FIRDS Register to ensure eligibility. It also includes automated data enrichment for all alerts and asset types from the eflow Market Data Store, which curates data from more than 250 sources, enriching transaction reports throughout the process. Highly configurable access controls allow you to manage data permissions on a user-by-user basis, while comprehensive internal audit trails enable you to track all activity across your team.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eControl framework\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eTZTR mitigates against the risk of incomplete and inaccurate reporting by flagging errors or missing information for further investigation. Embedded error handling and field-by-field editing within the platform automatically create a detailed audit trail of any changes, providing clear, verifiable evidence of compliance.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eGovernance, oversight and resourcing\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eTZTR enhances governance processes through clearly defined user roles that enable errors and amendments to be escalated, approved and recorded directly within the platform. Process and workflow automation also significantly reduces the operational burden on compliance teams, allowing them to focus on more complex tasks rather than time consuming data administration. Finally, TZTR generates highly detailed reports that provide clear, highly visual management insights that also satisfy the most granular of requests from regulators.\u003c/p\u003e\n\u003cp\u003eIf you’d like to find out more about how TZTR could work for your firm’s transaction reporting, get in touch to \u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003ebook a consultation\u003c/strong\u003e\u003c/a\u003e with one of our experts.\u003c/p\u003e\n","date_published":"2024-18-11T10:59:00+0000"},{"title":"Navigating compliance challenges: How Hedge Funds are leveraging technology to stay ahead","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/how-hedge-funds-leverage-technology-to-stay-ahead/","summary":"\u003cp\u003eIn recent years, Hedge Funds have come under closer scrutiny from regulators as increasingly stringent regulatory requirements have been introduced. This means that demonstrating compliance can no longer be considered a ‘tick box exercise’, but a multifaceted challenge that requires vast amounts of data to be handled across departments.\u003c/p\u003e\n\u003cp\u003eTo address this, Hedge Funds need to take a proactive approach to their regulatory reporting with many turning to technology to provide them with the tools needed to automate and streamline their compliance processes.\u003c/p\u003e\n\u003ch3 id=\"tackling-data-complexity-in-regulatory-reporting\"\u003e\u003cstrong\u003eTackling data complexity in regulatory reporting\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eOne complexity that Hedge Funds face in their regulatory reporting is the sheer volume of data that must be tracked, verified and collated for submission. Due to the nature of a Hedge Fund’s internal set up, this data often exists in multiple silos across departments, making it more difficult to extract, unify and analyse efficiently.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/#class-leading-regulatory-compliance-solutions-from-eflow\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eeflow’s technology\u003c/strong\u003e\u003c/a\u003e addresses this through a holistic, integrated approach. It delivers a comprehensive view of a Hedge Fund’s regulatory data, collating all of the relevant information in one place for quicker and more straightforward reporting.\u003c/p\u003e\n\u003ch3 id=\"how-technology-is-helping-hedge-funds-manage-their-regulatory-compliance\"\u003eHow technology is helping Hedge Funds manage their regulatory compliance\u003c/h3\u003e\n\u003cp\u003e\u003cstrong\u003eCreating ‘one true view’ of the firm’s data\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eConsolidating data to achieve a single, accurate view is essential for effective compliance. It keeps key stakeholders, from compliance officers to executives, informed and aligned, reducing the risk of errors and miscommunication.\u003c/p\u003e\n\u003cp\u003eeflow’s highly detailed reporting functionality generates insights and management information that can be easily shared firm-wide, in an easy to understand format, providing one source of truth.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eAccess contextual insights through detailed reporting\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eBy incorporating supplementary information, such as news and market events into their trade surveillance reports, Hedge Funds gain deeper insight into their compliance. Integrated communications surveillance goes one step further and provides a comprehensive overview of the communications taking place across the firm, monitoring them for suspicious activity. This helps them understand not only the “what” but also the “why” behind alerts generated by their system.\u003c/p\u003e\n\u003cp\u003eeflow’s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZTS trade surveillance\u003c/strong\u003e\u003c/a\u003e and \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZEC eComms surveillance\u003c/strong\u003e\u003c/a\u003e solutions use supplementary information including news and market events, and communications surveillance to provide highly contextualised regulatory reporting from one system. This helps firms to transform their data into tangible insights that can strengthen their regulatory and operational performance.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eComprehensive monitoring of all types of market manipulation\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/global-regulatory-update-q3-2024/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eRegulators are increasing their focus on proactive trade surveillance\u003c/strong\u003e\u003c/a\u003e, meaning Hedge Funds need to keep a close eye on their trading activities to avoid potential instances of market abuse and manipulation.\u003c/p\u003e\n\u003cp\u003eeflow’s solutions monitor all trading activity for signs of manipulative behaviours, including front running, insider trading, personal account dealing and many more. By identifying and flagging suspicious activity in real time, Hedge Funds can take action promptly and protect their firm.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eBreak down silos and improve communication\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eEffective communication within Hedge Funds, particularly between compliance, risk and legal teams, is crucial. Having one system that facilitates the seamless sharing of information between departments not only facilitates the effective investigation of suspicious activity but does so in a quicker and more efficient way.\u003c/p\u003e\n\u003cp\u003eeflow’s integrated case management functionality helps firms to do just this, reducing the time that teams need to spend on investigations and allowing them to resolve issues transparently.\u003c/p\u003e\n\u003ch3 id=\"eflows-purpose-built-tools-for-hedge-fund-compliance\"\u003e\u003cstrong\u003eeflow’s purpose-built tools for Hedge Fund compliance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003e\u003cstrong\u003eStreamlined trade surveillance with TZTS\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eeflow’s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZTS\u003c/strong\u003e \u003c/a\u003esystem enables Hedge Funds to manage their trade surveillance strategy through one centralised digital hub. With highly configurable monitoring parameters, consolidated data management and streamlined workflows, TZTS provides a holistic solution to mitigate the risk of market abuse. Hedge Funds can maintain oversight of their trading operations, ensuring they’re aligned internally and externally with regulatory expectations.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eComprehensive communications surveillance with TZEC\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZEC\u003c/strong\u003e \u003c/a\u003eallows Hedge Funds to generate a comprehensive view of various communication channels, identify potentially suspicious behaviour, and make informed, data led decisions. By integrating it with TZTS, Hedge Funds can match communications with alerts of suspicious trade activity, providing a holistic overview for compliance teams.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eEnsuring best execution with TZBE\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/tz-best-execution-and-transaction-cost-analysis/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZBE\u003c/strong\u003e \u003c/a\u003eis a best execution and transaction cost analysis (TCA) tool that offers a configurable digital solution to comply with regulations more efficiently and accurately. It gives a Hedge Fund the ability to demonstrate that it’s acting in the best interests of its clients and creates highly granular TCA reporting. Not only that, TZBE can also generate commercial insights by highlighting how your trading strategy can be executed more effectively.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSimplifying transaction reporting with TZTR\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZTR\u003c/strong\u003e \u003c/a\u003eenables Hedge Funds to simplify and automate their transaction reporting processes. Reduce the administrative burden on your team, improve the quality of your data submission, and simplify exception handling through one holistic system.\u003c/p\u003e\n\u003ch3 id=\"staying-ahead-of-compliance-challenges\"\u003eStaying ahead of compliance challenges\u003c/h3\u003e\n\u003cp\u003eAs regulators continue to evolve, Hedge Funds need flexible, powerful tools to meet their requirements. eflow’s suite of solutions provides a tailored approach to compliance, empowering Hedge Funds to monitor their activity, streamline reporting and improve collaboration across departments. By leveraging these tools, Hedge Funds can stay ahead of regulatory scrutiny and ensure they not only meet compliance standards, but do so with greater efficiency and speed.\u003c/p\u003e\n\u003cp\u003eIn an industry where maintaining trust and credibility is key, eflow’s solutions offer Hedge Funds a critical advantage. Find out how eflow’s solutions could help your firm by booking a no-obligation consultation with our team of experts. They can walk you through a personalised demo of our solution and offer advice on how best to overcome any trade surveillance challenges that your firm is facing.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eBook a consultation\u003c/strong\u003e\u003c/a\u003e\u003c/p\u003e\n","date_published":"2024-13-11T08:10:00+0000"},{"title":"Why an order book replay is an essential component of a holistic trade surveillance strategy","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/why-order-book-reply-is-essential/","summary":"\u003cp\u003eFinancial firms are under greater regulatory scrutiny than ever before, with regulators placing a particular focus on their ability to provide transparent and accountable records of their trading activities. As manipulative trading activity grows in sophistication, many firms now face the need to investigate potentially suspicious behaviour that is no longer at the top of the order book.\u003c/p\u003e\n\u003cp\u003eTo identify these risks and remain compliant, firms need a way to get a clear retrospective view of their trades, which is where an order book replay comes in.\u003c/p\u003e\n\u003ch3 id=\"what-is-an-order-book-replay\"\u003eWhat is an order book replay?\u003c/h3\u003e\n\u003cp\u003eAn order book replay is a visualisation of the order book that overlays client orders with market depth at each individual level (up to 10 levels deep) on the bid and the ask, providing a holistic view of their activity. It highlights how the market was both impacted and reacted to the placement/cancellation/execution of orders and is an aid for firms to investigate potentially manipulative trading activity that is, generally, not at the top of their order book.\u003c/p\u003e\n\u003cp\u003eThe advantage of an order book replay is that it allows contextual information to be displayed in an easily digestible format that enables analysts to analyse, assess and then get to their risk quicker.\u003c/p\u003e\n\u003ch3 id=\"the-benefits-of-an-order-book-replay\"\u003eThe benefits of an order book replay\u003c/h3\u003e\n\u003cp\u003eHistorically, firms have struggled with retrospective analysis of trading activity. One of the main reasons being that many have a limited retrospective view of their trading and order activity. For many, the data can be stored on disparate systems and consist of text-heavy data sets. So, when a regulator requires them to look further back in their order book, it’s often difficult and time consuming to collate the necessary information and analyse trades.\u003c/p\u003e\n\u003cp\u003eIt’s also important to note that collating the data is just the first step. Analysing, interpreting and presenting the required data often requires specialist business intelligence tooling or expertise in data science - not something firms usually have in-house. This makes it a time consuming process that drains resources and slows down the firm’s ability to investigate risk.\u003c/p\u003e\n\u003cp\u003eeflow\u0026rsquo;s Order Book Explorer takes this functionality a step further by providing a suite of tools that make the investigation of past trades faster, more intuitive, and more insightful.\u003c/p\u003e\n\u003ch3 id=\"eflows-order-book-explorer-beyond-simple-order-book-replay\"\u003eeflow’s Order Book Explorer: Beyond simple order book replay\u003c/h3\u003e\n\u003cp\u003eAs explored above, an order book replay is a powerful tool that enables firms to investigate past trades with more precision and in greater detail. eflow’s Order Book Explorer expands on this, enabling analysts to identify risks quicker by allowing them to, at a glance, view how orders impact depth of liquidity and best-bid-offers/spreads across traded assets. This is particularly relevant to regulations and market abuse scenarios that examine how orders (not just executions) affect price movements and executions.\u003c/p\u003e\n\u003cp\u003eThe functionality facilitates the addition of visual evidence to case notes (via screen grabs or other data export options) and submissions to regulators. The creation of graphs over a timeline is more intuitive and provides more detailed contextual information on the impacts of orders, amendments, cancellations and executions than trade blotters or lists of events can do in isolation.\u003c/p\u003e\n\u003cp\u003eAs part of eflow’s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eTZTS trade surveillance\u003c/a\u003e system, it offers a range of advanced features:\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eHighly visual order book snapshot\u003c/strong\u003e - configure visual, graphical, trading activity reports that can be configured in line with analysts’ specifications for clearer analysis, interpretation and reporting. Visualise the impact on the input, execution or cancellation of orders on the order book lifecycle, whether examining Market Manipulation or Best Execution.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003ePrice/volume timeframe replay\u003c/strong\u003e - replay historical trading activity with live timeframe updates for orders, amendments, cancellations and executions (fill or partial fill). This allows firms to explore the order book in a more user-friendly, intuitive manner.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003ePlayback controls\u003c/strong\u003e - Explore the price/volume replay through play, pause, forward and rewind functionality, enabling quick access to the precise moment of interest.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eDownload for further analysis\u003c/strong\u003e - extract key data, visualisations and reports, including all events that constitute the order book over a user-defined time period, for further analysis. This flexibility allows firms to incorporate order book insights into their broader risk management strategies.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eConstruct easily digestible reports\u003c/strong\u003e - contextualised trading data reports can be generated without the need for specialist tools or expertise. Allowing users to present findings in a clear and easily digestible format, reducing the need for specialist tools or expertise.\u003c/p\u003e\n\u003ch3 id=\"in-conclusion\"\u003eIn conclusion\u003c/h3\u003e\n\u003cp\u003eOrder book replay is becoming an indispensable tool for firms looking to maintain transparency, mitigate risks and meet regulatory requirements. With advanced features such as those available in eflow’s Order Book Explorer, analysts are able to reach evidence-based conclusions more quickly, without the need for specialist training or expertise in data manipulation or visualisation.\u003c/p\u003e\n\u003cp\u003eEnabling faster, more visual and comprehensive analysis of past trading activity, Order Book Explorer empowers firms to take control of their trading data, making sure they maintain the integrity of their trading operations, and stay ahead of regulatory requirements.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eBook a no obligation consultation\u003c/strong\u003e \u003c/a\u003ecall with our team of experts who can walk you through a personalised demo of Order Book Explorer, \u003ca href=\"https://eflowglobal.com/#class-leading-regulatory-compliance-solutions-from-eflow\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eand our other solutions\u003c/strong\u003e\u003c/a\u003e, and offer advice on how best to overcome any  regulatory challenges that your firm is facing.\u003c/p\u003e\n","date_published":"2024-12-11T09:10:00+0000"},{"title":"Reducing false positives in trade surveillance","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/reducing-false-positives-in-trade-surveillance/","summary":"\u003cp\u003eA common challenge firms face as part of their trade surveillance strategy is managing a high volume of false positives generated by their system. When incorrectly configured, these alerts can not only overwhelm compliance teams, but also increase the risk that truly manipulative behaviours go unnoticed.\u003c/p\u003e\n\u003cp\u003eManaging false positives effectively is therefore a crucial element to any trade surveillance system. \u003ca href=\"\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eeflow’s TZTS Trade Surveillance system\u003c/strong\u003e\u003c/a\u003e is built with this in mind, ensuring that genuine threats can be identified quickly and efficiently, while avoiding staff wasting time and resources on irrelevant alerts.\u003c/p\u003e\n\u003ch3 id=\"what-causes-false-positives-in-trade-surveillance\"\u003eWhat causes false positives in trade surveillance?\u003c/h3\u003e\n\u003cp\u003eA false positive refers to an alert or flag generated by a monitoring system that inaccurately identifies potentially suspicious or non-compliant trading activity when, in reality, the trade was legitimate and followed the rules. This happens when the surveillance algorithm or criteria mistakenly interprets certain trading patterns as potentially problematic, even when there\u0026rsquo;s no actual misconduct.\u003c/p\u003e\n\u003cp\u003eWhen a system generates too many false alerts, it can result in inefficiencies as compliance teams have to review and investigate large volumes of alerts. This can drain the resources of teams, limit their effectiveness in identifying genuinely suspicious activity, and reduce trust in the validity of the system.\u003c/p\u003e\n\u003cp\u003eWhen these factors are combined, it can significantly increase the risk of firms failing to identify the telltale signs of market abuse. This can then lead to regulatory enforcement action, severe financial penalties, and reputational risk.\u003c/p\u003e\n\u003ch3 id=\"reducing-false-positives-through-tailored-trade-surveillance\"\u003eReducing false positives through tailored trade surveillance\u003c/h3\u003e\n\u003cp\u003eTo manage the volume of false positives more effectively, firms need a trade surveillance system in place that is tailored to their specific trading activity. A one size fits all approach won’t work as each firm will be involved with different strategies, markets, instruments and client types, each of which come with their own unique criteria.\u003c/p\u003e\n\u003cp\u003eeflow’s TZTS Trade Surveillance system features conditional parameters as part of its core functionality, providing firms with the ability to set different conditions for alerts for various types of trading activity. The parameters can be set for factors like market volatility, liquidity, or client type. For example, this means it can distinguish between activity driven by natural market fluctuations and those which may be suspicious.\u003c/p\u003e\n\u003cp\u003eThese parameters can also be tested in a dedicated sandbox environment where real or dummy trade data can be tested to assess whether alerts generated are accurate. This allows firms to fine-tune their parameter settings in a completely isolated system before they are migrated to their live platform, ensuring that alerts align with the specific criteria needed for detection.\u003c/p\u003e\n\u003cp\u003eThanks to this level of customisation, TZTS increases the accuracy of alerts and significantly reduces the number of false positives reported. This enables firms to have more confidence that their compliance teams are focusing on genuine threats, while also working more efficiently.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003cdiv class=\"cms-embed\"\u003e\u003cdiv style=\"text-align: center;\"\u003e\u003ciframe width=\"560\" height=\"315\" src=\"https://www.youtube.com/embed/gbSUuIzmNNQ?si=5DzeNJltr6QG0Ncs?rel=0\" title=\"YouTube video player\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen=\"\"\u003e\u003c/iframe\u003e\u003c/div\u003e\u003c/div\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003ch3 id=\"dealing-with-market-volatility---a-real-world-example\"\u003eDealing with market volatility - a real world example\u003c/h3\u003e\n\u003cp\u003eOne key area where firms can benefit most from TZTS’s conditional parameters is in cases of market volatility. Market events, such as sharp drops in indexes, can trigger large volumes of false positives if a trade surveillance system doesn’t account for these conditions.\u003c/p\u003e\n\u003cp\u003eFor example, \u003ca href=\"https://www.reuters.com/markets/asia/japans-nikkei-sees-biggest-rout-since-1987-black-monday-2024-08-05/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003ein August 2024, Japan’s Nikkei 225 dropped 12% in a single day\u003c/strong\u003e\u003c/a\u003e, representing its largest ever points fall over a 24 hour period. eflow’s TZTS system flagged this volatility, but offset the alert, recognising that this movement was a market driven event, rather than suspicious trading behaviour. Without incorporating this wider market context into its alert parameters, other trade surveillance systems might incorrectly flag such an event as requiring regulatory investigation, causing an influx of false positives into the system and overwhelming compliance teams.\u003c/p\u003e\n\u003ch3 id=\"in-conclusion\"\u003eIn conclusion\u003c/h3\u003e\n\u003cp\u003eManaging false positives effectively should be a top priority for firms looking to optimise their trade surveillance. Adopting a tool like eflow’s TZTS Trade Surveillance allows firms to test, refine and configure precise parameters that account for their specific trading activity and client types.\u003c/p\u003e\n\u003cp\u003eThis not only improves accuracy, but minimises the ‘noise’ caused by false positives. This means that compliance teams are able to focus on genuine risks more efficiently and ensure that manipulative behaviours are identified faster.\u003c/p\u003e\n\u003cp\u003eTo find out more about eflow’s conditional parameters and the TZTS system,\u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003e \u003cstrong\u003erequest a consultation with one of our experts\u003c/strong\u003e\u003c/a\u003e.\u003c/p\u003e\n\u003cbr\u003e","date_published":"2024-24-10T10:59:00+0000"},{"title":"RegTech Market Trends and Future Challenges: A conversation with eflow’s Head of Surveillance","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/regtech-market-trends-and-future-challenges-a-conversation-with-eflow-s-head-of-surveillance/","summary":"\u003cp\u003eAs the tools and technologies available to bad actors continue to grow ever more sophisticated, RegTech providers are being forced not just to keep up, but to get ahead of the curve. To uphold market integrity, firms must have access to RegTech solutions capable of detecting potential market abuse, whatever form it comes in.\u003c/p\u003e\n\u003cp\u003eWith the rapid development taking place in this field of technological evolution in the RegTech space, it’s imperative that firms remain educated on the latest technologies and how they can best be utilised in a surveillance context. To that end, we asked Head of Surveillance at eFlow Global Jonathan Dixon to offer his insights into the RegTech industry’s future, the challenges it faces, and the technological trends that are likely to shape its development. With over a decade of experience across multiple sectors—including client, vendor, exchange, and consultancy roles—Jonathan is well-placed to provide expert analysis on where RegTech is headed.\u003c/p\u003e\n\u003ch2 id=\"key-market-trends-shaping-the-future-of-regtech\"\u003e\u003cstrong\u003eKey Market Trends Shaping the Future of RegTech\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eLooking ahead, two major trends will define the future of RegTech: increasing data processing power and the adoption of artificial intelligence (AI) for market surveillance. Jonathan highlights the growing ability of RegTech platforms to handle larger and more complex data sets, which will lead to enhanced detection of market abuse across multiple asset classes.\u003c/p\u003e\n\u003cp\u003e“As systems, processes and technology improve, we\u0026rsquo;re going to see the ability to process larger amounts of data,” Jonathan explains. “This will lead to capabilities that perhaps we couldn’t achieve before, like monitoring cross-product and cross-market events and seeing causal correlations between instruments in different markets.”\u003c/p\u003e\n\u003cp\u003eWhile the volume of trades might not increase exponentially, the complexity of the data that needs to be analysed will. This will require more advanced computing capabilities to identify patterns that indicate market abuse, such as layering, spoofing, or insider trading, particularly as they become more subtle.\u003c/p\u003e\n\u003cp\u003eAnother crucial trend is the increasing role of AI in trading and market surveillance. Jonathan points out the potential risks that come with AI adoption: “Now, do I think AI is going to take over the world? No. Do I think it will have an impact? Probably, yes.” He refers to a study conducted by the Cornell Institute, where an AI trading algorithm in a closed environment, when given insider information, traded on it and then lied to its supervisor about engaging in insider trading.\u003c/p\u003e\n\u003cp\u003eThis example illustrates the risks posed by AI, which may not always adhere to the ethical boundaries set for it. Jonathan adds: “There is also the capability of AI systems to talk to one another. Could three AI systems work together to manipulate the market in one direction so that one of them gains from it? That’s a risk we need to consider.”\u003c/p\u003e\n\u003cp\u003eJonathan believes that RegTech will need to stay ahead of these risks by ensuring surveillance systems can monitor the collaborative potential of AI processes and their ability to manipulate markets.\u003c/p\u003e\n\u003ch2 id=\"the-evolution-of-regtech-in-digital-and-decentralised-markets\"\u003e\u003cstrong\u003eThe Evolution of RegTech in Digital and Decentralised Markets\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs financial markets become increasingly digital and decentralised, RegTech will need to adapt to the unique characteristics of new asset classes such as cryptocurrencies. The nature of these markets, which operate continuously, presents new challenges for surveillance systems that are not built to handle 24/7 trading environments.\u003c/p\u003e\n\u003cp\u003eJonathan shared his own experience in this space: “I worked for a big crypto exchange, and not every surveillance platform is capable of working 24/7. Crypto works around the clock, but if your platform has to reset for even 30 seconds at midnight, those trades during that window might not be counted.”\u003c/p\u003e\n\u003cp\u003eThis highlights a key challenge for RegTech in the digital asset space. Traditional surveillance platforms were built for traditional markets with set trading hours. Digital assets, however, operate globally, 24 hours a day, making it essential for surveillance systems to be capable of real-time, continuous monitoring.\u003c/p\u003e\n\u003cp\u003eIn Europe, the introduction of regulations such as the Markets in Crypto-Assets Regulation (MiCA) demonstrates the growing regulatory focus on digital assets. As Jonathan pointed out, “With MiCA, we have Title VI, which means that the rules pertaining to market manipulation, insider dealing, and market abuse will be live at the end of this year. There’s no grace period for it, so RegTech platforms must be ready.”\u003c/p\u003e\n\u003cp\u003eThe ability to navigate these new regulatory frameworks and provide continuous surveillance will be a key factor in RegTech’s success as digital markets expand.\u003c/p\u003e\n\u003ch2 id=\"challenges-in-maintaining-market-integrity-amid-emerging-technologies\"\u003e\u003cstrong\u003eChallenges in Maintaining Market Integrity Amid Emerging Technologies\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eOne of the biggest challenges facing the RegTech industry is staying ahead of increasingly sophisticated bad actors. As financial markets and trading technologies become more complex, the methods used by individuals and institutions to manipulate markets are also evolving. RegTech firms must ensure their surveillance platforms can anticipate and identify these new risks.\u003c/p\u003e\n\u003cp\u003e“Staying ahead of bad actors is invariably the toughest thing to do. You never want to be playing catch-up,” Jonathan said. “It’s about understanding the markets and what those risks might be.”\u003c/p\u003e\n\u003cp\u003eOne example he gave was cross-product manipulation, where traders manipulate one asset class to benefit positions in another. “To give a really vanilla example, you might have a position in corn futures where you\u0026rsquo;re long. So at the end of the month, you buy a lot of corn on the spot commodities side, which improves your position on your long futures,” Jonathan explained. “Now apply that to more complex scenarios like oil futures and positions in Aramco. How do you monitor that?”\u003c/p\u003e\n\u003cp\u003eThe answer lies in building more advanced surveillance platforms that can analyse multiple asset classes and identify these nuanced forms of market manipulation. As Jonathan points out, “Traditional surveillance, whether it\u0026rsquo;s on TradFi or digital assets, is more vanilla. We know what we\u0026rsquo;re looking for on a product-by-product basis. But when it comes to cross-product manipulation and larger data sets, that’s where it gets more complex.”\u003c/p\u003e\n\u003cp\u003eEmerging technologies, particularly AI, add another layer of complexity. Jonathan believes the industry must be prepared for scenarios in which AI systems may engage in unexpected market manipulation: “If an algo did it, you could look back and say it happened because of X, Y, and Z. Unfortunately, with AI, the system might not have quite so explicit an instruction, making it harder to understand why it acted that way.”\u003c/p\u003e\n\u003ch2 id=\"the-impact-of-emerging-markets-on-regtech-growth\"\u003e\u003cstrong\u003eThe Impact of Emerging Markets on RegTech Growth\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eEmerging markets will play a significant role in shaping the future growth of RegTech. As these markets develop and seek to attract foreign investment, they will need to adopt more robust regulatory frameworks to ensure investor confidence. This presents an opportunity for RegTech firms to provide the solutions needed to enhance compliance and surveillance capabilities in these regions.\u003c/p\u003e\n\u003cp\u003eJonathan sees emerging markets falling into line with global standards to secure investment flows. “They’re going to have to fall into line, otherwise they won’t get the investment flow that they need,” he remarked. Standardisation and regulatory harmonisation will be critical to their success.\u003c/p\u003e\n\u003cp\u003eThis alignment with global regulatory standards will drive demand for RegTech solutions that can support compliance across jurisdictions. As Jonathan points out, emerging markets will not only need to implement surveillance systems but also develop the capacity to handle the unique challenges that come with digital assets and complex financial products.\u003c/p\u003e\n\u003ch2 id=\"geopolitical-influences-on-regulatory-frameworks-and-regtech\"\u003e\u003cstrong\u003eGeopolitical Influences on Regulatory Frameworks and RegTech\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eGeopolitical changes can have a profound impact on global regulatory frameworks, but Jonathan does not foresee these shifts fundamentally altering the RegTech industry. While sanctions and other geopolitical events create disruptions, the industry is well-prepared to manage these challenges.\u003c/p\u003e\n\u003cp\u003e“I don’t think the changing geopolitical landscape will materially affect the RegTech industry. If sanctions are imposed, we have the technology to deal with that,” Jonathan explained. “If Russia were prevented from engaging with global money markets, we’d have the capability to enforce that, even though it might be tough for the money markets.”\u003c/p\u003e\n\u003cp\u003eSanctions and regulatory restrictions are not new challenges for the financial industry, and Jonathan believes that the RegTech sector has the tools to manage them. “We’ve dealt with sanctions and trading events for decades, centuries even. It’s not a new problem, and we’re prepared for it,” he said.\u003c/p\u003e\n\u003cp\u003eThat said, RegTech firms will need to remain vigilant in monitoring attempts to circumvent sanctions and other regulatory restrictions. This will require continuous advancements in Anti-Money Laundering (AML), Know Your Customer (KYC), and Enhanced Due Diligence (EDD) solutions.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe future of RegTech will be shaped by significant advances in data processing, AI, and the digitalisation of financial markets. While these trends present exciting opportunities for improving market surveillance, they also introduce new risks that must be carefully managed. Jonathan Dixon’s insights highlight the importance of vigilance, adaptability, and innovation in navigating the rapidly evolving landscape of financial markets and regulatory frameworks.\u003c/p\u003e\n\u003cp\u003eStaying ahead of bad actors, anticipating new forms of market manipulation, and adapting to the unique challenges posed by digital and decentralised markets will be critical to the success of RegTech firms in the years to come. As the industry continues to grow and evolve, it will play an increasingly important role in maintaining the integrity of global financial markets.\u003c/p\u003e\n","date_published":"2024-16-10T13:03:00+0000"},{"title":"Global regulatory enforcement action update - Q3 2024","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/global-regulatory-update-q3-2024/","summary":"\u003ch1 id=\"q3-2024-enforcement-update-the-cost-of-unmonitored-communications\"\u003eQ3 2024 enforcement update: The cost of unmonitored communications\u003c/h1\u003e\n\u003cp\u003eIn the third quarter of 2024, enforcement actions related to market conduct reached a combined value of almost $800 million across four jurisdictions, with regulators coming down hard on widespread deficiencies in off-channel communications monitoring.\u003c/p\u003e\n\u003cp\u003eThe total value of fines issued in these three months alone were almost equal to those levied in the first six months of the year, while the number of fines has almost doubled.\u003c/p\u003e\n\u003cp\u003eIn this blog, we present an overview of what’s driven such a significant uplift in regulatory activity. Spoiler alert: traders are still using WhatsApp.\u003c/p\u003e\n\u003ch2 id=\"q3-enforcement-action-in-numbers\"\u003eQ3 enforcement action in numbers\u003c/h2\u003e\n\u003cp\u003eIn the last three months, 89 market conduct enforcements were issued by global regulators, the majority of which were for eComms surveillance failures\u0026hellip;\u003c/p\u003e\n\u003cimg src=\"/images/enforcement-action-by-type-1000.jpg\" alt=\"A breakdown of regulatory enforcement action by type Q3 2024\" height=\"622\" width=\"1000\" /\u003e\n\u003cp\u003eThe fines associated with this action totaled nearly $740 million\u0026hellip;\u003c/p\u003e\n\u003cimg src=\"/images/fines-by-type-1000.jpg\" alt=\"Regulatory fines by type issued in Q3 2024\" height=\"534\" width=\"1000\" /\u003e\n\u003ch2 id=\"electronic-communications-remain-in-regulators-focus\"\u003eElectronic communications remain in Regulators\u0026rsquo; focus\u003c/h2\u003e\n\u003cp\u003eQ3 saw yet another surge in regulatory scrutiny around recordkeeping practices, with US regulators imposing 61 fines related to off-channel communications on platforms like WhatsApp, Signal, and Telegram. The SEC and CFTC continue to lead the charge, imposing penalties against institutions of varying sizes. Notably, Toronto Dominion Bank received a \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8943-24\"\u003e$75 million fine\u003c/a\u003e, while others like \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8975-24\"\u003eCanadian Imperial Bank of Commerce\u003c/a\u003e and prominent rating agencies - Moody’s Investors Service, Inc. and S\u0026amp;P Global Ratings - also faced \u003ca href=\"https://www.sec.gov/newsroom/press-releases/2024-132\"\u003esubstantial repercussions\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003ePenalties typically correlated with the severity and duration of deficiencies, and in many cases, firms’ inability to capture and store encrypted communications not only hindered regulatory investigations but also heightened internal risks, eroding trust in their compliance frameworks.\u003c/p\u003e\n\u003cp\u003eDespite the sharp consequences, the benefits of proactive cooperation are clear. According to Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, “there are several [firms] that differentiated themselves by self-reporting prior to the staff’s investigation, demonstrating once again the real benefits of proactive cooperation.” Firms that identified gaps and engaged with regulators early on \u003ca href=\"https://www.sec.gov/newsroom/press-releases/2024-98\" target=\"_blank\" rel=\"noopener\"\u003esaw a tangible reduction in penalties\u003c/a\u003e. In contrast, those \u003ca href=\"https://www.sec.gov/newsroom/press-releases/2024-114\" target=\"_blank\" rel=\"noopener\"\u003eslower to enact remedial protocols\u003c/a\u003e often faced harsher sanctions and the requirement to retain compliance consultants to manage future oversight\u003c/p\u003e\n\u003cp\u003eThe ripple effects of these enforcement actions are now being felt beyond the US, as the UK’s Financial Conduct Authority (FCA) has initiated probes into how banks monitor encrypted communications by sending surveys that request disclosure of policy breaches. These actions are the FCA’s most obvious signal yet that a similar enforcement strategy is likely to follow if results from these inquiries don’t meet regulatory expectations.\u003c/p\u003e\n\u003ch2 id=\"market-manipulation-in-commodities-markets\"\u003eMarket manipulation in commodities markets\u003c/h2\u003e\n\u003cp\u003eThe US CFTC has also been intensifying efforts to protect market integrity throughout the energy sector, where the effects of malpractice can cascade across global markets.\u003c/p\u003e\n\u003cp\u003eMost recently, \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8953-24#:~:text=The%20order%20requires%20TOTSA%20to,Director%20of%20Enforcement%20Ian%20McGinley.\" target=\"_blank\" rel=\"noopener\"\u003eTOTSA TotalEnergies Trading was fined $48 million\u003c/a\u003e for attempting to manipulate the EBOB gasoline futures market through spoofing - placing fake orders to artificially depress prices and boost short positions. Controlling over 60% of the market volume, TOTSA\u0026rsquo;s actions had a significant impact, and although the firm partially cooperated, its failure to preserve key WhatsApp communications led to an even steeper penalty. This particular case involved coordination with Swiss (FINMA) and UK (FCA) regulators, demonstrating the interconnected nature of modern commodities trading and the need for international collaboration in identifying and penalising perpetrators.\u003c/p\u003e\n\u003cp\u003eThis is not an isolated incident. Just two months prior, \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8921-24\" target=\"_blank\" rel=\"noopener\"\u003eTrafigura Trading LLC faced a $55 million fine\u003c/a\u003e for a series of violations, including market manipulation and the misuse of non-public information, as well as actions to obstruct whistleblower communications\u003c/p\u003e\n\u003cp\u003eOutside of the US, market manipulation fines tend to be levied against individuals, rather than firms. Whilst the magnitude of financial penalties might not match the North American sanctions, regulators are still demonstrating a zero-tolerance attitude toward cases of brazen misconduct.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eAustralia\u003c/strong\u003e: ASIC \u003ca href=\"https://asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-161mr-charges-laid-in-alleged-telegram-pump-and-dump-conspiracy-following-asic-investigation/\"\u003echarged\u003c/a\u003e four individuals for conspiracy to commit market rigging and false trading in a pump-and-dump scheme. Using a private Telegram group, they inflated penny stock prices before selling for profit. They face up to 15 years in prison and $1 million in fines.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eHong Kong\u003c/strong\u003e: The Securities and Futures Commission (SFC) has intensified its crackdown on market manipulation.\n\u003cul\u003e\n\u003cli\u003eOn 6 August 2024, Cheng Ming was \u003ca href=\"http://www.compliancefirst.com.hk/_upload/005/000/000924-pdf.pdf\"\u003echarged\u003c/a\u003e with conspiracy to defraud in Hong Kong for his role in a ramp-and-dump scheme. Alongside 11 others facing trial, he is accused of manipulating stock prices to deceive investors. The case follows a joint investigation by the SFC and Hong Kong Police.\u003c/li\u003e\n\u003cli\u003eMs. Sit Yi Ki, Mr. Tam Cheuk Hang, and Ms. Lam Wing Ki received lengthy \u003ca href=\"https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=24PR125\"\u003eprison sentences\u003c/a\u003e for manipulating Ching Lee Holdings’ shares through false trading, deceiving investors and distorting stock value. This case resulted in the heaviest jail sentence for market manipulation since 2003, with $124.9 million in assets frozen by the SFC.\u003c/li\u003e\n\u003cli\u003eIn another Hong Kong case, an individual was ordered to disgorge $5.6 million in illicit profits after orchestrating false trading between personal and hedge fund accounts. He was also handed a four-year ban from dealing in securities.\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"trade-reporting\"\u003eTrade reporting\u003c/h2\u003e\n\u003cp\u003eIn Q3 2024, the SEC and CFTC penalised 13 firms for deficiencies in the accuracy and timeliness of trade reporting, with the largest fine of $5 million imposed on The Bank of New York Mellon (BNYM). BNYM was found to have misreported millions of swap transactions and failed to properly supervise its swap dealer operations. In addition to the fine, BNYM must engage an independent compliance consultant to strengthen its trade reporting systems, highlighting regulators\u0026rsquo; growing distrust in firms’ ability to manage and remediate controls internally.\u003c/p\u003e\n\u003ch2 id=\"how-technology-solves-the-ecomms-regulatory-challenge\"\u003eHow technology solves the eComms regulatory challenge\u003c/h2\u003e\n\u003cp\u003eRegulators are continuing to scrutinise firms that fail to prevent market-related communications on unmonitored channels. This focus is justified: without proper oversight, neither regulators nor firms can detect or prevent market abuse. While an initial solution may seem straightforward - banning or restricting off-channel communications - firms cannot stop there.\u003c/p\u003e\n\u003cp\u003eOnce these communications are moved on-channel, the real challenge begins: extracting signals of suspicious activity from vast amounts of unstructured text data. Failures at this stage won’t just result in \u0026lsquo;recordkeeping fines\u0026rsquo; but could lead to other serious repercussions, including failing to prevent market manipulation with tangible, traceable consequences.\u003c/p\u003e\n\u003cp\u003eeflow addresses this challenge by enabling firms to integrate their trade and eComms data, and analyse them together to provide full context for each trade. TZEC captures the full spectrum of electronic interactions taking place across your firm. It ingests and normalises data from various sources, employing advanced algorithms to detect anomalies and patterns that are indicative of suspicious behaviour, before linking them to relevant trade activity for further analysis. TZEC utilises eflow’s unique Global Lexicon Service so that financial institutions can identify signs of market abuse based on global data and behavioural trends, not just their own limited terms.\u003c/p\u003e\n\u003cp\u003eFollow these links for more information on eflow’s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eTZTS Trade Surveillance\u003c/a\u003e and \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eTZEC eComms Surveillance\u003c/a\u003e solutions, or \u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003ebook a no obligation consultation\u003c/a\u003e to speak to one of our experts.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003ch4 id=\"heading\"\u003e\u003c/h4\u003e\n","date_published":"2024-10-10T08:00:00+0000"},{"title":"The five most common transaction reporting errors, and how to combat them","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/five-most-common-transaction-reporting-errors/","summary":"\u003cp\u003eAccurate transaction reporting is crucial for ensuring market transparency and regulatory compliance. The \u003ca href=\"https://www.fca.org.uk/markets/uk-emir\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eEuropean Market Infrastructure Regulation (EMIR)\u003c/strong\u003e\u003c/a\u003e and the \u003ca href=\"https://www.fca.org.uk/markets/transaction-reporting\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eMarkets in Financial Instruments Regulation (MiFIR)\u003c/strong\u003e\u003c/a\u003e have established stringent reporting standards for financial institutions to abide by. However, firms often encounter challenges that lead to reporting errors, which can result in more work, operational inefficiencies, and even regulatory penalties if not managed properly.\u003c/p\u003e\n\u003cp\u003eIn this blog, we explore the five most common reasons that cause firms to encounter errors in their transaction reporting under EMIR and MiFIR, and how eflow can help you to avoid them.\u003c/p\u003e\n\u003ch3 id=\"1-data-inconsistency-and-quality-issues\"\u003e\u003cstrong\u003e1. Data inconsistency and quality issues\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eOne of the primary sources of errors in transaction reporting is data inconsistency or poor data quality. Firms often rely on multiple internal systems to manage their transactions, each storing and processing data differently. When reporting under EMIR and MiFIR, firms must pull data from these diverse sources, which increases the risk of inconsistencies, such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eMismatched fields (e.g. trade identifiers, counterparties)\u003c/li\u003e\n\u003cli\u003eIncorrect formatting\u003c/li\u003e\n\u003cli\u003eMissing or incomplete data points\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe sheer volume of data being processed and reported adds to this complexity. Even a small deviation in data format or missing information can lead to errors within reports, causing regulators to flag transactions for further review.\u003c/p\u003e\n\u003cp\u003eIn addition, incomplete or incorrect submissions in transaction reporting can lead to significant compliance issues, as inaccurate data may result in regulatory breaches or penalties. These errors often require firms to engage in back reporting, where they must correct and resubmit historical data, which is both time consuming and resource intensive.\u003c/p\u003e\n\u003cp\u003eOne solution is to use a system that automatically organises and processes the data. eflow’s \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZTR Transaction Reporting\u003c/strong\u003e \u003c/a\u003esystem consolidates the 203 data fields required by \u003ca href=\"https://eflowglobal.com/tztr-emir-reporting/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eEMIR\u003c/strong\u003e \u003c/a\u003eand the 65 fields required by \u003ca href=\"https://eflowglobal.com/tztr-mifir-reporting/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eMiFIR\u003c/strong\u003e\u003c/a\u003e, enriches the data with market information, and validates it to ensure compliance and accuracy.\u003c/p\u003e\n\u003cp\u003eAny errors or inconsistencies are flagged using an intuitive error-handling tool that highlights the specific field, allowing for direct edits. This saves you from the hassle of searching through countless lines of a spreadsheet to pinpoint the mistake.\u003c/p\u003e\n\u003ch3 id=\"2-inadequate-reconciliation-processes\"\u003e\u003cstrong\u003e2. Inadequate reconciliation processes\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eReconciliation involves verifying that data submitted to the regulator is accurate and matches internal records and the counterparties’ data. Inadequate reconciliation processes are a major source of errors, as discrepancies can arise between trade records, counterparty reports and trade repository data.\u003c/p\u003e\n\u003cp\u003eSince EMIR and MiFIR require firms to report not just their transactions but also confirm that both sides of a trade (i.e. both the buyer and seller) report the same data, any unmatched data can lead to errors. Without a robust reconciliation system, firms are likely to submit inaccurate or incomplete information, creating issues that are only discovered later during regulatory audits.\u003c/p\u003e\n\u003cp\u003eWith integrated three-way data reconciliation, TZTR takes care of this for you. Once the system ingests a file, the reconciliation process quickly identifies and matches records, all in just a matter of seconds, clearly identifying any errors.\u003c/p\u003e\n\u003ch3 id=\"3-manual-processes-and-lack-of-automation\"\u003e\u003cstrong\u003e3. Manual processes and lack of automation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhile financial transaction reporting is detailed and complex, many firms still rely on manual processes for data entry, reconciliation, and submission. These time consuming processes are prone to human error which can lead to mistyped fields, misreported figures or even the omission of key data.\u003c/p\u003e\n\u003cp\u003eIn contrast, automation ensures that data is consistently captured, formatted, and submitted in accordance with regulatory standards. Without such tools there are often discrepancies in reporting, particularly for firms that handle high volumes of transactions.\u003c/p\u003e\n\u003cp\u003eInvesting in automated reporting solutions, such as TZTR, helps reduce human error, enables real-time data validation, and streamlines the reporting process to ensure compliance with EMIR and MiFIR requirements.\u003c/p\u003e\n\u003ch3 id=\"4-lack-of-audit-trails\"\u003e\u003cstrong\u003e4. Lack of audit trails\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eA lack of an audit trail can make it challenging for firms to demonstrate compliance during a regulatory review. Without a clear record of changes, actions, and approvals, it becomes difficult to demonstrate how data was processed and reported. In the event of an audit, firms may struggle to provide evidence that proper procedures were followed, or explain why a change was made, potentially leading to penalties or further scrutiny from regulators.\u003c/p\u003e\n\u003cp\u003eAn automated solution with a robust audit trail ensures full transparency, offering a clear and verifiable history of all reporting activities. For instance, eflow’s system tracks all user actions, includes fields for compliance teams to document the reasoning behind changes, and timestamps each entry. It also incorporates embedded approval workflows, ensuring that certain actions must be approved by senior team members before they are implemented. This not only enhances accountability, but provides a clear historical overview of system interaction, further simplifying the process of demonstrating compliance when under regulatory scrutiny.\u003c/p\u003e\n\u003ch3 id=\"5-loss-of-control-through-delegated-reporting\"\u003e\u003cstrong\u003e5. Loss of control through delegated reporting\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eDelegated reporting can present significant challenges for firms, as they effectively hand over the responsibility of reporting to a third party, while still being held fully accountable for any errors or non-compliance. This loss of control can be risky because firms no longer have direct oversight of the data being submitted to regulators. As a result, they are unable to verify the accuracy and completeness of the information in real-time.\u003c/p\u003e\n\u003cp\u003eA solution like eflow’s TZTR offers a much more effective approach to transaction reporting compared to delegated reporting. While it significantly reduces the heavy administrative workload typically associated with managing and submitting regulatory reports, it doesn’t sacrifice control. Firms maintain complete ownership of their data, which is critical for ensuring accuracy and meeting regulatory requirements.\u003c/p\u003e\n\u003ch3 id=\"bonus---building-an-in-house-solution\"\u003e\u003cstrong\u003eBonus - Building an in-house solution\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAlthough not directly related to errors within transaction reporting, building an in-house solution can create challenges for firms’ transaction reporting. It might seem like a cost-effective solution at first, but it often drains time and resources that could be better spent on core business activity.\u003c/p\u003e\n\u003cp\u003eWhile firms may have the technical capability to build their own system, many underestimate the complexity and the ongoing effort required to maintain it. The project often ends up being more expensive than anticipated, with unforeseen challenges leading to delays and errors.\u003c/p\u003e\n\u003cp\u003eAdditionally, regulatory changes require constant updates which can put firms back to square one. Without the industry knowledge and expertise that specialised vendors provide, staying compliant becomes even more difficult. Many firms that attempt this end up turning to vendors later, having already invested heavily in a solution that didn’t meet their needs.\u003c/p\u003e\n\u003ch3 id=\"in-conclusion\"\u003e\u003cstrong\u003eIn conclusion\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIn conclusion, accurate transaction reporting is essential for firms to maintain regulatory compliance under EMIR and MiFIR, but the challenges they face often lead to costly errors, fines, and operational inefficiencies. Common issues such as data inconsistency, inadequate reconciliation, manual processes, and incorrect submissions can be mitigated by using an automated solution like eflow’s TZTR.\u003c/p\u003e\n\u003cp\u003eWith TZTR, firms gain control over their reporting process without the burden of manual tasks, ensuring data quality, transparency, and compliance. Unlike building in-house solutions, which can be costly and difficult to maintain, TZTR offers a robust, scalable approach that evolves with changing regulations, giving firms peace of mind and allowing them to focus on their core business.\u003c/p\u003e\n\u003cp\u003eIf you’d like to find out more about how TZTR could work for your firm’s transaction reporting, ge\u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003et in touch to book a demo with one of our experts\u003c/strong\u003e\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2024-07-10T10:59:00+0000"},{"title":"Harnessing technology: How asset and wealth managers are tackling market abuse","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/how-asset-and-wealth-managers-tackle-market-abuse/","summary":"\u003cp\u003eMarket abuse has long been a concern for both asset and wealth managers. Insider trading is the most prevalent type of non-compliant activity that they’re likely to come across in their work, but they also face risks including market manipulation, front-running and spoofing, among others.\u003c/p\u003e\n\u003cp\u003eIdentifying and managing market abuse is a highly complex challenge for these types of firms due to the variety of asset types, diverse client portfolios, and numerous internal teams involved across trades. Building on this complexity, regulators have heightened their scrutiny, making compliance with frameworks such as MAR (Market Abuse Regulation) and MiFID II (Markets in Financial Instruments Directive) more demanding than ever before.\u003c/p\u003e\n\u003cp\u003eTo navigate these challenges, many asset and wealth managers are increasingly turning to technology as a tool to enhance their regulatory oversight and control. In fact, \u003ca href=\"https://eflowglobal.com/global-trends-in-market-abuse-and-trade-surveillance-form/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003erecent eflow research\u003c/strong\u003e\u003c/a\u003e reveals that 65% of firms in this sector have expressed \u0026ldquo;significant investment plans\u0026rdquo; in technology aimed at mitigating compliance challenges.\u003c/p\u003e\n\u003ch2 id=\"understanding-the-complexity-of-market-abuse-risks-for-asset-managers\"\u003eUnderstanding the complexity of market abuse risks for asset managers\u003c/h2\u003e\n\u003cp\u003eAsset and wealth managers work with a wide range of asset types, each of which come with its own set of regulatory frameworks and risk profiles. Their clients vary from institutional investors to high-net-worth individuals, each with different objectives and reporting requirements. This means the potential for market abuse can arise from numerous angles, all of which need to be monitored.\u003c/p\u003e\n\u003cp\u003eThis is in addition to the fact that regulatory expectations of financial firms have increased significantly. In recent years, authorities around the world have increased their scrutiny of operational practices, particularly in Europe with the enforcement of MAR and MiFID II. These regulations have expanded what constitutes market abuse and introduced more stringent compliance requirements, making it imperative for asset and wealth managers to adopt advanced technological solutions to avoid penalties.\u003c/p\u003e\n\u003ch3 id=\"how-technology-is-streamlining-asset-managers-trade-surveillance\"\u003eHow technology is streamlining asset managers’ trade surveillance\u003c/h3\u003e\n\u003ch4 id=\"automation-of-trade-surveillance-tasks\"\u003e\u003cstrong\u003eAutomation of trade surveillance tasks\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eTraditionally, trade surveillance has involved manual, human led processes, where compliance teams have to filter through vast amounts of trading data and communications to identify any suspicious patterns. However, this can be a time consuming and resource intensive task, especially if the number of trades undertaken increases.\u003c/p\u003e\n\u003cp\u003eMany firms are now using technology, such as \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eeflow’s TZTS Trade Surveillance solution\u003c/strong\u003e\u003c/a\u003e, to manage these processes more efficiently. TZTS, for example, can process vast amounts of trading data, flag any irregularities in real time, reducing the likelihood of human error and enabling compliance teams to focus on high-importance issues. The system also uses automation and machine learning to enable faster, more accurate detection of suspicious behaviour.\u003c/p\u003e\n\u003ch4 id=\"real-time-data-analysis\"\u003e\u003cstrong\u003eReal-time data analysis\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eData analytics tools play a crucial role in the detection of early signs of market abuse by analysing trading data in real-time. They can identify patterns which may signal potential misconduct, such as sudden spikes or drops in trading activity which could indicate insider trading or market manipulation.\u003c/p\u003e\n\u003cp\u003eFor asset and wealth managers, identifying these patterns early provides their compliance teams with the data to investigate and act quickly before a minor issue escalates. \u003ca href=\"https://eflowglobal.com/discover-the-power-of-tzts-a-robust-trade-surveillance-solution-to-combat-market-abuse./\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZTS\u003c/strong\u003e\u003c/a\u003e uses integrated machine learning to learn from historic data and refine its algorithm to improve accuracy and reduce false positives.\u003c/p\u003e\n\u003ch4 id=\"contextual-insight\"\u003e\u003cstrong\u003eContextual insight\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eBy pulling together multiple data sources, an overview of key contextual information can be created in one place, enhancing and easing the evaluation of potential market abuse. For example, when an alert is triggered, TZTS collates data from multiple sources, including trader details, counterparties, communications, market data, news events, global index movements, and portfolio information.\u003c/p\u003e\n\u003cp\u003eThis holistic approach enables compliance managers to evaluate alerts with a full understanding of the factors surrounding the trade, providing deeper insight into potential risks without needing to manually gather and compare data from various sources. This integrated view makes it easier to identify patterns, improving the accuracy and speed of compliance efforts.\u003c/p\u003e\n\u003ch4 id=\"one-source-of-truth\"\u003e\u003cstrong\u003eOne source of truth\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eAsset and wealth management firms often involve multiple teams in the trading process, such as portfolio managers, compliance officers, legal departments, and operations staff, all of which interact at different stages. This complexity requires streamlined, coordinated surveillance workstreams to ensure that all activities are properly monitored and compliant with regulations.\u003c/p\u003e\n\u003cp\u003eTZTS’s integrated case management tool facilitates efficient communication within these teams by centralising information and enabling seamless collaboration. It also maintains a full audit trail of all activities, ensuring transparency and accountability across the firm while reducing the risk of errors or compliance breaches.\u003c/p\u003e\n\u003ch2 id=\"the-increasing-importance-of-ecomms-surveillance\"\u003eThe increasing importance of eComms Surveillance\u003c/h2\u003e\n\u003cp\u003eCommunication between traders, brokers, portfolio managers, and other stakeholders are increasingly happening across multiple channels, including email, messaging apps, and more. These communications are key to detecting early signs of insider trading or market manipulation, and can play a vital role in analysing signs of market abuse when alerts are triggered.\u003c/p\u003e\n\u003cp\u003eGiven regulators\u0026rsquo; increasing focus on preventing market abuse, the surveillance of electronic communications (e-comms) has become an important element of a holistic trade surveillance strategy. In fact, having a robust e-comms surveillance system is no longer optional - it’s a necessity.\u003c/p\u003e\n\u003cp\u003eFor asset managers, the key challenge lies in \u003ca href=\"https://eflowglobal.com/why-are-firms-turning-to-integrated-ecomms-and-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003econnecting the dots between e-comms data and actual trading activities\u003c/strong\u003e\u003c/a\u003e. An isolated email might seem harmless, but when cross-referenced with trade execution data, it could reveal signs of insider trading or market manipulation. This is where integrated trade and communications surveillance systems come into play. eflow’s \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZEC eComms Surveillance platform\u003c/strong\u003e\u003c/a\u003e integrates with TZTS, combining the monitoring of trade data with real-time communication surveillance, offering a more comprehensive view of potential misconduct.\u003c/p\u003e\n\u003ch2 id=\"conclusion-technology-is-the-key-to-navigating-regulatory-complexity\"\u003eConclusion: Technology is the key to navigating regulatory complexity\u003c/h2\u003e\n\u003cp\u003eAs regulatory scrutiny intensifies and market abuse risks become more sophisticated, technology is proving to be even more important for the asset and wealth management industry. By leveraging automation, data analytics, and integrated surveillance systems, firms can streamline their operations, reduce resource strain, and improve their ability to detect and prevent market abuse.\u003c/p\u003e\n\u003cp\u003eeflow’s surveillance technology solutions, TZTS and TZEC, provide asset and wealth managers with powerful tools to strengthen their regulatory controls. These solutions offer a more robust, efficient, and streamlined approach to monitoring compliance, enabling firms to stay ahead of evolving risks while meeting heightened regulatory demands with confidence.\u003c/p\u003e\n\u003cp\u003eDiscover how it can benefit your firm by \u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003escheduling a free consultation\u003c/strong\u003e\u003c/a\u003e with one of our experts.\u003c/p\u003e\n","date_published":"2024-02-10T10:59:00+0000"},{"title":"US market abuse crackdown: How integrated surveillance can protect firms","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/us-market-crackdown/","summary":"\u003cp\u003eUS regulators, led by the SEC and CFTC, have made headlines in recent years through their aggressive enforcement actions to safeguard market integrity. From proven market manipulation to trade surveillance lapses and failures in electronic communications (eComms) monitoring, regulators are sending a clear message: firms must have effective controls in place or face significant penalties.\u003c/p\u003e\n\u003cp\u003eThese enforcements also indicate where regulatory scrutiny will likely fall in the near future. This blog explores the present environment by referencing major enforcement actions, sets out a view of what’s to come next, and how firms can best prepare.\u003c/p\u003e\n\u003ch3 id=\"market-manipulation-enforcements\"\u003eMarket manipulation enforcements\u003c/h3\u003e\n\u003cp\u003eFINRA, the CFTC, and SEC have actively pursued direct cases of market manipulation. Recent enforcements have highlighted complex schemes, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eWash Trades and Non-Competitive Transactions:\u003c/strong\u003e These trades, made between accounts under common control without real transfer of ownership, mislead the market. In \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8946-24\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eone notable case\u003c/strong\u003e\u003c/a\u003e, a Brazilian energy company and its Swiss affiliate executed 44 transactions involving over 50,000 sugar contracts, worth more than $1 billion. The firms misused competitive markets to facilitate the internal transfer of physical sugar between their entities, distorting the true market conditions.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eBear Raiding:\u003c/strong\u003e \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8953-24#:~:text=Washington%2C%20D.C.%20%E2%80%94%20The%20Commodity%20Futures,in%20order%20to%20benefit%20its\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTOTSA TotalEnergies Trading SA\u003c/strong\u003e\u003c/a\u003e attempted to manipulate the Argus Eurobob (EBOB) benchmark for European gasoline by selling large quantities of EBOB gasoline at artificially low prices. These were then reported to Argus and incorporated into the benchmark price, benefiting its short position in EBOB-linked futures.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"regulators-highlight-system-deficiencies\"\u003eRegulators highlight system deficiencies\u003c/h3\u003e\n\u003cp\u003eWhile some enforcements do not involve direct manipulative acts, they punish critical gaps in internal controls and monitoring systems that could allow market abuse to go undetected. These failures emphasise the urgent need for firms to regularly test and refine their surveillance frameworks to ensure that suspicious activity is not missed. This is an issue that exists in the context of both trade and eComms surveillance.\u003c/p\u003e\n\u003ch4 id=\"trade-surveillance\"\u003eTrade surveillance\u003c/h4\u003e\n\u003cp\u003eThere have been several notable cases of trade surveillance system inadequacies picked up by US regulators in 2024:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eFailure to configure systems properly:\u003c/strong\u003e \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8914-24\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eJ.P. Morgan\u003c/strong\u003e\u003c/a\u003e (May 2024) was fined $200 million for failing to properly configure data feeds for its trade surveillance system, resulting in billions of orders not being captured.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eGaps in surveillance reporting:\u003c/strong\u003e \u003ca href=\"https://www.financemagnates.com/institutional-forex/goldman-sachs-grapples-with-hefty-finra-fine/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eGoldman Sachs\u003c/strong\u003e\u003c/a\u003e (July 2024) failed to include certain securities (warrants, rights, and OTC equity securities) in its surveillance reports, leading to undetected suspicious activity over a prolonged period.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eInadequate monitoring and escalation procedures:\u003c/strong\u003e \u003ca href=\"https://www.financemagnates.com/forex/online-broker-fails-to-catch-pump-and-dump-schemes-finra-finds/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTradeStation\u003c/strong\u003e\u003c/a\u003e (February 2024) lacked proper procedures for escalating alerts from its automated surveillance system, leading to missed opportunities to detect activities like wash trading and pump-and-dump schemes.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eReliance on deficient third-party systems:\u003c/strong\u003e \u003ca href=\"https://citywire.com/ria/news/finra-fines-merrill-3m-over-neglectful-trade-monitoring/a2449100\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eMerrill Lynch\u003c/strong\u003e\u003c/a\u003e (August 2024) relied on third-party surveillance systems that were later deemed by FINRA to be insufficient, limiting the firm\u0026rsquo;s ability to detect manipulative trades like prearranged trading.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch4 id=\"ecomms-surveillance\"\u003eeComms surveillance\u003c/h4\u003e\n\u003cp\u003eIn 2024, the enforcement landscape for eComms surveillance was marked by two significant waves of fines, primarily targeting broker-dealers and investment advisers. These actions revealed significant failures in maintaining and archiving business-related communications, particularly through unauthorised channels like personal messaging apps.\u003c/p\u003e\n\u003cp\u003eIn February 2024, the SEC fined five broker-dealers, seven dually registered firms, and four affiliated advisers over \u003ca href=\"https://www.sec.gov/news/press-release/2024-18\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003e$81 million\u003c/strong\u003e\u003c/a\u003e for widespread violations of federal securities laws related to eComms recordkeeping. The August 2024 crackdown escalated these efforts, with the SEC imposing \u003ca href=\"https://www.sec.gov/newsroom/press-releases/2024-98\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003e$392.75 million\u003c/strong\u003e\u003c/a\u003e in penalties on 26 additional firms for similar failures.\u003c/p\u003e\n\u003cp\u003eThese enforcement actions exposed significant gaps in internal controls across multiple firms, many of which admitted to non-compliance with regulatory requirements. While some firms reduced their penalties through self-reporting and remediation, the SEC’s ongoing focus underscores a zero-tolerance stance on off-channel communications and a commitment to enforcing robust recordkeeping standards.\u003c/p\u003e\n\u003ch3 id=\"whats-next\"\u003eWhat’s next?\u003c/h3\u003e\n\u003ch4 id=\"from-data-to-detection\"\u003eFrom data to detection\u003c/h4\u003e\n\u003cp\u003eUS regulators have made it clear that accurate and comprehensive data collection, along with robust systems and controls, are foundational to maintaining market integrity. The enforcements of 2024 highlight the importance of getting the data right - from ensuring complete recordkeeping to deploying systems that can effectively analyse relevant transactions and communications.\u003c/p\u003e\n\u003cp\u003eHowever, as firms address these issues, regulators are likely to increasingly shift their attention to how effectively these organisations leverage trade and eComms data to detect and prevent market abuse. Compliance will not be a box-ticking exercise, but one that requires enhanced clarity and depth of insights to enable decisive action.\u003c/p\u003e\n\u003ch4 id=\"the-case-for-an-integrated-approach\"\u003eThe case for an integrated approach\u003c/h4\u003e\n\u003cp\u003eAn \u003ca href=\"https://eflowglobal.com/images/Integrating-eComms-and-trade-surveillance-eBook.pdf\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eintegrated approach\u003c/strong\u003e\u003c/a\u003e, where trade and eComms data are analysed together, provides firms with the vital context that is needed to construct the full story of a trade and detect malicious intent and potential market abuse.\u003c/p\u003e\n\u003cp\u003eMany firms still use siloed systems that require a significant amount of manual intervention and cross-referencing of data to link communications to their associated trades. However, by deploying a mix of process automation and machine learning, firms can not only capture and link data more effectively, but also interpret it in one holistic view. This also means that the technology can ‘learn’ the telltale signs of market abuse and apply these proactively to future communications surveillance.\u003c/p\u003e\n\u003cp\u003eThis approach offers the more comprehensive and robust regulatory framework that regulators are evidently seeking, whilst also yielding additional efficiencies for firms prepared to take the next step.\u003c/p\u003e\n\u003cp\u003eA truly integrated system, that handles both trade and eComms data natively**,** maximises these efficiencies and is otherwise superior to the use of multiple separate systems that are \u0026ldquo;bolted-on\u0026rdquo;. A couple of key factors are easily overlooked:\u003c/p\u003e\n\u003cp\u003eFirst, native integration ensures \u003cstrong\u003edata provenance\u003c/strong\u003e - the ability to track and verify the origin and flow of data through the system. In a ‘bolted-on’ system, mismatches or manual errors can occur when linking different data streams, potentially leading to gaps or inconsistencies in the audit trail.\u003c/p\u003e\n\u003cp\u003eSecond, \u003cstrong\u003edata security\u003c/strong\u003e is more robust in an integrated system. When trade and eComms data are handled together in one system, there is less risk of vulnerabilities that can arise when transferring sensitive information between separate platforms, such as security breaches or data losses.\u003c/p\u003e\n\u003ch3 id=\"conclusion\"\u003eConclusion\u003c/h3\u003e\n\u003cp\u003eWhile US regulators have been cracking down on systems and controls deficiencies, they have also been targeting cases of market abuse. As firms establish and improve data practices and surveillance systems, regulators will find more and clearer evidence of market abuse wherever it occurs, and firms will be left with no excuse for their regulatory non-compliance.\u003c/p\u003e\n\u003cp\u003eThis next phase of regulatory scrutiny will require tools optimised for provenance, insights and action. Adopting a holistic, technology-driven surveillance approach will be essential for firms looking to meet these heightened expectations and to do so in an efficient manner.\u003c/p\u003e\n\u003cp\u003eFor more information on how eflow can support your firm with a holistic approach to trade and eComms surveillance, explore our \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZTS\u003c/strong\u003e \u003c/a\u003eand \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eTZEC\u003c/strong\u003e\u003c/a\u003e products or \u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003ebook a consultation\u003c/strong\u003e\u003c/a\u003e with our team of experts.\u003c/p\u003e\n","date_published":"2024-30-09T10:59:00+0000"},{"title":"FCA requests details of communication policy breaches","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fca-requests-details-of-communication-policy-breaches/","summary":"\u003cp\u003eThe FCA has requested that UK banks report details of any employees breaching their communication policies in a move signalling a further crack-down on controls around eComms monitoring and surveillance.\u003c/p\u003e\n\u003cp\u003eThis follows \u003ca href=\"https://www.fnlondon.com/articles/fca-prepares-fresh-probe-into-bankers-encrypted-messaging-use-638b421c\"\u003e\u003cem\u003ereporting from FN\u003c/em\u003e\u003c/a\u003e that the FCA would begin to survey firms with regards to how they use and monitor messages sent using so-called off-channel communication platforms such as WhatsApp, Signal and Telegram.\u003c/p\u003e\n\u003cp\u003eWith growing concerns around the increased risk of market abuse and insider trading caused by poor controls around off-channel communications, this recent flurry of activity may indicate that the FCA is looking to more closely align themselves with US regulatory standards.\u003c/p\u003e\n\u003ch2 id=\"the-stance-of-us-regulators\"\u003eThe stance of US regulators\u003c/h2\u003e\n\u003cp\u003eSince 2021, US regulators - namely the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) - have made the unmonitored use of off-channel communications an area of focus for regulatory enforcement. Tier one institutions such as Goldman Sachs, JPMorgan Chase and Bank of America have all faced such fines, with approximately $2.8bn in penalties being levied since 2021 for improper controls around communications surveillance.\u003c/p\u003e\n\u003cp\u003eWhile the FCA’s fines have been relatively small in comparison, this latest initiative may indicate a change in approach is forthcoming.\u003c/p\u003e\n\u003cp\u003eIf results from this latest survey indicate a significant risk of market abuse and insider trading being created by failures in communications monitoring - a fact that seems likely if we consider the North American market - then further investigations and strengthened regulatory controls seem highly likely.\u003c/p\u003e\n\u003ch2 id=\"why-is-communications-monitoring-important\"\u003eWhy is communications monitoring important?\u003c/h2\u003e\n\u003cp\u003eUltimately, this focus on communications record keeping and monitoring is about transparency and risk management. If firms don’t have robust controls in place around off-channel communications, then traders will be able to send private, encrypted messages freely. As a result, firms will be unable to demonstrate their compliance with market abuse regulations to regulators and the risk of non-compliant activity will be increased.\u003c/p\u003e\n\u003cp\u003eUnmonitored communication channels create surveillance gaps, which in turn create points of risk; if employees are allowed to communicate about trades on unmonitored platforms, gaps in the regulatory audit trail are created. This leads to a heightened risk of market abuse and insider trading and a lack of demonstrable compliance with regulatory standards.\u003c/p\u003e\n\u003cp\u003eTo that end, it is vital that firms track and analyse all relevant communications between employees. Not only does this limit the risk of abusive or insider trading, but it also allows firms to protect their own reputation and the integrity of the market.\u003c/p\u003e\n\u003ch2 id=\"how-can-firms-protect-themselves\"\u003eHow can firms protect themselves?\u003c/h2\u003e\n\u003cp\u003eAs the regulatory focus on robust record keeping and monitoring of communications grows, firms will need to prove to regulators that they have suitable controls in place if they want to avoid a regulatory backlash.\u003c/p\u003e\n\u003cp\u003eWhile simply keeping records of communications may have previously sufficed, firms today are increasingly expected to be able to actively monitor those communications for evidence of potentially abusive trading.\u003c/p\u003e\n\u003cp\u003eRecent technological advancements have allowed firms to implement solutions that can not only store records of communications, but actively surveil them for evidence of behaviours indicative of market abuse or insider trading. By harnessing machine learning technologies such as natural language processing and sentiment analysis, these tools can flag suspicious messages before linking them to relevant trades. This integrated approach allows firms to indicate that they are generating a holistic overview of risk which incorporates both communications and the trade data itself.\u003c/p\u003e\n\u003cp\u003eeflow’s eComms surveillance solution TZEC has been designed specifically to provide this service to firms. It can capture data from any platform - on- or off-channel communications, email or voice calls - analyse those communications for potentially suspicious language, then link those messages to relevant trades to provide a holistic overview of the entire trade lifecycle.\u003c/p\u003e\n\u003cp\u003eIf you’d like to learn more about how TZEC could help your firm, \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a consultation here\u003c/a\u003e.\u003c/p\u003e\n\u003cbr\u003e","date_published":"2024-24-09T12:35:35+0000"},{"title":"eflow launches ‘Market Abuse Health Check’ as global trading fines reach $800 million in first half of 2024","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-global-launches-market-abuse-health-check-as-global-trading-fines-reach-800-million-in-first-half-of-2024/","summary":"\u003cp\u003e- \u003cem\u003eeflow will offer firms a no-obligation ‘Health Check’ where their trade surveillance strategy will be evaluated by an industry expert\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003e- \u003cem\u003eNews comes as global enforcement actions related to market conduct resulted in nearly\u003c/em\u003e \u003ca href=\"https://eflowglobal.com/h1-enforcement-roundup-firms-systems-and-controls-are-called-into-question/\"\u003e\u003cem\u003e$800 million of fines\u003c/em\u003e\u003c/a\u003e \u003cem\u003ebeing issued in the first half of 2024\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eLondon, UK: Date:\u003c/strong\u003e As market abuse fines soar for firms across the globe, RegTech (Regulatory Technology) scaleup \u003ca href=\"https://eflowglobal.com/\"\u003eeflow\u003c/a\u003e today launches a ‘Market Abuse Health Check’ for firms who want to remain compliant.\u003c/p\u003e\n\u003cp\u003eRegulatory action against market abuse and surveillance shortcomings has been extensive so far this year. JP Morgan has recently been \u003ca href=\"https://fintech.global/2024/05/24/j-p-morgan-securities-fined-200m-by-cftc-for-surveillance-failures/#:~:text=J.P.%20Morgan%20Securities%20fined%20%24200m%20by%20CFTC%20for%20surveillance%20failures,-May%2024%2C%202024\u0026amp;text=J.P.%20Morgan%20Securities%20has%20been,shortcomings%20in%20its%20surveillance%20systems.\"\u003efined $200m by the CFTC\u003c/a\u003e, Citigroup was fined by the FCA, BaFin and PRA, and the FCA, SEC and CFTC, ASIC (Australia) and SFC (Hong Kong) all imposed insider trading fines during the first half of 2024. Moreover, responding to a series of non-compliance cases, SEBI (India) also introduced \u003ca href=\"https://www.sebi.gov.in/media-and-notifications/press-releases/apr-2024/sebi-board-meeting_83115.html\"\u003enew market abuse controls and regulations\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eAmid the regulators’ global effort to clamp down on market abuse, eflow’s ‘Health Check’ will see Jonathan Dixon, industry specialist and eflow’s Head of Surveillance, provide businesses with bespoke insights on how to combat the threat of market abuse within their organisations.\u003c/p\u003e\n\u003cp\u003eJonathan brings a wealth of knowledge and experience in market abuse surveillance, most recently by leading eflow’s participation in the FCA’s Market Abuse Surveillance Tech Sprint to help address industry challenges and discuss future innovation in the sector. Jonathan\u0026rsquo;s depth of expertise will ensure that participating firms receive an impartial and detailed assessment informed by decades of real-world experience.\u003c/p\u003e\n\u003cp\u003eCommenting on the launch of the programme, Jonathan said: “The only thing more expensive than an effective compliance programme is \u003cem\u003enot\u003c/em\u003e having an effective compliance programme. Global NCAs are proactively and regularly reviewing regulated firms’ Market Abuse Risk Assessments, in addition to taking a qualitative approach to their STOR output. This means that it is more important than ever for firms to not only understand the risks inherent in how they operate, but to be able to demonstrate how they have dealt with that risk.”\u003c/p\u003e\n\u003cp\u003eBen Parker, CEO and founder of eflow, added: “As global regulatory enforcement action ramps up, it’s vital that firms have robust processes in place to mitigate market abuse within their organisations and avoid significant fines. Jonathan has transformed the regulatory compliance strategies of a wealth of businesses during his 15 years in specialist roles at the likes of Kraken, Accenture and Barclays. His depth of technical knowledge and ‘hands on’ experience will ensure our ‘Market Abuse Health Check’ is a vital step towards compliance for all financial services firms.”\u003c/p\u003e\n\u003cp\u003eeflow offers award-winning solutions for market abuse surveillance, best execution, transaction-cost analysis, transaction reporting and eComms surveillance. The company currently services over 120 clients across five continents, providing both buy-side and sell-side firms with highly configurable digital tools that are designed to keep them compliant and competitive in this ever-changing regulatory landscape.\u003c/p\u003e\n\u003cp\u003eIf you’d like to claim your Market Abuse health check, please get in touch here: \u003ca href=\"https://lp.eflowglobal.com/market-abuse-health-check\"\u003ehttps://lp.eflowglobal.com/market-abuse-health-check\u003c/a\u003e\u003c/p\u003e\n","date_published":"2024-12-09T09:45:00+0000"},{"title":"AMFI introduces new market manipulation standards for Indian asset management companies","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/amfi-introduces-new-market-manipulation-standards-for-indian-asset-management-companies/","summary":"\u003cp\u003eThe Association of Mutual Funds in India (AMFI) is rolling out new standards for institutional mechanisms to detect and deter market manipulation, including front-running and fraudulent transactions within asset management companies (AMCs).\u003c/p\u003e\n\u003cp\u003eThese measures are part of a broader initiative to align with the \u003ca href=\"https://eflowglobal.com/sebis-latest-circular-strengthening-amc-to-combat-market-abuse-and-front-running/\" title=\"SEBI's latest circular: Strengthening AMC to combat market abuse and front-running\" target=\"_blank\" rel=\"noopener\"\u003eSecurities and Exchange Board of India (SEBI) regulations\u003c/a\u003e, which will bring mutual funds under the SEBI (Prohibition of Insider Trading) Regulations, 2015, from November 2024.\u003c/p\u003e\n\u003ch3 id=\"phased-implementation-timeline\"\u003e\u003cstrong\u003ePhased implementation timeline\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe rollout will occur in four stages, starting with equity mutual funds:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eNovember 2, 2024\u003c/strong\u003e: The first phase covers equity securities trades in mutual fund schemes (excluding international equities) with assets over Rs 10,000 crore.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eFebruary 2, 2025\u003c/strong\u003e: The standards expand to equity schemes with assets under Rs 10,000 crore.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eMay 2, 2025\u003c/strong\u003e: Trades involving passive schemes, arbitrage schemes, and overseas securities will be required to comply across all schemes.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eAugust 2, 2025\u003c/strong\u003e: The final phase encompasses debt securities, commodities, real estate investment trusts (REITs), and infrastructure investment trusts (InvITs).\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"key-measures-and-requirements\"\u003e\u003cstrong\u003eKey measures and requirements\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003e\u003cstrong\u003eOversight\u003c/strong\u003e:\u003c/p\u003e\n\u003cp\u003eCEOs, compliance officers, managing directors, and similar business leaders are required to establish robust regulatory mechanisms to comply with the new standards. These systems must generate, process, and review alerts related to potential market abuse, with alerts being produced weekly and reported to both the board of directors and the trustees.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eBrokers\u003c/strong\u003e:\u003c/p\u003e\n\u003cp\u003eAMCs must take prompt action against brokers flagged by alerts for suspicious activities, including the potential termination of agreements. Quarterly reports detailing these actions must be submitted to SEBI and trustees. Additionally, AMCs are required to incorporate clauses in their broker agreements that allow for appropriate measures to be taken against brokers suspected of market abuse.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eEmployees\u003c/strong\u003e:\u003c/p\u003e\n\u003cp\u003ePersonal transactions of key employees and their immediate relatives must be reviewed if linked to any suspicious activity. Additionally, fund managers and dealers are required to take a mandatory leave of at least 10 business days within a financial year, with at least five of those days being consecutive.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eResources\u003c/strong\u003e:\u003c/p\u003e\n\u003cp\u003eMutual fund houses are encouraged to collaborate by sharing their surveillance systems, internal controls, and escalation processes. This approach helps to reduce costs while enhancing compliance efficiency across the industry.\u003c/p\u003e\n\u003ch3 id=\"increasing-focus-on-market-abuse-in-india\"\u003e\u003cstrong\u003eIncreasing focus on market abuse in India\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eGlobal regulators have increasingly focused on curbing market abuse, and India is following suit with the introduction of new standards. SEBI has mandated that all brokers implement market abuse mechanisms by January 1, 2025, and brought in new legislation for stockbroking firms in India, the last update to which was 1992. These measures are designed to prevent insider manipulation, ensuring a fairer playing field in the mutual fund industry.\u003c/p\u003e\n\u003cp\u003eBy extending insider trading norms and enforcing strict compliance, SEBI and AMFI aim to protect investor interests and uphold market integrity. This initiative marks a significant step toward enhancing transparency and trust in India’s financial markets.\u003c/p\u003e\n\u003ch3 id=\"the-use-of-technology-to-detect-and-manage-market-abuse\"\u003e\u003cstrong\u003eThe use of technology to detect and manage market abuse\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIntroducing advanced regulatory technology such as eflow\u0026rsquo;s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" title=\"TZTS Trade Surveillance\"\u003eTZTS Trade Surveillance\u003c/a\u003e system can significantly streamline a firm’s compliance reporting processes. By automating the detection of potential instances of market abuse, firms can generate, process, and review alerts more efficiently, to ensure that they meet all the requirements set out by the new standards.\u003c/p\u003e\n\u003cp\u003eTZTS equips firms with specialised tests to detect manipulative behaviours, particularly relevant to SEBI and AMFI’s new regulations on insider trading, front-running, and misuse of insider information as well as over 35 other forms of manipulative behaviours such as marking the open/close, pre-arranged trading, wash trading and more. Preset and customisable reports can also be used to generate management information quickly and efficiently. The system offers targeted functionality, ensuring seamless compliance and proactive market abuse monitoring.\u003c/p\u003e\n\u003cp\u003eTo explore how this technology can benefit your firm, \u003ca href=\"https://eflowglobal.com/book-a-consultation/\" title=\"Book a consultation\" target=\"_blank\" rel=\"noopener\"\u003ebook a consultation\u003c/a\u003e with our experts today.\u003c/p\u003e\n","date_published":"2024-12-09T07:43:00+0000"},{"title":"How TZEC offers an integrated approach to eComms and trade surveillance","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/how-tzec-offers-an-integrated-approach-to-ecomms-and-trade-surveillance/","summary":"\u003cp\u003eTZEC is eflow’s multi-channel eComms surveillance system, designed to enable financial institutions to gain a comprehensive view of various communication channels, identify potentially suspicious behaviour, and make informed, data-led regulatory decisions.\u003c/p\u003e\n\u003cp\u003eGlobally, financial regulators are increasingly focusing on how compliance teams manage the risk of communications across electronic platforms. Digital messages can often carry the first signs of potential market abuse, and regulators want to ensure that firms are monitoring these interactions and linking them to abusive trading.\u003c/p\u003e\n\u003cp\u003eeflow’s TZEC module captures the full spectrum of electronic interactions taking place across your firm. It ingests and normalises data from various sources, employing advanced algorithms to detect anomalies and patterns that are indicative of suspicious behaviour, before linking them to relevant trade activity for further analysis.\u003c/p\u003e\n\u003cp\u003eTZEC uses a unique Global Lexicon Service developed by eflow. This analyses language and vocabulary using global data and behavioural trends to identify potential signs of market abuse. This is then combined with a firm’s own Client Lexicon Service, which can be tailored to include company or industry-specific words, phrases and terms.\u003c/p\u003e\n\u003cp\u003eWhen combined with TZEC’s automated workflows, sophisticated machine-learning technology, and robust linkage capabilities, the system provides financial institutions with a depth and breadth of regulatory analysis that is simply unmatched.\u003c/p\u003e\n\u003ch2 id=\"the-key-benefits-of-tzec\"\u003e\u003cstrong\u003eThe key benefits of TZEC\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThanks to its ability to undertake deep-dive analysis of all types of communication channels in a matter of seconds, TZEC enables firms to monitor, analyse and audit vast quantities of data while streamlining surveillance operations and mitigating against the risk of non-compliance. And because TZEC has been engineered to normalise any communications channel, firms have the peace of mind that any new channels can be onboarded effortlessly to future-proof their eComms surveillance strategy.\u003c/p\u003e\n\u003cp\u003eTZEC can digitally link suspicious communications to high-risk trade activity to provide additional context that can be used for further investigation. By directly associating communication data with trade activity, compliance teams can conduct more thorough investigations and make informed decisions based on a granular timeline of interactions that would have previously been hugely time-consuming to define accurately.\u003c/p\u003e\n\u003cp\u003eThe system also utilises cutting-edge machine learning to evolve and enhance its ability to detect suspicious activity. For example, TZEC’s ‘sentiment analysis’ capabilities are able to determine whether a message contains threatening or coercive terminology, while the Global Lexicon Service monitors linguistic and behavioural trends to contextualise the potential risk associated with them.\u003c/p\u003e\n\u003ch2 id=\"book-a-consultation\"\u003e\u003cstrong\u003eBook a consultation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAcross the globe, financial regulators are increasingly focusing on how compliance teams manage the risk of communications across electronic platforms. TZEC offers a robust, comprehensive solution for eComms surveillance, enabling financial firms to stay ahead of regulatory requirements and manage compliance risks effectively. Book a consultation today to see how TZEC can mitigate the threat of market abuse.\u003c/p\u003e\n","date_published":"2024-11-09T12:06:00+0000"},{"title":"EMIR Refit - What you need to know and what you need to do ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/emir-refit-what-you-need-to-know-and-what-you-need-to-do-/","summary":"\u003cp\u003eThe EMIR Refit - a significant update to the European Market Infrastructure Regulation (EMIR) - has been in effect across the EU for several months now. With the UK fast approaching its own go-live date, 30th September 2024, it’s the perfect time to recap the key aspects of the key points of EMIR Refit and what you need to do.\u003c/p\u003e\n\u003ch2 id=\"background---emir-and-emir-refit\"\u003eBackground - EMIR and EMIR Refit\u003c/h2\u003e\n\u003cp\u003eEMIR is an EU regulation aimed at increasing the transparency and stability in over-the-counter (OTC) derivatives markets. Companies with trading activities in the European Economic Area, and those in the UK from September 2024, are obligated to comply in a few key areas:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eReporting: Market participants must report details of their OTC derivative contracts to trade repositories.\u003c/li\u003e\n\u003cli\u003eCentral Clearing: Certain OTC derivative contracts must be cleared through a central counterparty to reduce counterparty risk.\u003c/li\u003e\n\u003cli\u003eRisk Management: Market participants are required to implement robust risk management processes, such as collateral management, to reduce systemic risk.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"emir-refit\"\u003eEMIR Refit\u003c/h3\u003e\n\u003cp\u003eOver time, EMIR’s regulations have become outdated and complex, and mass reporting errors emerged, leading to the launch of the EMIR Refit (Regulatory Fitness and Performance Program) in 2017. The program intends to improve the quality of reporting by simplifying the regulation, including alignment with international standards. An initial round of amendments in 2019 expanded the definition of Financial Counterparties to include more entities posing risk to the financial system, and introduced the concept of Small Financial Counterparties which are exempt from clearing obligations, among many other changes.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://www.esma.europa.eu/sites/default/files/library/esma74-362-824_fr_on_the_ts_on_reporting_data_quality_data_access_and_registration_of_trs_under_emir_refit_0.pdf\"\u003eESMA’s Final Report\u003c/a\u003e, laying out the program’s next steps, was published in December 2020, endorsed by the European Commission in June 2022 and published into the \u003ca href=\"https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L:2022:262:TOC\"\u003eEuropean Commission Official Journal\u003c/a\u003e in October 2022 for implementation in April 2024. This latest publication includes substantial updates to the technical standards associated with EMIR, covering both the regulatory obligations (Regulatory Technical Standards) and the standards, formats, frequency and methods of fulfilling these obligations (Implementing Technical Standards). Following Brexit, the FCA have \u003ca href=\"https://www.fca.org.uk/publication/documents/reporting-derivatives-under-uk-emir-after-transition-period.pdf\"\u003e‘onshored’\u003c/a\u003e the EU regulation, EMIR Refit will be a requirement in the UK in September 2024.\u003c/p\u003e\n\u003ch2 id=\"what-you-need-to-know\"\u003eWhat you need to know\u003c/h2\u003e\n\u003ch3 id=\"emir-refit-the-latest-changes\"\u003eEMIR Refit: The latest changes\u003c/h3\u003e\n\u003cp\u003eAt a high level, there are three areas of change that you should know about:\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eReportable fields:\u003c/strong\u003e With the inclusion of 89 new reporting fields and the elimination of 15 previous fields, the total number of reporting fields under EMIR has increased from 129 to 203. For context, this is more than double the number of reportable fields under MIFIR for trade and transaction reporting. Whilst the removal of ‘Beneficiary’ and ‘Trading Capacity’ go some way to simplification, reporting firms’ overall requirements have been made more complex with the addition of challenging fields such as those pertaining to their counterparties, including clearing thresholds, reporting obligations and corporate sectors.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eReporting lifecycle:\u003c/strong\u003e EMIR Refit aims to make the lifecycle of a trade more transparent with increased granularity on what action has been taken, including the reporting of modifications or terminations of a contract, as well as a new field, ‘Event Type’, which helps to explain why an action was taken. ‘Event Type’ is to be reported and used in conjunction with ‘Action Type’ - ESMA has provided the matrix below to illustrate when reporting is required and at what level (Transactional, ‘T’, or Positional, ‘P’)\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/emir-refit-table-matrix-red.png\" alt=\"\"\u003e\u003cbr\u003e\u003ca href=\"\"\u003e\u003cem\u003eAction and Event Types Matrix\u003c/em\u003e\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eHarmonisation:\u003c/strong\u003e As part of simplifying EMIR, ESMA has sought to align the regulation with international standards with which firms are already familiar. For example, EMIR Refit aligns closely to the work done by the CPMI-IOSCO Harmonisation Group on critical data elements, directly impacting the generation of Unique Transaction Identifiers. Harmonisation also applies to the formatting of data reports. The fully standardised ISO20022 XML format is widely used elsewhere, and isthe required format of \u003ca href=\"https://eflowglobal.com/tztr-emir-reporting/\"\u003eEMIR reporting\u003c/a\u003e as of April 2024 in the EU, and in September 2024 in the UK.\u003c/p\u003e\n\u003ch3 id=\"regulatory-rewrites---emir-is-not-alone\"\u003eRegulatory rewrites - EMIR is not alone\u003c/h3\u003e\n\u003cp\u003eResearch published In 2021 highlighted that 97% of firms were misreporting under EMIR. With that backdrop, EMIR’s rewrite is no surprise. Similarly, high profile reporting \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8604-22\"\u003efailures\u003c/a\u003e and \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8552-22\"\u003eenforcement actions\u003c/a\u003e have \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8553-22\"\u003eoccurred in the US\u003c/a\u003e, and the CFTC implemented an initial round of changes to its swaps reporting rules in December 2022, ahead of plans to implement its \u003ca href=\"https://regnosys.com/insights/preparing-for-the-cftc-rewrite-with-digital-regulatory-reporting/\"\u003esecond phase in Q4 2023\u003c/a\u003e. The Monetary Authority of Singapore also expanded their OTC derivatives trade reporting requirements in 2021, and the Canadian Securities Administrators plan to implement changes to their trade reporting rules will come into force in 2025. This is to name just a few. Given this wider context, EMIR Refit can be viewed as one of a long list of regulatory rewrites in the trade and transaction reporting space. And since EMIR Refit is not alone, the actions taken in response to these amendments can go a long way in determining a firm’s preparation for the trials to come.\u003c/p\u003e\n\u003ch2 id=\"what-you-need-to-do\"\u003eWhat you need to do\u003c/h2\u003e\n\u003ch3 id=\"data\"\u003eData\u003c/h3\u003e\n\u003cp\u003eAs a regulation which leans heavily on reporting obligations, EMIR has always represented a data problem for firms. The amendments made through EMIR Refit compound these challenges, with a significant increase in reportable fields and a new required format. For many of the large firms that fall into EMIR’s scope, managing masses of global data will already present an operational challenge, especially if those firms are also operating on legacy systems. Big data \u003ca href=\"https://www.industryarc.com/Report/17928/big-data-consulting-market.html\"\u003econsulting\u003c/a\u003e and \u003ca href=\"https://www.fortunebusinessinsights.com/industry-reports/big-data-technology-market-100144\"\u003etechnology\u003c/a\u003e industries are experiencing significant growth as firms respond to competitive and regulatory pressures to modernise - of which EMIR Refit is one of the latest. Firms that take the opportunity to clean up their data stores and optimise their data pipelines in preparation for EMIR Refit will find themselves better prepared to respond to the challenges ahead, regulatory or otherwise.\u003c/p\u003e\n\u003ch3 id=\"technology-and-expertise\"\u003eTechnology and expertise\u003c/h3\u003e\n\u003cp\u003eIn the same way, firms that view EMIR Refit as a driving force for technology transformation will be better placed for more seamless transitions during future shifts in economic and regulatory conditions. In particular, the use of dynamic and broad solutions, such as platforms, can provide a breadth of operational coverage which means that many of the necessary changes can be made all within one system. Managing these changes with speed and precision requires that the technology partner is equipped with deep subject matter expertise - a commodity that is especially important in the context of a rewrite that comes 10 years after original \u003ca href=\"https://eflowglobal.com/how-a-transaction-reporting-system-can-simplify-your-emir-reporting-processes/\" target=\"_blank\" rel=\"noopener\"\u003eEMIR implementation\u003c/a\u003e. In that time, many firms will likely have lost their internal experts. Trusting an external partner is not always easy, as trust is built not only through expertise and accolades, but also through communication and customer service excellence. This point can easily be missed when the primary focus is technological change, but is a crucial consideration when firms are relying on external partners to address regulatory obligations.\u003c/p\u003e\n\u003cp\u003eSo, to avoid dreading the next regulatory rewrite, choose a technology partner with the capabilities to understand and operationalise your end to end obligations, and who you can trust to guide you through the process with maximum clarity. Most importantly, choose a technology partner with a track record of customer service excellence alongside technical expertise. This combination is the most impactful for successful change.\u003c/p\u003e\n\u003cp\u003eeflow’s \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting\"\u003eTZTR Transaction Reporting platform\u003c/a\u003e is purpose-built to meet all EMIR and MiFIR reporting obligations and is already being used by European firms to comply with the new legislation that was rolled out in April 2024.\u003c/p\u003e\n\u003ch3 id=\"key-changes\"\u003eKey Changes\u003c/h3\u003e\n\u003ch3 id=\"1-expansion-of-reportable-fields\"\u003e1. \u003cstrong\u003eExpansion of Reportable Fields\u003c/strong\u003e\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eThe number of reportable fields has increased from 129 to 203 in the EU and to 204 in the UK.\u003c/li\u003e\n\u003cli\u003eThis expansion aims to enhance the granularity and accuracy of derivatives reporting.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"2-introduction-of-the-corporate-sector-field\"\u003e2. \u003cstrong\u003eIntroduction of the \u0026lsquo;Corporate Sector\u0026rsquo; Field\u003c/strong\u003e\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\n\u003cp\u003eA new data field, \u0026lsquo;corporate sector,\u0026rsquo; has been introduced to classify counterparties based on their primary business activities.\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eThis addition helps regulators better understand the nature of the entities involved in derivative transactions.\u003c/p\u003e\n\u003ch3 id=\"br3-adoption-of-iso-20022-xml-reporting-format\"\u003e\u003cbr\u003e3. \u003cstrong\u003eAdoption of ISO 20022 XML Reporting Format\u003c/strong\u003e\u003c/h3\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eBoth EU and UK EMIR Refit mandates the use of the ISO 20022 XML format for reporting, replacing previous formats to standardize data submission.\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eThis change facilitates improved data quality and interoperability across reporting entities.\u003c/p\u003e\n\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"4-new-reporting-timelines\"\u003e4. \u003cstrong\u003eNew Reporting Timelines\u003c/strong\u003e\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\n\u003cp\u003eEU EMIR Refit went live on 29 April 2024, with a backloading deadline for outstanding derivatives set for 26 October 2024.\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eUK EMIR Refit is scheduled to commence on 30 September 2024, with a backloading deadline of 31 March 2025.\u003cbr\u003e\u003cbr\u003e\u003cbr\u003e\u003cstrong\u003eEMIR Refit Implementation Timeline\u003cbr\u003e\u003c/strong\u003e\u003c/p\u003e\n\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eDate\u003c/th\u003e\n\u003cth\u003eMilestone\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd\u003e29 April 2024\u003c/td\u003e\n\u003ctd\u003eEU EMIR Refit go-live\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003e26 October 2024\u003c/td\u003e\n\u003ctd\u003eEU backloading deadline for outstanding trades\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003e30 September 2024\u003c/td\u003e\n\u003ctd\u003eUK EMIR Refit go-live\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003e31 March 2025\u003c/td\u003e\n\u003ctd\u003eUK backloading deadline for outstanding trades\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003ch2 id=\"additional-resources\"\u003eAdditional Resources\u003c/h2\u003e\n\u003cp\u003eFor more detailed information on EMIR Refit and its implications, consider exploring the following resources:\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003ca href=\"https://www.kaizenreporting.com/5-key-changes-for-esma-emir-refit-2024/\"\u003eKaizen Reporting: 5 Key Changes for EMIR Refit 2024\u003c/a\u003e\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"\"\u003eTRAction Fintech: What is the new ‘Corporate sector’ field under EMIR Refit?\u003c/a\u003e\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"\"\u003eDeloitte UK: EMIR Refit – Key changes and challenges\u003c/a\u003e\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003cp\u003eTo help you prepare effectively, we are offering a free EMIR Refit Readiness Audit. This complimentary 30-minute consultation will assess your current readiness and provide insights on how to maintain your compliance during the transition. \u003ca href=\"https://lp.eflowglobal.com/emir-refit-readiness-audit?utm_campaign=Prospects%20-%20EMIR%20Refit\u0026amp;utm_source=hs_email\u0026amp;utm_medium=email\u0026amp;_hsenc=p2ANqtz-8LCacurFvg_c08AUAgo8_C-55WunQpADuew2BWZXlOcetJbXmcuHzbTM2_oQWthihXo3vo\"\u003eBook your free EMIR Refit audit here.\u003c/a\u003e\u003c/p\u003e\n\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"2024-09-09T11:00:00+0000"},{"title":"SEBI's latest circular: Strengthening AMC to combat market abuse and front-running","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/sebi-s-latest-circular-strengthening-amc-to-combat-market-abuse-and-front-running/","summary":"\u003ch2 id=\"background\"\u003eBackground\u003c/h2\u003e\n\u003cp\u003eStriking the right balance between stringent oversight and operational flexibility is a difficult but necessary endeavour. In 2020, The Securities and Exchange Board of India (SEBI) introduced rigorous regulations mandating that all communications by Asset Management Companies (AMCs) during market hours be conducted through recorded channels, including personal and face-to-face interactions. This measure was aimed at curbing market abuses such as insider trading, front-running and fraudulent transactions. However, while these regulations have been effective in deterring misconduct, they have also been perceived as overly restrictive by the mutual fund industry, impacting the operational efficiency of AMCs.\u003c/p\u003e\n\u003ch2 id=\"time-for-change\"\u003eTime for change\u003c/h2\u003e\n\u003cp\u003eRecognising these concerns, SEBI is now contemplating a nuanced approach that would relax the stringent communication recording requirements while simultaneously strengthening the internal controls and trade surveillance mechanisms within AMCs. The proposed amendments aim to balance operational efficiency with the need to safeguard against market abuse. This blog explains these amendments, exploring how SEBI plans to maintain market integrity while addressing the operational needs of the industry, and what this means for the future of mutual fund regulation in India.\u003c/p\u003e\n\u003ch2 id=\"the-proposed-amendments\"\u003eThe proposed amendments\u003c/h2\u003e\n\u003cp\u003eThe current Indian regulations emphasise integrity, transparency, and accountability, but lack a structured institutional mechanism to detect and otherwise deter market abuse. SEBI\u0026rsquo;s proposed amendments aim to bridge this gap by requiring AMCs to implement robust surveillance systems, whistleblower policies, and senior management oversight. The ultimate aim is to enhance market integrity while aligning India\u0026rsquo;s regulatory framework with international best practices.\u003c/p\u003e\n\u003ch3 id=\"stricter-mechanisms-for-identifying-and-preventing-market-abuse\"\u003eStricter mechanisms for identifying and preventing market abuse\u003c/h3\u003e\n\u003cp\u003eOn 05 August, SEBI released their latest \u003ca href=\"https://www.sebi.gov.in/legal/circulars/aug-2024/institutional-mechanism-by-asset-management-companies-for-identification-and-deterrence-of-potential-market-abuse-including-front-running-and-fraudulent-transactions-in-securities_85468.html\"\u003e\u003cu\u003eCircular\u003c/u\u003e\u003c/a\u003e, containing more detailed proposals for amending the Mutual Fund Regulations to require AMCs to establish a structured institutional mechanism aimed at identifying and deterring market abuse. This proposal stems from recent incidents of misconduct within AMCs1, highlighting the need for proactive measures. The mechanism will include enhanced surveillance systems, internal controls, and escalation processes to detect and address unethical practices such as insider trading and misuse of sensitive information:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\n\u003cp\u003e\u003cstrong\u003eAlert-based surveillance\u003c/strong\u003e: AMCs must develop and implement systems that generate and process alerts promptly, ensuring “timely” identification of potential market abuse.\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003e\u003cstrong\u003eProcessing alerts\u003c/strong\u003e: During the review of alerts, AMCs should consider all recorded communications, including chats, emails, and access logs from the dealing room, as well as CCTV footage if available. Entry logs to the premises should also be monitored.\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003e\u003cstrong\u003eStandard operating procedures (SOPs)\u003c/strong\u003e: AMCs are required to establish written policies and procedures for investigating and addressing potential market abuse, such as front-running and manipulative or fraudulent transactions. These SOPs must be approved by the AMC\u0026rsquo;s Board of Directors.\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003e\u003cstrong\u003eAction on suspicious alerts\u003c/strong\u003e: Upon detecting potential market abuse, AMCs should take appropriate actions, which may include suspending or terminating the involved employees or brokers.\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003e\u003cstrong\u003eEscalation process\u003c/strong\u003e: AMCs must have a clear process to promptly escalate instances of potential market abuse to their Board of Directors and Trustees, including the results of their internal investigations.\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003e\u003cstrong\u003ePeriodic review\u003c/strong\u003e: AMCs should regularly review and update their surveillance procedures and systems to ensure they remain effective over time.\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003e\u003cstrong\u003eData sharing with exchanges\u003c/strong\u003e: For better surveillance, stock exchanges and depositories, in coordination with AMFI, should establish systems to share relevant trade data with AMCs.\u003cbr\u003e\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003e\u003cstrong\u003eReporting to SEBI\u003c/strong\u003e: AMCs must report all examined alerts and the corresponding actions taken to SEBI in their Compliance Test Report (CTR) and Half-Yearly Trustee Report (HYTR) in the following format:\u003c/p\u003e\n\u003cp class=\"align-center\"\u003e\u003cimg src=\"/images/sebi-table.png\" alt=\"SEBI Table\" height=\"200\" width=\"880\" /\u003e\u003cbr /\u003e\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eDetailed implementation standards will be supplied in consultation between The Association of Mutual Funds in India (AMFI) and SEBI by August 20, 2024.\u003c/em\u003e\u003c/p\u003e\n\u003ch3 id=\"brsenior-manager-accountability\"\u003e\u003cbr\u003eSenior manager accountability\u003c/h3\u003e\n\u003cp\u003eThe proposed amendments would also enhance accountability by making the AMC’s Chief Executive Officer (or equivalent) and Chief Compliance Officer responsible for the implementation and effective functioning of the institutional mechanism for market abuse prevention. This amendment aims to ensure that senior management actively oversees and ensures compliance, fostering a culture of accountability throughout the AMC.\u003cbr\u003e\u003c/p\u003e\n\u003ch3 id=\"whistleblower-policy\"\u003eWhistleblower policy\u003c/h3\u003e\n\u003cp\u003eThe proposals would mandate the implementation of a whistleblower policy within AMCs. This policy would allow employees and stakeholders to report unethical practices or potential market abuse anonymously and safely, with assured confidentiality and protection for whistleblowers. The amendment aims to create a secure environment for reporting concerns, enabling AMCs to detect and address unethical behaviour and market abuse more effectively.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003ch3 id=\"subsequent-relaxation-of-electronic-communications-surveillance\"\u003eSubsequent relaxation of electronic communications surveillance\u003c/h3\u003e\n\u003cp\u003eBy introducing the aforementioned mechanisms, SEBI hopes to create a robust regulatory environment in which they can relax communications recording requirements for FMDs. While the current regulations mandate recording to prevent market abuse, industry participants have highlighted challenges, particularly during face-to-face meetings and external interactions. SEBI suggests exempting such in-person communications from recording requirements, provided that existing communication safeguards remain in place. This relaxation is contingent upon implementing a robust institutional mechanism within AMCs, ensuring continued market integrity despite the relaxed recording rules.\u003cbr\u003e\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003eConclusion\u003c/h2\u003e\n\u003cp\u003eFor India, these changes signify a move towards a more mature, principles-based regulatory regime that supports innovation and growth in the financial sector while ensuring that the highest standards of market integrity are maintained. It underscores India\u0026rsquo;s commitment to maintaining a regulatory environment that is not only robust and resilient but also flexible enough to adapt to new market realities. This approach mirrors global regulatory trends, where the focus is increasingly on creating frameworks that are both effective and adaptable.\u003cbr\u003e\u003c/p\u003e\n\u003cp\u003eAs financial markets and adjacent technologies become more complex and interconnected, the need for sophisticated regulatory mechanisms that can preemptively detect and deter misconduct becomes ever more critical. The global regulatory environment is therefore likely to see a continued emphasis on transparency, technological integration, and institutional responsibility. SEBI’s approach provides a blueprint for how emerging markets can balance stringent oversight with the need for operational flexibility, ensuring that market integrity is preserved in an era of rapid innovation.\u003c/p\u003e\n\u003cbr\u003e\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"2024-04-09T07:43:00+0000"},{"title":"Unpacking ESMA’s technical standards for best execution: A closer look at the latest consultation","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/unpacking-esma-s-technical-standards-for-best-execution-a-closer-look-at-the-latest-consultation/","summary":"\u003ch2 id=\"legal-background-and-purpose-of-the-technical-standards\"\u003eLegal background and purpose of the Technical Standards\u003c/h2\u003e\n\u003cp\u003eOn 8th March 2024, an amendment to the Directive on Markets in Financial Instruments (MiFID II review) was published in the Official Journal of the European Union. This amendment mandates the European Securities and Markets Authority (ESMA) to develop Regulatory Technical Standards (RTS), aiming to specify the criteria for establishing and assessing the effectiveness of investment firms’ order execution policies.\u003c/p\u003e\n\u003cp\u003eESMA\u0026rsquo;s latest Consultation Paper seeks stakeholders\u0026rsquo; views on these proposed standards. Feedback from this consultation will be considered by ESMA, with the final report and draft RTS expected to be submitted to the European Commission for endorsement by December 29, 2024. This blog serves to summarise and contextualise the RTS, providing investment firms with a clear understanding of the new criteria.\u003c/p\u003e\n\u003ch2 id=\"revisiting-mifid-ii-article-27---best-execution\"\u003eRevisiting MiFiD II Article 27 - Best Execution\u003c/h2\u003e\n\u003cp\u003eUnderstanding MiFID II’s Article 27 is crucial as it contains firms’ current best execution requirements, and is therefore the backbone of the proposed RTS. This article mandates that investment firms take all sufficient steps to achieve the best possible result for client orders, considering factors like price, costs, speed, and likelihood of execution and settlement. For retail clients, it emphasises the importance of \u003cem\u003etotal consideration\u003c/em\u003e, including all related execution costs. Firms must implement and monitor an effective \u003cem\u003eorder execution policy\u003c/em\u003e to ensure transparency and consistently optimal outcomes for clients.\u003c/p\u003e\n\u003ch3 id=\"shortcomings-in-firms-execution-policies\"\u003eShortcomings in firms’ execution policies\u003c/h3\u003e\n\u003cp\u003eESMA’s MiFiD II reviews have highlighted shortcomings in firms’ actual implementation of execution policies. Some firms have failed to:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eProvide sufficient documentation to justify their choice of execution venue\u003c/li\u003e\n\u003cli\u003eProperly demonstrate that they executed client orders in accordance with order execution policies\u003c/li\u003e\n\u003cli\u003eDisclose details other than generic information about order execution policies and their steps taken to obtain the best possible result when executing client orders\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eAs a result, the RTS laid out in the consultation paper are focussed on making sure that order execution policies effectively contribute to enhance the execution quality for retail and professional clients.\u003c/p\u003e\n\u003ch2 id=\"key-elements-of-the-proposed-draft-rts-on-firms-execution-policies\"\u003eKey elements of the proposed draft RTS on firms’ execution policies\u003c/h2\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cstrong\u003e1. In their order execution policies and arrangements, firms should distinguish between the different classes of financial instruments they offer.\u003c/strong\u003e\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003eThese classes should be based on ISO Standard 10962, using the first two letters of the CFI to correspond to a class of financial instrument. Additionally, each country of primary listing for equity instruments (CFI code starting with “E”) should constitute a separate class. Firms may, in some cases, cluster several classes of instrument into a single class if it doesn’t impair achieving the best possible result.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eESMA Q1:\u003c/strong\u003e Do you agree with the proposed categorisation of classes of financial instrument? Could the methodology based on the classification of instruments in the MiFiD II RTS 1 and 2 used in the context of MiFiD II transparency reporting be an alternative?\u003c/em\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eThe alternative methodology ESMA is referring to:\u003c/strong\u003e A fixed list of classes could be used, based on MiFID II RTS 1 and 2 classifications.\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eEquities by country:\u003c/strong\u003e Each country of primary listing for shares in companies would be a separate class\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eOther instruments:\u003c/strong\u003e Other financial instruments could be grouped into 15-20 classes\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eClustering allowed:\u003c/strong\u003e Clustering of several classes into a single class could also be permitted under this methodology\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003c/ul\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cstrong\u003e2. Firms should pre-select eligible venues for client order execution according to meaningful criteria determining to what extent the best possible result can be obtained for clients.\u003c/strong\u003e\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003eVenues are to be selected per class of financial instrument, per category of retail and/or professional clients, and by accounting for certain further factors including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eDifferent order frequencies and values for retail and professional clients respectively\u003c/li\u003e\n\u003cli\u003eWhether the executed financial instruments are EU or non-EU instruments\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eOverall, the draft RTS proposes that firms keep an updated list of venues for the execution of client orders. The list must consist of venues authorised by national competent authorities or third-country authorities, and it must be determined according to the firms’ internal governance procedures. The list must include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eDate of approval, name and capacity of the person or name of the governance body that approved the venue\u003c/li\u003e\n\u003cli\u003eWhich classes of financial instrument the venue can be used\u003c/li\u003e\n\u003cli\u003eWhich categories of clients the venue can be used\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eESMA Q2:\u003c/strong\u003e Do you believe that the current wording of the RTS is clear and sufficient with regard to the content of the order execution policy where an investment firm selects only one execution venue to execute all client orders? Or should the RTS provide for specific criteria to be taken into account when assessing if the selected venue achieves the best possible result in the execution of client orders? Please also state the reasons for your answer.\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eThe proposal to categorise venues by class of financial instrument and client type, and to consider order frequency and value, ensures a tailored approach. The requirement for an updated, governance-approved list of venues promotes transparency and accountability. The current wording of the RTS may or may not be sufficient, but including specific criteria for assessing single venue selections would enhance clarity and ensure consistent best execution practices.\u003cbr\u003e\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cstrong\u003e3. Firms should distinguish between obligatory and discretionary factors in cases where a client order\u003c/strong\u003e \u003cem\u003e\u003cstrong\u003ecould\u003c/strong\u003e\u003c/em\u003e \u003cstrong\u003ebe executed at several venues.\u003c/strong\u003e\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003eCriteria and relative importance must be specified for (i) each class of financial instrument (ii) retail and professional clients and (iii) based on analysis which must include certain factors such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eAll costs directly related to the execution\u003c/li\u003e\n\u003cli\u003eReal-time market or historical data on the relevant financial instrument or class of instrument\u003c/li\u003e\n\u003cli\u003eSize and nature of the order\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIf the firm uses an automotive order routing system, it must describe the main characteristics of the system.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eESMA Q3:\u003c/strong\u003e Do you agree with the proposed factor of “order sizes” respectively for retail and professional clients, to be considered in investment firms’ selection of eligible execution venues in their order execution policy and internal execution arrangements (see Article 4(1)(d)(i and ii) of the draft RTS)? If not, what alternative factor would you propose?\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eDifferentiating order sizes for retail and professional clients aligns with the principle of best execution by ensuring that larger, more complex orders are handled with the necessary sophistication, while smaller orders receive appropriate attention to detail. Some alternative factors include liquidity conditions or market impact considerations to further refine the execution quality.\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cstrong\u003e4. Firms must continuously monitor their execution quality, triggering reviews of their execution policies and venue selection if significant events impact quality or if performance is deemed to be insufficient.\u003c/strong\u003e\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003eFirms are to specify the frequency and methodology of their monitoring within their execution policies, allowing them to assess all transactions or representative samples for each class of financial instruments. Monitoring performance against specific thresholds can prompt venue reviews if performance falls below predetermined levels. Firms may use third-party monitoring but must carefully evaluate the third party\u0026rsquo;s processes.\u003c/p\u003e\n\u003cp\u003eFirms are also required to conduct regular reviews of their execution policies and arrangements, assessing venues at least annually or upon material changes. Reviews must consider new venues and services, and firms must update their policies and correct deficiencies promptly, within three months at most. Assessments should compare transaction prices against reference data and distinguish between execution-related fees and venue membership costs. Third-party analysis is permitted but must be thoroughly reviewed by the firm to ensure it represents the firm’s client base accurately.\u003c/p\u003e\n\u003cp\u003e\u003cbr\u003e\u003cem\u003e\u003cstrong\u003eESMA Q4:\u003c/strong\u003e Do you agree with ESMA’s proposals for the specification of the criteria for establishing and assessing the effectiveness of investment firms’ order execution policies?\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eESMA Q5\u003c/strong\u003e\u003c/em\u003e: \u003cem\u003eDo you agree with ESMA’s proposal that investment firms may rely on monitoring and assessments performed by third parties, such as independent data providers, as long as firms assess the processes of these third parties?\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eContinuous monitoring and regular review of execution policies are vital for maintaining best execution standards. ESMA’s proposals to specify monitoring frequency and methodology ensure consistent oversight and prompt action when performance falls below set thresholds. Allowing third-party monitoring and assessments is practical, provided firms rigorously evaluate these processes. This balance of internal and external oversight helps firms stay compliant and adapt to market changes effectively.\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cstrong\u003e5. Firms must outline how they handle specific client instructions, detailing the impact on venue selection and best execution criteria.\u003c/strong\u003e\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003eWithin their order execution policies, firms must differentiate between orders with and without specific instructions, explaining that specific instructions involve choosing from multiple options or directing the firm to handle the order differently from the policy. Only the instructed part of the order is treated as \u003cem\u003especific instruction\u003c/em\u003e, with other parts processed normally. Additionally, if firms allow clients to choose execution venues, the policy must explain measures to avoid inducing venue choices and include a warning about the potential impact on achieving the best possible result.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eESMA Q6:\u003c/strong\u003e Concerning the specific client instruction, should it be possible for an investment firm to pre-select an execution venue in the order screen, where the firm invites its clients to choose an executing venue out of multiple options? And if so, do you agree that only if the client chooses a different venue than the one pre-selected by the firm, the choice of execution venue does constitute a specific instruction?\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eAllowing clients to choose execution venues requires clear measures to prevent undue influence and ensure clients are aware of the potential impacts on execution quality. The proposal for pre-selecting venues streamlines the process, but it\u0026rsquo;s essential that any client deviation is explicitly treated as a specific instruction to maintain transparency and regulatory compliance. This approach balances operational efficiency with client autonomy and regulatory standards.\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cstrong\u003e6. Investment firms\u0026rsquo; order execution policies must ensure the best possible result for clients when executing orders on their own account.\u003c/strong\u003e\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003eFirms must specify that “own account dealing” is allowed only if it is expressly provided for in the policy and results in the best outcome for clients. The policies must also address conflict of interest management and ensure fair pricing for OTC products, complying with organisational and methodological disclosure requirements.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eESMA Q7:\u003c/strong\u003e Where an investment firm executes client orders by dealing on own account (including back-to-back trading), in light of the specificity of this execution model and since it is bound by the rules governing best execution, do you believe the current text is clear with regard to what kind of obligations an investment firm applying such models should comply with? Or do you believe it would be useful to provide in the RTS list and explanations of information that should be included in the order execution policy, such as related to the method and steps to be taken by the firm to establish the price of client transactions in back-to-back trading, or the methodology for the firm’s application of mark-ups or mark-downs in such order executions?\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eDealing on \u003cem\u003eown account\u003c/em\u003e inherently involves conflicts of interest, as firms may prioritise their own profits over clients\u0026rsquo; best interests. Specific guidelines in the RTS for price setting and applying mark-ups or mark-downs would mitigate these conflicts by ensuring transparent and fair pricing practices. These guidelines would provide a clearer framework for firms to follow, potentially enhancing compliance and protecting clients from unfair practices\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003eConclusion\u003c/h2\u003e\n\u003cp\u003eThe proposed RTS under MiFID II aim to elevate the standards of best execution by requiring investment firms to adopt a granular and data-driven approach to order execution. But while the new rules should drive better client outcomes, they present operational challenges for firms reliant on more manual, spreadsheet-based evaluation.\u003c/p\u003e\n\u003cp\u003eeflow Global’s TZBE system is specifically designed to meet these demands, automating the analysis of cost, speed and likelihood of execution, broken down by asset class. The platform is entirely customisable and firms are able to tailor the system to account for organisation-specific requirements and client instructions, ensuring ongoing compliance with the detailed stipulations of the RTS.\u003c/p\u003e\n\u003cp\u003eThe ESMA consultation serves as an opportunity for investment firms to have their voices heard in the development of the RTS. But with a limited feedback period and a likely short implementation window, it’s important that firms are proactive in evaluating their current execution policies and surrounding technology stack to ensure they are prepared for more rigorous standards. By embracing advanced solutions like TZBE, firms can not only navigate these regulatory changes but also position themselves at the forefront of industry standards, ensuring they deliver the best possible outcomes for their clients in an increasingly competitive market.\u003c/p\u003e\n","date_published":"2024-30-08T12:50:00+0000"},{"title":"UK MAR and market abuse after Brexit - The new regime explained","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/uk-mar-and-market-abuse-after-brexit-the-new-regime-explained/","summary":"\u003ch2 id=\"uk-mar-and-market-abuse-since-brexit\"\u003eUK MAR and market abuse since Brexit\u003c/h2\u003e\n\u003cp\u003eIt may seem hard to believe, but it’s now more than four and a half years since the UK officially left the European Union. This seismic event has had significant political, social and economic repercussions for the country, and has also impacted the financial services industry that plays such an important role in the UK economy.\u003c/p\u003e\n\u003cp\u003eRegulatory matters have certainly been impacted by Brexit. Just as it was back in 2020, market abuse remains a serious concern for financial regulators. It’s why the European Union sought to further codify its regime back in 2016 with the \u003ca href=\"https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0596\u0026amp;from=EN\" target=\"_blank\" rel=\"noopener\"\u003eMarket Abuse Regulation\u003c/a\u003e, and why the UK’s Financial Conduct Authority (FCA) has paid such meticulous attention to monitoring firms and enforcing its provisions.\u003c/p\u003e\n\u003cp\u003eWith the passing of the \u003ca href=\"https://www.legislation.gov.uk/ukpga/2020/29/enacted/data.htm\" target=\"_blank\" rel=\"noopener\"\u003eEuropean Union (Future Relationship) Act 2020\u003c/a\u003e and the end of the Brexit transition period, the UK severed its ties from the EU’s legal framework. From the EMIR reporting regime to the cessation of passporting rights for UK firms, Brexit has had a significant effect on the way financial services operate – including in terms of compliance with market abuse legislation which have been ‘on-shored’ as the UK Market Abuse Regime (UK MAR). With the express intention of providing continuity for UK markets and financial instruments, the regime provides welcome clarity against an otherwise unclear backdrop - but what does it really mean for businesses?\u003c/p\u003e\n\u003cp\u003eHere, we take a look back at the key provisions of UK MAR, and summarise the steps businesses need to take to comply with market abuse regulations in the post-Brexit environment.\u003c/p\u003e\n\u003ch2 id=\"what-does-brexit-mean-for-the-market-abuse-regulation\"\u003eWhat does Brexit mean for the market abuse regulation?\u003c/h2\u003e\n\u003cp\u003eThe Market Abuse Regulation (EU MAR) first came into effect on 3 July 2016, and replaced the previous Market Abuse Directive (MAD). In simple terms, the regulation is an instrument to discourage and penalise insider trading, market manipulation, and the unlawful disclosure of information.\u003c/p\u003e\n\u003cp\u003eTaking effect from 23:00 on 31 December 2020, the European Union (Withdrawal) Act 2018 effectively translates the UK Market Abuse Regime’s (UK MAR) European predecessor into domestic law. UK MAR is made up a collection of legislation, technical standards, and guidance, namely;\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003ethe \u003ca href=\"https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0596\u0026amp;from=EN\"\u003eEU Market Abuse Regulation\u003c/a\u003e as amended by the UK’s \u003ca href=\"https://www.legislation.gov.uk/uksi/2019/310/contents\"\u003eMarket Abuse Exit Regulations 2019\u003c/a\u003e;\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"https://www.handbook.fca.org.uk/techstandards\"\u003eFCA Technical Standards\u003c/a\u003e that relate to UK MAR;\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"https://www.esma.europa.eu/convergence/guidelines-and-technical-standards\"\u003eESMA Guidelines\u003c/a\u003e and ESMA Q\u0026amp;A documents that existed before the end of the Brexit transition period; and\u003c/li\u003e\n\u003cli\u003ethe \u003ca href=\"https://www.handbook.fca.org.uk/handbook\"\u003eFCA Handbook\u003c/a\u003e.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe regime applies to all issuers with securities listed or traded on UK markets or organised trading facilities (Main Market, AQSE, AIM). EU MAR continues to apply in cases where securities are listed or traded on a market or via an organised trading facility based in a European Economic Area (EEA) Member State. In essence, this means that listed companies have two key bodies of legislation that they need to pay attention to. A company that is listed on both the London Stock Exchange’s Main Market and the French Euronext Paris, for example, must comply with both UK MAR and EU MAR.\u003c/p\u003e\n\u003ch2 id=\"uk-mar-the-key-provisions-explained\"\u003eUK MAR: the key provisions explained\u003c/h2\u003e\n\u003cp\u003eAlthough UK MAR broadly mirrors its EU counterpart, there are a few key provisions that businesses must consider and adhere to. It is worth keeping in mind that many things remain unchanged under the UK scheme – for instance the requirement for firms and trading venues to provide suspicious transaction reports to the FCA.\u003c/p\u003e\n\u003cp\u003eSince many of the provisions of EU MAR remain unchanged by the UK version, the following points focus on those areas introduced under The Financial Services Bill 2019-2021, where the UK has diverged from the European regime.\u003cbr\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003ePDMR disclosures\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFirstly, it’s important to note that there is continuing obligation under UK MAR for ‘persons discharging managerial responsibilities’ (PDMRs) and ‘persons closely associated with them’ (PCAs) to make disclosures to the issuer and home state regulator within a specified period after any notifiable transaction involving the issuer’s securities. UK MAR goes one step further than EU MAR by clarifying that these disclosures must be made within ‘three working days’ (versus the EU’s three ‘business days’), thereby expressly excluding UK public holidays along with Saturdays and Sundays.\u003c/p\u003e\n\u003cp\u003eIn a welcome change to the existing regime, issuers now have two working days from receipt of notification from a PDMR or PCA to make a regulatory announcement of the transaction. This gives issuers some breathing space, since the previous regime required them to make their notification within the same three-day window following a relevant transaction.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eInsider lists\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe responsibilities of companies to maintain insider lists have been further clarified by UK MAR. In broad terms, the obligation to keep an up-to-date list of company insiders now also applies to any person acting on behalf of the issuer. Whilst the issuer itself will remain responsible for compliance, this change addresses confusion that has previously surrounded the role of professional advisers and other third parties who may act on its behalf.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eStronger sentencing\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFurther changes have been made to the Criminal Justice Act 1993 and the Financial Services Act 2021, where the intention is to increase the maximum sentence for insider dealing and market manipulation offences from seven to ten years. This will reconcile the penalty provisions of UK MAR with other those already found in UK law for comparable economic crimes.\u003c/p\u003e\n\u003ch2 id=\"the-future-of-market-abuse-regulations-in-the-uk\"\u003eThe future of market abuse regulations in the UK\u003c/h2\u003e\n\u003cp\u003eThe implementation of UK MAR and the governance of market abuse by the FCA has followed a very recognisable path in recent years. Upon its launch, the FCA website stated that “UK MAR aims to increase market integrity and investor protection, enhancing the attractiveness of securities markets for capital raising” – which is strikingly similar to the statement they made at the inception of EU MAR in 2016. It seems, as far as the regulator is concerned, that business as usual is the order of the day for market abuse regulation.\u003c/p\u003e\n\u003cp\u003eIn recent years, the UK regulator has demonstrated its focus on clamping down on market abuse, both through regulatory enforcement action and clear instructions on the measures that it expects firms to take in order to remain compliant.\u003c/p\u003e\n\u003cp\u003eThe FCA’s Market Watch 79 publication was perhaps the clearest indication of its strategy. This highlighted not only \u003ca href=\"https://eflowglobal.com/fca-market-watch-79/\"\u003ethe most common failures of firms’ trade surveillance strategies\u003c/a\u003e, but also the flaws that they had identified in the operational processes of firms that had measures in place to prevent instances of market abuse.\u003c/p\u003e\n\u003cp\u003eIn terms of enforcement action, eflow research highlighted that the FCA issued 10 fines for instances of market abuse between Q1 2019 and Q3 2023, totalling $87m. While the number of fines issued was lower than the AMF in France, the average value of fines was the highest of all European regulators, suggesting that the FCA sees severe financial penalties as key to their enforcement strategy.\u003c/p\u003e\n\u003ch2 id=\"staying-compliant-under-uk-mar\"\u003eStaying compliant under UK MAR\u003c/h2\u003e\n\u003cp\u003eAs the UK continues to chart its own course outside of the EU, companies and investment firms must be more vigilant than ever when it comes to ensuring that they meet their legal obligations. This is especially the case for those companies who are listed in both the UK and on markets domiciled in EEA Member States – a situation which is likely to give rise to a dual reporting obligation.\u003c/p\u003e\n\u003cp\u003eThe legislation that regulates market abuse and reporting is complex and ever-evolving and the penalties for getting it wrong have become increasingly severe post-Brexit. eflow’s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eTZTS Trade Surveillance system\u003c/a\u003e has been designed specifically to lighten the regulatory load and keep firms compliant.\u003c/p\u003e\n\u003ch3 id=\"post-brexit-regulatory-landscape-uk-mar-vs-eu-mar\"\u003ePost-Brexit Regulatory Landscape: UK MAR vs. EU MAR\u003c/h3\u003e\n\u003cp\u003e\u003cbr\u003eFollowing the UK\u0026rsquo;s departure from the EU, the Market Abuse Regulation (EU MAR) was transposed into UK law as UK MAR on 31 December 2020. While UK MAR retains much of the original EU MAR framework, several distinctions have emerged:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eScope of Application\u003c/strong\u003e: EU MAR applies to financial instruments traded on EU trading venues, whereas UK MAR governs instruments on UK trading venues. \u003cstrong\u003eRegulatory Divergence\u003c/strong\u003e: The UK has initiated reforms to tailor its market abuse regime, including plans to repeal retained EU law and introduce UK-specific legislation under the Financial Services and Markets Act 2023.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eCriminal Regime Review\u003c/strong\u003e: In March 2023, HM Treasury and the FCA published a joint statement outlining proposed updates to the criminal market abuse regime, aiming to enhance enforcement effectiveness.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"recent-market-abuse-cases-and-regulatory-responses\"\u003eRecent Market Abuse Cases and Regulatory Responses\u003c/h2\u003e\n\u003cp\u003eThe FCA has demonstrated a robust approach to enforcing market abuse regulations, with notable cases in recent years:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eMohammed Zina Case (2024)\u003c/strong\u003e: A former Goldman Sachs analyst was convicted of insider trading and fraud, resulting in a 22-month prison sentence and a £586,711 confiscation order.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eBarclays Bank plc (2024)\u003c/strong\u003e: Fined £10 million for breaches related to failure to disclose information in the issuer sector.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eMetro Bank plc (2024)\u003c/strong\u003e: Received a £16.7 million fine for inadequate systems and controls concerning financial crime in the retail banking sector.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThese cases underscore the FCA\u0026rsquo;s commitment to maintaining market integrity and deterring misconduct.\u003c/p\u003e\n\u003chr\u003e\n\u003ch2 id=\"comparative-overview-pre-and-post-brexit-market-abuse-regulations\"\u003eComparative Overview: Pre and Post-Brexit Market Abuse Regulations\u003c/h2\u003e\n\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eAspect\u003c/th\u003e\n\u003cth\u003eEU MAR (Pre-Brexit)\u003c/th\u003e\n\u003cth\u003eUK MAR (Post-Brexit)\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd\u003e\u003cstrong\u003eJurisdiction\u003c/strong\u003e\u003c/td\u003e\n\u003ctd\u003eEU trading venues\u003c/td\u003e\n\u003ctd\u003eUK trading venues\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003e\u003cstrong\u003eLegislative Framework\u003c/strong\u003e\u003c/td\u003e\n\u003ctd\u003eDirect EU regulation\u003c/td\u003e\n\u003ctd\u003eTransposed EU MAR with UK-specific amendments\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003e\u003cstrong\u003eRegulatory Authority\u003c/strong\u003e\u003c/td\u003e\n\u003ctd\u003eEuropean Securities and Markets Authority (ESMA)\u003c/td\u003e\n\u003ctd\u003eFinancial Conduct Authority (FCA)\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003e\u003cstrong\u003eRecent Reforms\u003c/strong\u003e\u003c/td\u003e\n\u003ctd\u003eEU Listing Act introducing changes to MAR\u003c/td\u003e\n\u003ctd\u003eFinancial Services and Markets Act 2023 enabling UK-specific reforms\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003cp\u003eFor more information on how your firm can keep pace with its compliance, contact \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003eeflow\u003c/a\u003e today.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e*This article is provided for informational purposes only and should not be relied upon as a legal or financial advice. Its contents are current at the date of publication and do no not necessarily reflect the present state of the law.\u003c/em\u003e\u003c/p\u003e\n","date_published":"2024-29-08T12:00:00+0000"},{"title":"Why brokers are embracing regulatory technology to streamline their transaction reporting","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/brokers-embracing-regulatory-technology/","summary":"\u003cp\u003eThe landscape of broker trading is one of the most dynamic in the financial services sector. As a result of the evolving nature of their activity, they are increasingly drawing the attention of regulators.\u003c/p\u003e\n\u003cp\u003eGlobally, the focus on transaction reporting has intensified, with regulatory bodies imposing stricter requirements to enhance transparency, market integrity, and investor protection. Transaction reporting by brokers, in particular, has come under greater scrutiny due to the dynamic outcomes they generate. In response, brokers are increasingly adopting regulatory technology to handle these complex reporting obligations with greater efficiency and accuracy.\u003c/p\u003e\n\u003ch2 id=\"the-importance-of-transaction-reporting-for-brokers\"\u003eThe importance of transaction reporting for brokers\u003c/h2\u003e\n\u003cp\u003eTransaction reporting is a critical component of regulatory compliance for brokers. Regulatory authorities such as the Financial Conduct Authority (FCA) in the UK and the European Securities and Markets Authority (ESMA) have implemented stringent rules under frameworks like MiFID II (Markets in Financial Instruments Directive II). These rules require brokers to report a vast array of transaction data, including trade details, client information, and execution specifics, often within very tight deadlines.\u003c/p\u003e\n\u003cp\u003eThe complexity of these requirements can be overwhelming. For instance, MiFID II mandates that every trade must be reported within a specific timeframe, with accurate details on who made the trade, where, when, and how. Errors or delays in reporting can result in severe penalties, ranging from fines to licence revocations.\u003c/p\u003e\n\u003cp\u003eTransaction reporting technology solutions, like \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\"\u003eeflow’s TZTR\u003c/a\u003e, are playing an increasingly essential role in this context, as they offer sophisticated tools to automate and streamline the reporting process. These tools ensure that brokers can meet their regulatory obligations with precision, thereby reducing the risk of non-compliance and its associated consequences.\u003c/p\u003e\n\u003ch2 id=\"automating-data-processing-in-transaction-reporting\"\u003eAutomating data processing in transaction reporting\u003c/h2\u003e\n\u003cp\u003eOne of the primary benefits of technology in transaction reporting is its ability to automate the collection, processing, and submission of transaction data. Traditional reporting methods, which often involve manual data entry and checking, are not only time-consuming but also prone to human error. Even minor inaccuracies in reported data can lead to significant regulatory breaches.\u003c/p\u003e\n\u003cp\u003eBy leveraging advanced technologies such as machine learning (ML) to automatically extract relevant data from trade records, validate it, and format it according to regulatory standards, firms can not only improve accuracy but also speed up their reporting process. This ensures that all transactions are reported accurately and completely within the required timelines.\u003c/p\u003e\n\u003cp\u003eFurthermore, platforms can integrate seamlessly with existing trading systems, allowing for real-time data capture and reporting. This capability is particularly crucial in the fast-paced world of broker trading, where transaction volumes are high, and the window for reporting is narrow.\u003c/p\u003e\n\u003ch2 id=\"enhancing-compliance-integrity\"\u003eEnhancing compliance integrity\u003c/h2\u003e\n\u003cp\u003eRegulatory bodies set specific guidelines on how transaction reporting should be handled, including how trades are reported, managed, and why decisions are made. Brokers must therefore ensure that all details are tracked, maintained, and managed.\u003c/p\u003e\n\u003cp\u003eFor instance, by implementing robust solutions like eflow’s, which offer automated and comprehensive audit trails that document every step of the reporting process, brokers can provide clear evidence of compliance during regulatory audits. This approach not only ensures adherence to regulatory requirements but also builds trust with clients and regulators.\u003c/p\u003e\n\u003ch2 id=\"the-advantages-of-data-enrichment\"\u003eThe advantages of data enrichment\u003c/h2\u003e\n\u003cp\u003eWhen conducting transaction reporting, one of the main benefits of using technology is data enrichment. This ensures the accuracy, completeness, and timeliness of data submitted to regulatory authorities.\u003c/p\u003e\n\u003cp\u003eBy leveraging automated data enrichment from sources like eflow’s Market Data Store, which aggregates data from over 250 sources, brokers can enhance the quality of their transaction reports. This process integrates additional contextual information, such as market data, asset classifications, and reference data, which helps in accurately interpreting and validating transactions. Consequently, enriched data reduces the risk of non-compliance, minimises errors, and improves the overall efficiency of regulatory reporting processes.\u003c/p\u003e\n\u003ch2 id=\"managing-multi-jurisdictional-reporting-requirements\"\u003eManaging multi-jurisdictional reporting requirements\u003c/h2\u003e\n\u003cp\u003eBrokers often operate across multiple jurisdictions, each with its own unique set of transaction reporting requirements. Managing these varied requirements can be challenging, particularly when regulations differ significantly between regions.\u003c/p\u003e\n\u003cp\u003eDesigned to handle the complexity of multi-jurisdictional reporting, eflow’s TZTS system can be customised to meet the specific requirements of different regulatory bodies, ensuring that they remain compliant no matter where they operate. It will automatically adjust reporting protocols based on the jurisdiction in which a transaction occurs, streamlining the process and reducing the risk of errors.\u003c/p\u003e\n\u003cp\u003eThis adaptability is crucial for those looking to expand their operations internationally, while maintaining compliance with all relevant regulations.\u003c/p\u003e\n\u003ch2 id=\"future-proofing-transaction-reporting\"\u003eFuture-proofing transaction reporting\u003c/h2\u003e\n\u003cp\u003eThe financial services industry is in a constant state of evolution, with new regulations and reporting standards emerging regularly. For brokers, staying ahead of these changes is essential to avoid compliance risks and maintain a competitive edge.\u003c/p\u003e\n\u003cp\u003eAdopting a technology solution not only addresses current transaction reporting challenges but also prepares brokers for future regulatory developments. For example, eflow’s TZTR system is designed to be scalable and adaptable, allowing firms to adapt their reporting seamlessly alongside new regulatory requirements. This flexibility ensures that brokers can continue to meet their obligations even as the regulatory landscape changes.\u003c/p\u003e\n\u003ch2 id=\"explore-how-eflows-tztr-transaction-reporting-solution-could-work-for-you\"\u003eExplore how eflow’s TZTR Transaction Reporting solution could work for you\u003c/h2\u003e\n\u003cp\u003eAs regulatory authorities continue to tighten their requirements around transaction reporting, the adoption of regulatory technology is becoming increasingly critical for brokers.\u003c/p\u003e\n\u003cp\u003eBy automating the reporting process, enhancing data security, and managing multi-jurisdictional compliance, technology solutions enable brokers to navigate the complexities of transaction reporting with greater ease and accuracy. In doing so, they not only ensure their ongoing compliance, but also position themselves for sustainable growth in an ever-evolving market.\u003c/p\u003e\n\u003cp\u003eeflow\u0026rsquo;s \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\" title=\"TZTR Transaction Reporting\" target=\"_blank\" rel=\"noopener\"\u003eTZTR Transaction Reporting\u003c/a\u003e solution is specifically crafted to support firms in achieving these goals. Discover how it can benefit your firm by \u003ca href=\"https://eflowglobal.com/book-a-consultation/\" title=\"Book a consultation\" target=\"_blank\" rel=\"noopener\"\u003escheduling a free consultation\u003c/a\u003e with one of our experts.\u003cbr\u003e\u003c/p\u003e\n","date_published":"2024-27-08T10:59:00+0000"},{"title":"Trade surveillance, unstructured data and privacy concerns","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/trade-surveillance-unstructured-data-and-privacy-concerns/","summary":"\u003cp\u003eIn recent years, we have seen the introduction of cutting-edge technology to the trade surveillance sector. This has revolutionised how data is collected and analysed together with the nature of these services. However, if we take a step back, many instances of market abuse are planned days, weeks, or even months before their execution.\u003c/p\u003e\n\u003cp\u003eThe introduction of electronic communication data has given regulated firms the ability to take a proactive approach to market abuse and surveillance. When collecting data from various messaging apps, phone calls, emails, and other sources, it is now possible to convert unstructured data and analyse it in a structured fashion. With this, however, there arise issues around data protection and privacy, and how they balance with the legal obligations of financial institutions and regulators.\u003c/p\u003e\n\u003ch2 id=\"the-role-of-trade-surveillance-in-financial-markets\"\u003e\u003cstrong\u003eThe role of trade surveillance in financial markets\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eBefore we move to the complexities of unstructured data and privacy concerns, it’s essential to highlight the basic elements of trade surveillance within investment markets.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eMonitoring financial data\u003c/li\u003e\n\u003cli\u003eIdentifying market manipulation\u003c/li\u003e\n\u003cli\u003eCollating relevant data\u003c/li\u003e\n\u003cli\u003eReporting to regulators\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThis brings us to the critical purpose of trade surveillance: to preserve market integrity, protect investors, and assist with the prosecution of those engaging in market abuses. We live in an era of high-tech trading systems and ever-more innovative market abuse strategies, and the cost of fulfilling regulatory duties continues to rise.\u003c/p\u003e\n\u003ch2 id=\"understanding-unstructured-data-in-trade-surveillance\"\u003e\u003cstrong\u003eUnderstanding unstructured data in trade surveillance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe term unstructured data relates to datasets that can be human or machine-generated in a textual or non-textual format. In essence, they aren\u0026rsquo;t stored in a structured database format, making it difficult (if not impossible) to search and analyse in their original format. The most common forms of unstructured data include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eEmails\u003c/li\u003e\n\u003cli\u003eWord-processing documents\u003c/li\u003e\n\u003cli\u003eAudio files\u003c/li\u003e\n\u003cli\u003eVideo files\u003c/li\u003e\n\u003cli\u003eCollaboration software\u003c/li\u003e\n\u003cli\u003eInstant messaging\u003c/li\u003e\n\u003cli\u003eText messages\u003c/li\u003e\n\u003cli\u003ePhone calls\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIt is estimated that unstructured data makes up 80% of all enterprise data and this will likely grow in the future. Consequently, if your surveillance activities are based on only 20% of structured data, how much potentially incriminating information are you missing?\u003c/p\u003e\n\u003cp\u003eThere are four critical differences between structured and unstructured data:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eDefined vs Undefined\u003c/li\u003e\n\u003cli\u003eQualitative vs Quantitative\u003c/li\u003e\n\u003cli\u003eEasy vs Difficult to analyse\u003c/li\u003e\n\u003cli\u003ePredefined format vs Variety of formats\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWhile it is possible to store structured and unstructured data in the cloud, unstructured data requires significantly more storage space and is therefore less efficient. To balance this, the collating of unstructured data is less expensive than structured data and can be accumulated much quicker. Converting this data into usable information does require using the latest technology, such as AI, ML and Big Data analysis.\u003c/p\u003e\n\u003ch2 id=\"privacy-concerns-and-trade-surveillance\"\u003e\u003cstrong\u003ePrivacy concerns and trade surveillance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThere are broader issues when it comes to balancing the requirements for surveillance with the requirements under GDPR and the principles of data minimisation, wherein only data that is needed for the purposes (of surveillance) should be collected and processed. This helps firms to approach the dual requirements of promoting market integrity together with ensuring data privacy is ensured in a consistent, principle-led fashion.\u003c/p\u003e\n\u003cp\u003eIt is estimated that broader unstructured data will reach a staggering 175 billion TB annually by 2025, presenting substantial logistical, analysis and cost issues. Under UK data protection regulations, companies must make sure that all information collected is:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eUsed fairly, lawfully and transparently\u003c/li\u003e\n\u003cli\u003eUsed for specified, explicit purposes\u003c/li\u003e\n\u003cli\u003eUsed in a manner which is only necessary for its purpose\u003c/li\u003e\n\u003cli\u003eKept up-to-date where applicable\u003c/li\u003e\n\u003cli\u003eAccurate\u003c/li\u003e\n\u003cli\u003eRetained for no longer than is necessary (legally or operationally)\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eData must also be stored securely, with access limited to relevant individuals and protected from loss, destruction, unlawful use, or damage. This brings us to cybersecurity, a broader topic that companies holding private and personal information must consider.\u003c/p\u003e\n\u003ch2 id=\"addressing-privacy-concerns-in-unstructured-data-surveillance\"\u003e\u003cstrong\u003eAddressing privacy concerns in unstructured data surveillance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs a RegTech, eflow feels it is essential to address the elephant-in-the-room: employee privacy concerns, especially in the context of unstructured data surveillance. Many people ask whether, as an employee of a company, you need to consent to surveillance of communication during your working day.\u003c/p\u003e\n\u003cp\u003eWhere an employer can identify a lawful basis for gathering, analysing, and holding private data, consent would not typically be required from the individual(s). In this scenario, it would likely come under the “legitimate interest” basis in the context of the wider business operation and, in this case, abiding by strict regulations. As we mentioned above, there should be no scope to use the data collected for any other purpose, and it must be stored securely and accessed on a strict need-to-use basis.\u003c/p\u003e\n\u003cp\u003eIt’s important to note that employers must make their employees aware of the surveillance systems and the specific scope. When it comes to data and privacy protection for third parties communicating with individuals within your business, this will again be covered by the legitimate interest argument.\u003c/p\u003e\n\u003cp\u003eIronically, while we tend to focus on privacy and data protection, US regulators issued $2 billion in fines in September 2022 for the \u003ca href=\"https://www.bloomberg.com/news/articles/2022-09-27/wall-street-whatsapp-probe-poised-to-result-in-historic-fine\"\u003eopposite\u003c/a\u003e. These fines related to the failure of several financial institutions to record communications on unauthorised messaging apps, most notably WhatsApp.\u003c/p\u003e\n\u003cp\u003eFinancial institutions are being squeezed from both sides, data privacy regulations restrict the use of data collated and regulators are issuing enormous fines for failure to maintain communication records.\u003c/p\u003e\n\u003ch2 id=\"converting-unstructured-data\"\u003e\u003cstrong\u003eConverting unstructured data\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs it stands, unstructured data offers little assistance for those looking to identify instances of market abuse. There may be elements you can extract, but due to the format at best this would be time-consuming, at worst, inaccurate and potentially misleading. To maximise the benefits of unstructured data it should be converted into a structured format.\u003c/p\u003e\n\u003cp\u003eThe main stages of this process are:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eCollating unstructured data\u003c/li\u003e\n\u003cli\u003eCreate a preferred data structure\u003c/li\u003e\n\u003cli\u003eCleaning the unstructured data\u003c/li\u003e\n\u003cli\u003eEntity extraction\u003c/li\u003e\n\u003cli\u003eStore the data\u003c/li\u003e\n\u003cli\u003eAnalyse the data\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe less structure, the greater the challenge to extract the relevant information and rebuild within a predefined structure. To ensure maximum accuracy, legal obligations and business responsibilities, constant data quality checks must be done, with tweaks and changes where applicable. This is not a one-off activity; this is something that should be ongoing at all times to fulfil regulatory liabilities and responsibilities to your employees and clients.\u003c/p\u003e\n\u003ch2 id=\"regulatory-compliance-and-data-protection\"\u003e\u003cstrong\u003eRegulatory compliance and data protection\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs the digital era expands into more areas of everyday life, business, and personal, governments worldwide have been forced to respond to concerns about data protection and privacy. In the UK, we have the UK Data Protection Act (DPA) 2018, in conjunction with the General Data Protection Regulation (GDPR), which took effect on 1 January 2021.\u003c/p\u003e\n\u003cp\u003eThe EU has similar regulations to the UK, and other countries, such as the US, China, Switzerland, Australia, Brazil, Canada, Hong Kong, and many others, have also introduced privacy and data protection regulations. This is relevant because investment markets are now global; as a consequence of the digital era, you can deal in foreign markets at the touch of a button.\u003c/p\u003e\n\u003cp\u003eWhile the specific regulations will vary across countries, if you look at UK and EU GDPR, this gives you an idea of the scope of the regulations. These include but are not limited to, the following:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eLawful, fair and transparent processing\u003c/li\u003e\n\u003cli\u003eLimitation of purpose, data and storage\u003c/li\u003e\n\u003cli\u003eData subject rights\u003c/li\u003e\n\u003cli\u003eConsent\u003c/li\u003e\n\u003cli\u003ePersonal data breaches\u003c/li\u003e\n\u003cli\u003ePrivacy by design\u003c/li\u003e\n\u003cli\u003eData protection impact assessment\u003c/li\u003e\n\u003cli\u003eData transfers\u003c/li\u003e\n\u003cli\u003eAppointment of a data protection officer\u003c/li\u003e\n\u003cli\u003eAwareness and training\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eData storage also presents legal and logistical challenges. For example, Swiss regulations stipulate that data collected in Switzerland must stay (and be processed) in the country. This can add additional layers of cost and compliance for financial institutions with operations worldwide.\u003c/p\u003e\n\u003ch2 id=\"technological-solutions-and-ethical-considerations\"\u003e\u003cstrong\u003eTechnological solutions and ethical considerations\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eMany would argue that trade surveillance in relation to \u003ca href=\"https://eflowglobal.com/integrating-ecomms-and-trade-surveillance/\"\u003eelectronic communication\u003c/a\u003e is a proactive approach to market abuse, as opposed to reactive and retroactive when using historical data to identify similar activities. Undoubtedly, AI, ML, and, in particular, Big Data analysis have allowed financial institutions and regulators to identify potential illegal activity much earlier.\u003c/p\u003e\n\u003cp\u003eThe growing use of cloud services has significantly increased the speed of IT service delivery. This has helped reconstruct unstructured data in a structured format and analyse the information in real time. We know that fraudsters often use keywords and particular phrases that are replicated across connected communications. In normal circumstances, they may not stand out but are often signs and signals for criminals. However, incorporating Natural Language Processing (NLP) with the latest technology allows patterns, phrases, and individual words to be used as triggers.\u003c/p\u003e\n\u003cp\u003eWhile NLP has existed for more than 50 years, it has only recently started to play a significant role in trade surveillance. It has helped significantly reduce the number of false positives, allowing companies to focus critical resources and funding on more likely instances of market abuse. These may seem like subtle improvements, but the knock-on effect on efficiently using resources and finances is significant.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe depth and quality of trade surveillance available today have improved dramatically compared to just a decade ago, taking in not just actual trade data but also the monitoring of electronic communications. This creates the potential for a genuinely proactive approach to detecting market abuse, compared to the reactive and retroactive approach associated with monitoring and analysing trade data. However, this addition to the armoury of the financial services industry comes with challenges.\u003c/p\u003e\n\u003cp\u003eData protection and privacy regulations have been enhanced in recent years with the introduction of the GDPR in Europe and the UK. Finding a balance between protecting and maintaining privacy while using unstructured data elements to identify illegal activity is challenging. There are strict regulations in both areas, trade regulations and data protection, with financial institutions caught in the middle.\u003c/p\u003e\n\u003cp\u003eWe provide a range of trade and broader surveillance services so financial institutions can fulfil their regulatory obligations. This promotes a healthy relationship between financial institutions and regulators and, more importantly, helps to maintain the integrity of investment markets.\u003c/p\u003e\n\u003cp\u003eIf you would like to discuss your options and our services, please \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a consultation\u003c/a\u003e.\u003c/p\u003e\n\u003cbr\u003e","date_published":"2024-19-08T14:28:00+0000"},{"title":"US Regulatory Enforcement Compared to the Rest of the World","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/us-regulatory-enforcement-compared-to-the-rest-of-the-world/","summary":"\u003cp\u003eThe regulatory enforcement landscape worldwide reveals a significant disparity in approaches, with the US leading both in terms of volume and severity of fines for market abuse.\u003c/p\u003e\n\u003cp\u003eFrom Q1 2019 to Q3 2023, US regulators issued 133 fines amounting to $2.67 billion. While the total value of these penalties was significantly influenced by a single $920 million fine imposed on JP Morgan Chase and Co., the figures remain notable even when excluding this case, with the average fine in the US equalling $13.2 million.\u003c/p\u003e\n\u003cp\u003eWhile significant in their own right, these figures become all the more noteworthy when compared to the enforcement actions taken by other global regulators. For instance, while the AFM in France led activity across European regulators, issuing 23 penalties totalling $111 million and surpassing both the UK ($87m) and Germany ($15m) in monetary terms, the volume and severity of their enforcements still trailed far behind the US.\u003c/p\u003e\n\u003ch2 id=\"contrast-of-apac-and-us-regulatory-approaches\"\u003e\u003cstrong\u003eContrast of APAC and US Regulatory Approaches\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe approach of regulators in APAC presents perhaps the greatest contrast to US enforcement strategies.\u003c/p\u003e\n\u003cp\u003eDuring this period, Hong Kong’s SFC issued just one fine of $9 million, while Singapore’s MAS issued 21 fines totalling only $20.7 million. This is primarily due to the region’s reserved enforcement approach. Unlike the US, which uses substantial fines as a deterrent, APAC regulators tend to operate with greater discretion. This reflects cultural values that emphasise individual accountability and societal harmony over public reprimand. In this environment, the monetary value of fines is relatively less important, as reputational damage carries a higher cost.\u003c/p\u003e\n\u003ch2 id=\"a-detailed-look-at-us-enforcement-action\"\u003e\u003cstrong\u003eA Detailed Look at US Enforcement Action\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs we’ve already seen, during the period analysed for this report, American regulators ranked first in both the frequency and value of fines for market manipulation compared to other global regulators.\u003c/p\u003e\n\u003cp\u003eAmongst US regulators, the CFTC (Commodity Futures Trading Commission) led the way in terms of enforcement severity, with an average fine exceeding $57 million. In terms of frequency, FINRA (The Financial Industry Regulatory Authority) issued the most fines, totalling 67, followed by the Securities and Exchange Commission with 41 enforcement penalties.\u003c/p\u003e\n\u003cp\u003eFor comparison, all non-US regulators combined issued 71 fines during the same period. This stark difference underscores the aggressive stance of US regulators in addressing market manipulation and enforcing financial regulations.\u003c/p\u003e\n\u003cp\u003eLek Securities serves as a prime example of the aggressive enforcement actions taken by US authorities. In 2019, Lek Securities was fined twice for its involvement in manipulative trading practices. FINRA imposed a $900,000 fine for failing to supervise and prevent manipulative trading activities by foreign traders on their platform, including layering and spoofing. Additionally, the SEC fined the firm $1.5 million for being complicit in the layering and cross-market manipulation activities of a Ukraine-based firm Avalon FA Ltd, between 2014 and 2017. This case highlights the stringent measures US regulators take to ensure market integrity and deter unlawful trading practices.\u003c/p\u003e\n\u003ch3 id=\"volume-of-short-selling-related-enforcements-in-the-us\"\u003e\u003cstrong\u003eVolume of Short Selling-Related Enforcements in the US\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003e\u003cbr\u003eThe volume of short selling-related enforcements from US regulators is another notable point. FINRA was the only regulator to consistently enforce short selling fines in the observed period, accumulating $21.6m across 15 fines. During the same period, the SEC issued $20.9 million in short selling fines, despite enforcing only five penalties.\u003c/p\u003e\n\u003cp\u003eThe Bank of America adds a significant dimension to the analysis of short selling-related enforcements. Over the observed period, the bank faced three fines from FINRA for short selling violations. They were fined $150,000 in 2020 for multiple reporting and supervisory failures between May 2012 and September 2017, $850,000 in 2021 for improperly netting trading activities of affiliated broker-dealer customers for close-out obligations and claiming undue pre-fail credit, and $1.5 million in 2021 for an inadequate supervisory system.\u003c/p\u003e\n\u003cp\u003eComparatively, other jurisdictions saw limited enforcements of short selling fines. While the SFC was active between 2019 and 2022, it did not record any penalties in the first three quarters of 2023. Despite this, their accumulated $7.8 million in short selling fines accounted for 70% of their total core fines. Notably, other regulators exhibited low activity in this area, with FCA issuing just one fine in 2020. The CFTC, AFM, MAS, BAFin and ESMA did not enforce any short selling fines during this period.\u003c/p\u003e\n\u003ch4 id=\"brcommodities-enforcementbr\"\u003e\u003cbr\u003e\u003cstrong\u003eCommodities Enforcement\u003c/strong\u003e\u003cbr\u003e\u003c/h4\u003e\n\u003cp\u003eIn the commodities market, single and cross-market spoofing, alongside insider trading, constitute the primary market abuse risk typologies, driving the majority of enforcement actions.\u003c/p\u003e\n\u003cp\u003eThe CFTC bolstered its enforcement efforts in 2023, recording a record number of penalties targeting manipulation and spoofing actors. These cases underscore the CFTC’s dedication to enforce regulations against manipulative and deceptive practices in commodity markets, focusing on holding individuals and entities accountable across a wide array of commodities and trading platforms.\u003c/p\u003e\n\u003ch3 id=\"conclusionbr\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003cbr\u003e\u003c/h3\u003e\n\u003cp\u003eAs global regulators adapt to modern market dynamics and challenges, the laissez-faire era of regulatory action appears to be fading, giving way to a new age of proactive oversight and diligence. While U.S. regulators have been at the forefront of stringent enforcement actions during the examined period, they are also setting a precedent for more proactive enforcement action that is likely to be adopted globally.\u003c/p\u003e\n\u003cp\u003eAs financial markets become increasingly globalised and interconnected, collaborative regulation is poised to become more common, with regulators around the world following the lead of their U.S. counterparts. The heightened scrutiny of digital assets, where the risks of market manipulation, wash trading, and other fraudulent activities are significant, underscores the necessity of robust regulatory frameworks.\u003c/p\u003e\n\u003cp\u003eThe shift towards more rigorous and coordinated regulatory efforts, spearheaded by U.S. regulators, sets the stage for a global regulatory landscape that prioritises transparency, fairness, and investor protection in an increasingly complex financial environment.\u003c/p\u003e\n\u003cp\u003eOur report \u0026lsquo;US trends in market abuse and trade surveillance\u0026rsquo; explores the trends highlighted in this blog in more detail. \u003ca href=\"https://eflowglobal.com/us-trends-in-market-abuse-and-trade-surveillance-form/\" title=\"Download our report\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eDownload your copy here\u003c/strong\u003e\u003c/a\u003e\u003cstrong\u003e.\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFor more information on how your firm can keep pace with its compliance,\u003ca href=\"https://eflowglobal.com/book-a-consultation/\" title=\"Book a consultation\" target=\"_blank\" rel=\"noopener\"\u003e \u003cstrong\u003ebook a consultation\u003c/strong\u003e \u003c/a\u003ewith one of our experts today.\u003c/p\u003e\n","date_published":"2024-16-08T09:00:00+0000"},{"title":"Discover the power of TZTS:  A robust trade surveillance solution to combat market abuse.","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/new-blog-post-1/","summary":"\u003ch2 id=\"tzts-a-powerful-trade-surveillance-solution\"\u003eTZTS: A powerful trade surveillance solution\u003c/h2\u003e\n\u003cp\u003eIn the face of constantly evolving regulatory standards, financial institutions are under increasing pressure to demonstrate the strength of their processes to prevent market abuse. As a result, having a strong and comprehensive trade surveillance strategy in place is non-negotiable.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eTZTS\u003c/a\u003e is eflow’s cutting-edge trade surveillance solution. It’s engineered to provide firms with a robust, holistic, and dynamic solution to meet their regulatory challenges head-on. Powered by eflow\u0026rsquo;s proprietary \u003ca href=\"https://eflowglobal.com/the-path-ecosystem/\"\u003ePATH ecosystem\u003c/a\u003e and harnessing advanced machine learning and behavioural analytics, TZTS is designed to monitor and identify all major market abuse and manipulation typologies as outlined by various regulatory bodies such as the FCA, ESMA, SEC, CFTC, and MAS.\u003c/p\u003e\n\u003ch3 id=\"the-importance-of-flexibility\"\u003eThe importance of flexibility\u003c/h3\u003e\n\u003cp\u003eOne of the most important elements of any good trade surveillance system is flexibility. While market abuse monitoring may once have been a tick-box exercise, regulators today expect firms to implement dynamic solutions which take variables such as trading strategy and market volatility into consideration.\u003c/p\u003e\n\u003cp\u003eWith this in mind, TZTS can be tailored to meet your exact specifications while retaining the flexibility and dynamism required by financial regulators. One of the most important ways it achieves this is through \u0026ldquo;conditional parameters\u0026rdquo;.\u003c/p\u003e\n\u003cp\u003eTo take an example, consider the recent Nikkei plunge. By allowing for conditional parameterisation, TZTS is able to greatly reduce the number of false positives generated during times of increased market volatility such as these. If, for example, Nikkei drops 12.4%, a share price drop of 10% should not trigger an alert as the move is not material within the context of the wider move of the index. A test using non-conditional parameters would see this price move and generate a false positive alert. However, by harnessing conditional parameters, TZTS is able to only look for moves greater than 12.4% by considering the move of the underlying index first and the move of the individual asset second - using both to create the context for at risk moves.\u003c/p\u003e\n\u003cp\u003eThis dynamism allows firms to satisfy global regulatory requirements, automate previously time-consuming compliance checks, and reduce unnecessary \u0026rsquo;noise\u0026rsquo; that detracts from primary business goals. These are just some of the reasons why it is trusted as the trade surveillance technology of nearly 100 financial institutions globally, ranging from top tier institutions to boutique firms.\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e“RBC Brewin Dolphin has used TZTS for trade surveillance for six years. We consider a vendor relationship to be more than just a company providing a product; we look for vendors who are committed to product and customer service improvement. eflow fits that requirement perfectly.”\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003cp\u003eLisa Todd, Assistant Director, RBC Brewin Dolphin\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003ch3 id=\"data-enrichment\"\u003eData enrichment\u003c/h3\u003e\n\u003cp\u003eThanks to the data-agnostic platform on which TZTS is built, it also excels at data management and enrichment.\u003c/p\u003e\n\u003cp\u003eBefore testing, TZTS automatically enriches all trade data provided in your file, ensuring that all necessary information is validated and contextualised against data from over 250 global venues from a range of different market data providers. This comprehensive data enrichment process strengthens trade surveillance governance and reduces the risk of non-compliance due to inaccurate or incomplete reporting.\u003c/p\u003e\n\u003cp\u003eIn addition, TZTS offers both preset and customisable reporting options to choose from, enabling firms to generate highly granular management information for further analysis. For example, your firm’s alert generation history can be grouped by entity, trader or instrument for further analysis and comparison to general market trends and movements.\u003c/p\u003e\n\u003ch3 id=\"book-a-consultation\"\u003eBook a consultation\u003c/h3\u003e\n\u003cp\u003eWith the regulatory landscape becoming increasingly complex, firms need robust solutions like TZTS to streamline their trade surveillance efforts. Discover the power of TZTS by \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebooking a consultation with eflow\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2024-13-08T14:19:00+0000"},{"title":"The Future of compliance: Predictive analytics and proactive surveillance","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/the-future-of-compliance-predictive-analytics-and-proactive-surveillance/","summary":"\u003cp\u003eAttempting to predict the future of regulatory requirements and technology is always dangerous. Investment markets are fast-moving and can change in the blink of an eye; we all remember the regulatory fallout from the 2008 global financial crisis - any prophecies made prior to that would have been quickly obsolete.\u003c/p\u003e\n\u003cp\u003eIn a perfect world, predictive analytics and proactive trade surveillance would keep us one step ahead of bad actors and potential market malfeasance. However, it\u0026rsquo;s more complex than that; sometimes, a blend of reactive and proactive can help achieve the best results, setting solid foundations for the future.\u003c/p\u003e\n\u003ch2 id=\"challenges-in-trade-surveillance-and-market-abuse-monitoring\"\u003e\u003cstrong\u003eChallenges in trade surveillance and market abuse monitoring\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eBefore we look at how predictive and proactive (as well as reactive) strategies can help with trade surveillance and market abuse monitoring, it\u0026rsquo;s essential to identify some of the broader challenges. These include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eComplex and evolving regulations\u003c/li\u003e\n\u003cli\u003eData volume, variety and management\u003c/li\u003e\n\u003cli\u003eTechnological integration\u003c/li\u003e\n\u003cli\u003eAddressing the challenge of false positives\u003c/li\u003e\n\u003cli\u003eDetection of insider trading\u003c/li\u003e\n\u003cli\u003eBroader market manipulation\u003c/li\u003e\n\u003cli\u003eCross-market and cross-asset monitoring\u003c/li\u003e\n\u003cli\u003eAllocation and focus of resources\u003c/li\u003e\n\u003cli\u003eReal-time monitoring and latency\u003c/li\u003e\n\u003cli\u003ePrivacy and data protection\u003c/li\u003e\n\u003cli\u003eBehavioural pattern recognition and integration\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIn systems with any degree of automation, false positives will emerge. Filtering out these false positives while flagging valid positives can be challenging. This is where machine learning and broader Artificial Intelligence (AI) technology are helping to improve results.\u003c/p\u003e\n\u003ch2 id=\"understanding-predictive-analytics-in-trade-surveillance\"\u003e\u003cstrong\u003eUnderstanding predictive analytics in trade surveillance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAnalytics cannot be used to predict the future. However, by examining past instances of market abuse and analysing any trading or behavioural patterns that arise, we are able to harness retrospective insights to predict with a higher degree of certainty potential future instances of abusive or manipulative trading. This is the real benefit of predictive analytics.\u003c/p\u003e\n\u003cp\u003eThis style of predictive analytics is already being harnessed by financial institutions to improve their risk mitigation strategies and root out instances of market abuse before they take place. There are many examples of this, such as:\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eScenario:\u003c/strong\u003e Financial institutions and trade surveillance systems may use machine learning algorithms to analyse historical trading data in addition to client-centric alert feedback loops to identify, and risk score, future instances of insider trading and market abuse.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eApplication:\u003c/strong\u003e In practice machine learning, utilising client-centric risk scoring of historic alerts, could allow for both dynamic parameterisation for alert typologies in addition to risk scoring for future alerts.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eBenefit:\u003c/strong\u003e Potentially abusive or high-risk trading is flagged quickly and accurately, prompting immediate investigation, thereby reducing financial and reputational risk.\u003c/p\u003e\n\u003cp\u003eThe benefits of dynamic parameterisation are that firms can have thresholds that meet both their risk appetite and the specifics of their trading activity; complemented by risk scoring of alerts that reflects their historic alert patterns and allows analysts to focus their time effectively.\u003c/p\u003e\n\u003ch2 id=\"the-shift-from-reactive-to-predictive-monitoring\"\u003e\u003cstrong\u003eThe shift from reactive to predictive monitoring\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eOngoing technological advances have brought a new era for trade surveillance systems, but are we moving from a reactive to a proactive strategy when it comes to monitoring market abuse?\u003c/p\u003e\n\u003cp\u003eTrade surveillance is, by definition, reactive rather than proactive: it is backward-looking, examining events (orders/amendments/cancellations/executions) that have already occurred.\u003c/p\u003e\n\u003cp\u003eBearing this in mind, a question arises: what would a proactive approach to market abuse look like?\u003c/p\u003e\n\u003cp\u003eOne of the most effective ways of introducing a proactive element to market abuse detection and prevention is to incorporate communication monitoring. By adding eComms surveillance to existing trade surveillance processes, firms are able to both actively analyse former trades and highlight potential future instances of market abuse. Catching criminals in the planning stage of insider trading or broader market abuse allows financial institutions and regulators to take control, preventing abusive trading before it takes place.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eScenario:\u003c/strong\u003e A trading firm implements a system that monitors email, chat, voicemails, and other, non-structured data, channels between traders and external parties in real-time.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eApplication:\u003c/strong\u003e Using Natural Language Processing (NLP), specific words and phrases that may relate to, for example, market abuse or, more specifically, insider dealing can be flagged. The system can also be adapted to focus on particular companies, industries, third parties, or even less well-known keywords and phrases via a targeted lexicon approach.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eBenefit:\u003c/strong\u003e In theory, if the suspicious lexicons are identified early in the process, action can be taken to avoid market abuse and flag bad actors. This would be deemed a proactive approach because the financial institutions and regulators have identified a situation and taken control before it has time to be actioned. In addition, where the market activity has already begun, this system can still prove useful in collating critical evidence to support potential investigations and prosecutions.\u003c/p\u003e\n\u003ch2 id=\"integration-of-predictive-analytics-proactive-surveillance-and-trade-surveillance\"\u003e\u003cstrong\u003eIntegration of predictive analytics, proactive surveillance, and trade surveillance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAt eflow, we appreciate the challenges institutions and regulators face in relation to trade surveillance and identifying instances or potential instances of market abuse. Predictive analytics and proactive surveillance have significant benefits, but when combined, the two enhance the broader benefits.\u003c/p\u003e\n\u003cp\u003eWhen it comes to identifying and flagging market abuse, we provide two specific services:\u003c/p\u003e\n\u003ch3 id=\"tzts-trade-surveillance-for-market-abusehttpseflowglobalcomtz-market-abuse-trade-surveillance\"\u003e\u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eTZTS Trade Surveillance for Market Abuse\u003c/a\u003e\u003c/h3\u003e\n\u003cp\u003ePowered by machine learning and behavioural analytics, TZTS automatically monitors your trades for over 40 forms of market abuse to satisfy the increasingly granular requirements of industry regulators. The TZTS module can test all major asset classes, can be tailored to your exact specification, and enables you to dynamically adjust test parameters on an ongoing basis. This enables firms to satisfy global regulatory requirements, automate previously time consuming compliance checks, all while reducing unnecessary ‘noise’ that distracts from your primary business goals.\u003c/p\u003e\n\u003ch3 id=\"tzec-ecomms-surveillancehttpseflowglobalcomtz-ecomms-surveillance\"\u003e\u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eTZEC eComms Surveillance\u003c/a\u003e\u003c/h3\u003e\n\u003cp\u003eTZEC captures the full spectrum of electronic interactions taking place across your firm, including email providers, messaging apps and call recording services. It ingests and normalises data from various sources, employing advanced algorithms to detect anomalies and patterns that are indicative of suspicious behaviour, before linking them to relevant trade activity for further analysis. TZEC utilises eflow’s unique Global Lexicon Service so that financial institutions can identify signs of market abuse based on global data and behavioural trends, not just their own limited terms. This means that TZEC provides a depth and breadth of eComms surveillance that is simply unmatched.\u003c/p\u003e\n\u003ch2 id=\"benefits-of-embracing-predictive-analytics-and-proactive-surveillance\"\u003e\u003cstrong\u003eBenefits of embracing predictive analytics and proactive surveillance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThere have been recent cases that highlight the benefits of using prospective models and tools hand-in-hand with retrospective surveillance to generate positive outcomes for NCA’s in the identification and prosecution of market abuse. Below we will look at 2 such examples.\u003c/p\u003e\n\u003ch3 id=\"predictive-analytics-raj-rajaratnamhttpssevenpillarsinstituteorgcase-studiesraj-rajaratnam-and-insider-trading-2-and-the-galleon-group\"\u003e\u003cstrong\u003ePredictive analytics:\u003c/strong\u003e \u003ca href=\"https://sevenpillarsinstitute.org/case-studies/raj-rajaratnam-and-insider-trading-2/\"\u003eRaj Rajaratnam\u003c/a\u003e \u003cstrong\u003eand the Galleon Group\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe SEC used advanced data analytics to identify the timing of unusual trades just before major corporate announcements. Further data analysis highlighted several instances indicative of insider trading, which led to jail sentences for those involved. Is this an example of a predictive or retroactive-based prosecution, or both?\u003c/p\u003e\n\u003ch3 id=\"proactive-analytics-sac-capital-advisors\"\u003e\u003cstrong\u003eProactive analytics: SAC Capital Advisors\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eProactive surveillance, which involved monitoring emails and phone calls, identified suspicious conversations amongst traders at SAC Capital Advisors. They were discussing non-public information that could, and did, have a material impact on share prices. Consequently, numerous employees were \u003ca href=\"https://www.reuters.com/article/business/sac-capital-to-pay-10-million-in-investors-insider-trading-lawsuit-idUSKBN0U7179/\"\u003econvicted of insider trading\u003c/a\u003e, and the company pleaded guilty and was subject to a $1.8 billion fine.\u003c/p\u003e\n\u003ch2 id=\"learning-from-the-past\"\u003e\u003cstrong\u003eLearning from the past\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eEven the use of cutting-edge technology requires a degree of human intervention; this was evident in the \u003ca href=\"https://eflowglobal.com/does-borderless-trading-require-a-revised-approach-to-trade-surveillance/\"\u003ecase of Navinder Singh Sarao and the Flash Crash\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eAfter being charged with spoofing and wire fraud, he eventually pled guilty and took a deal from the SEC. He agreed to work with the FCA in exchange for no additional prison time other than four months, which he had already served in Wandsworth Prison. He walked them through his spoofing strategy and associated software, helping to identify other instances of similar market abuse and explain the process by which he could extract value from the spoofing activity.\u003c/p\u003e\n\u003cp\u003eOn this occasion, the SEC, supported by the FCA, took a longer-term approach to these challenges, leveraging the prospect of prison time to extract as much (ironically) inside information as possible from Navinder Singh Sarao.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eUndoubtedly, AI, ML, and Big Data are changing the landscape of the trade surveillance sector. While predictive analytics and proactive surveillance are hot topics, it’s important not to lose sight of the basic concept of trade surveillance - to ensure that history does not repeat itself by recognising specific trading patterns.\u003c/p\u003e\n\u003cp\u003eThe introduction of eComms surveillance adds a genuine proactive element to trade surveillance, helping to combat different forms of market abuse before they begin. In isolation, these two approaches have helped identify numerous instances of market abuse. Combined, they create a pincer-like movement, highlighting early-stage market abuse plans through eComms surveillance while reacting much quicker and gathering more data during and after the process.\u003c/p\u003e\n\u003cp\u003eIf you would like to discuss the merits of predictive, proactive, and retroactive trade surveillance strategies, \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a consultation\u003c/a\u003e to examine your situation in more detail.\u003c/p\u003e\n","date_published":"2024-05-08T10:18:00+0000"},{"title":"eflow’s role in the FCA Market Abuse Surveillance Tech Sprint ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fca-market-abuse-tech-sprint/","summary":"\u003cp\u003e\u003cem\u003e\u003cstrong\u003eYou can access a video recording of Jonathan\u0026rsquo;s presentation on the FCA website:\u003c/strong\u003e\u003c/em\u003e \u003ca href=\"\"\u003e\u003cem\u003e\u003cstrong\u003ehttps://www.fca.org.uk/multimedia/market-abuse-surveillance-techsprint-presentation-eflow\u003c/strong\u003e\u003c/em\u003e\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003eI recently had the pleasure of being part of the \u003ca href=\"https://www.fca.org.uk/firms/innovation/techsprints\" target=\"_blank\" rel=\"noopener\"\u003eFCA Market Abuse Surveillance Tech Sprint (MASTS)\u003c/a\u003e. The eflow team, together with eight other firms, presented our findings to a wide range of Surveillance and AI specialists at the FCA’s headquarters in Stratford, London.\u003c/p\u003e\n\u003cp\u003eThe aim of the Tech Sprint was to have firms and research institutions approach three problem statements:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003eImproved accuracy of market abuse detection: \u003cem\u003eHow can AI in post-trade market abuse surveillance help reduce false positives, produce a higher proportion of true positives, resulting in more accurate alerts and signals?\u003c/em\u003e\u003c/li\u003e\n\u003cli\u003eDetection of instances of complex market abuse: \u003cem\u003eHow can AI identify signals or instances of more complex types of market abuse, involving the analysis of multiple data sets that traditional rules-based surveillance tools currently struggle to identify?\u003c/em\u003e\u003c/li\u003e\n\u003cli\u003eTransforming market abuse surveillance by incorporating anomaly detection: \u003cem\u003eHow can AI help identify previously undetected anomalies indicative of market abuse, manipulative strategies and disruptive trading practices that may give participants an unfair advantage?\u003c/em\u003e\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003eThe eflow team focused on problem statement 1, looking at how AI and Machine Learning (ML) can be used to drive an improvement in both analyst efficiency, by highlighting high-value alerts, and also examining how clients can have parameters that are dynamically adjusted – being fit for purpose for how they trade both now and in the future.\u003c/p\u003e\n\u003cp\u003eBy utilising an alert feedback loop to allow an ML process to learn what could be considered high or low value alerts, we can understand commonalities in the results. Whether that be time traded before the release of Material Non-Public Information (MNPI) for an insider dealing alert, or the time for cancellations of a non-bona fide alert for spoofing, patterns that highlight what a client deems high risk can help drive both alert risk scoring and the tuning of thresholds.\u003c/p\u003e\n\u003cp\u003eThis approach was further reinforced through the training of ML models on the huge real-world dataset provided by the FCA, where traditional, parameter based, surveillance behaviours help further refine and identify those events that would be considered high risk (wherein both ML and traditional parameters agree). It also allowed us to identify the value-added proposition; alerts identified by the ML process that were \u003cem\u003enot\u003c/em\u003e identified by the traditional parameter solution, which links back to the dynamic parameterisation proposition.\u003c/p\u003e\n\u003ch3 id=\"exploring-new-innovations-in-the-world-of-regulatory-compliance\"\u003e\u003cstrong\u003eExploring new innovations in the world of regulatory compliance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eOf course, we were not the only firm with some great ideas about how to approach trade surveillance. We were all amazed to see students from UCL and King\u0026rsquo;s College London present their approach to problem statement 2 studying market dynamics and market behaviour through the integration of an econophysics model. This demonstrated how approaching the market as a physical system with mass and velocity can lead to novel approaches in identifying unusual trading activity before news events.\u003c/p\u003e\n\u003cp\u003eWe were also treated to some wonderful presenters, Benjamin Levy from B-Next had us searching for invisible (or very well hidden!) snakes in the grass whilst drawing analogies with German radar in World War II. Ross Pearson and Kenn Rodrigues from DHI-AI utilised their current work with the Australian Securities and Investment Commission (ASIC) to drive a greater understanding of how Bayesian networks can drive anomaly detection, all wrapped up in a dynamic presentation style that closed the presentations with vim and a call to the bar!\u003c/p\u003e\n\u003cp\u003eIn addition to the presenters from the vendor and research side, we were also fortunate to have some great speakers from the FCA share their wisdom and insight into the markets with us. Jamie Bell, Head of Market Oversight, made the point that as AI and ML can be used to drive trading decisions, so should we understand that there’s a growing need for ‘\u003cem\u003emore sophisticated market abuse detection tools that can monitor evolving market dynamics and detect complex forms of market abuse\u003c/em\u003e’. That is the crux of what we were all trying to do; to ensure that the integrity of the marketplace can be maintained in the face of increased risk.\u003c/p\u003e\n\u003ch2 id=\"what-does-this-mean-for-the-application-of-ai-and-ml-in-financial-regulation\"\u003e\u003cstrong\u003eWhat does this mean for the application of AI and ML in financial regulation?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eSo what are the next steps? Well, for eflow, the next step is to continue to build out a feedback loop and work with clients to get real-world alert risk ranking feedback. This will ensure that we can create a best-in-class mechanism to allow for the review of risk-scored alerts.\u003c/p\u003e\n\u003cp\u003eWhile it is not the role of a trade surveillance provider to \u003cem\u003etell\u003c/em\u003e a firm how to approach their risk, but if we can help them to \u003cem\u003eget to their risk quicker\u003c/em\u003e then we will ensure that they can approach the compliance processes with more certainty and conviction.\u003c/p\u003e\n\u003cp\u003eHowever, for all of us at the Tech Sprint, the next step was a fantastic social get together on the roof terrace of the FCA building where we were all treated to pizza, ice cream (I might have avoided the surveillance radar to get an extra 99 flake) and a chance to feedback what we had learnt from each other’s presentations.\u003c/p\u003e\n\u003cp\u003eFor me, it was the sense that everyone knows what they need to do. AI and ML are undoubtedly the future, but one that needs to be approached in lock-step with testing, tuning and current, parameter based, solutions. Whilst no one vendor had the solution for future surveillance ready \u003cem\u003eyet\u003c/em\u003e, I do not doubt that we all, particularly here at eflow, will be at the forefront of where the technology \u003cem\u003ewill be\u003c/em\u003e.\u003c/p\u003e\n\u003cp\u003eFollow the links for more information on eflow\u0026rsquo;s \u003ca href=\"/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003etrade surveillance\u003c/a\u003e and \u003ca href=\"/tz-ecomms-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eeComms surveillance\u003c/a\u003e solutions to combat the threat of market abuse.\u003cbr\u003e\u003c/p\u003e\n","date_published":"2024-02-08T10:59:00+0000"},{"title":"Why are firms turning to integrated eComms and trade surveillance?","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/new-blog-post/","summary":"\u003cp\u003eFirms\u0026rsquo; communication channels have expanded significantly in recent years, especially with the pandemic highlighting the importance and adaptability of digital communication channels.\u003c/p\u003e\n\u003cp\u003eIn the context of trade surveillance, it\u0026rsquo;s crucial for firms to recognise this expansion and meticulously evaluate the communications integral to their trade surveillance processes. This ensures they gain precise and actionable insights into potential misconduct, something that is increasingly pertinent to regulators investigating market abuse.\u003c/p\u003e\n\u003cp\u003eConsequently, many firms are now exploring ways to integrate eComms surveillance into their trade surveillance strategies.\u003c/p\u003e\n\u003ch3 id=\"growing-sophistication-of-market-abuse\"\u003e\u003cstrong\u003eGrowing sophistication of market abuse\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eFirms and regulators continually face the daunting task of substantiating market abuse, requiring extensive investigations and intricate evidence collection. This challenge escalates as bad actors employ increasingly sophisticated strategies across diverse markets and products, while the increase of communication channels heightens the risk of unmonitored blind spots.\u003c/p\u003e\n\u003cp\u003eThese combined factors significantly elevate the risk of non-compliance for firms. Without a comprehensive surveillance approach, piecing together a narrative behind suspicious trades and crucially, establishing liability in a legal context, becomes exceedingly difficult.\u003c/p\u003e\n\u003ch3 id=\"increasing-regulatory-scrutiny\"\u003e\u003cstrong\u003eIncreasing regulatory scrutiny\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIntegrating trade data and electronic communications surveillance is rapidly becoming an essential regulatory requirement. It is no longer viewed solely as a compliance measure but as a critical enhancement to the depth of data insights and clarity in decision-making available to firms.\u003c/p\u003e\n\u003cp\u003eWith increased scrutiny on the quality of firms\u0026rsquo; recordkeeping, the frequency and severity of enforcement actions is likely to expand globally. Regulatory bodies are growing impatient with incomplete data hindering market abuse investigations.\u003c/p\u003e\n\u003cp\u003eFor instance, in the UK, Ofgem imposed a landmark £5.41 million fine on Morgan Stanley \u0026amp; Co in September 2023 for failing to record and retain electronic communications, marking the UK\u0026rsquo;s inaugural penalty under transparency rules aimed at combating market abuse and insider trading.\u003c/p\u003e\n\u003cp\u003eFirms must recognise that collecting and storing communication data is just the beginning. The real challenge—and necessity—lies in effectively leveraging this data to detect and comprehend market abuse. Regulators consistently rely on eComms data and expect firms to vigilantly monitor their operations with equal rigour.\u003c/p\u003e\n\u003cp\u003eAdopting a holistic approach to surveillance is imperative for firms committed to safeguarding market integrity and preserving their reputation, both with regulators and the public.\u003c/p\u003e\n\u003ch3 id=\"cost-pressures\"\u003e\u003cstrong\u003eCost pressures\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eOver the past few decades, as firms have adopted increasingly sophisticated surveillance technology, they have encountered operational challenges stemming from high false positive rates generated by isolated lexicon-based or basic sample-based surveillance methods. Integrated systems offer a solution by significantly decreasing the occurrence of false positives, thereby reducing the time compliance teams spend reviewing them.\u003c/p\u003e\n\u003cp\u003eMoreover, consolidating data analysis into a unified platform allows firms to streamline operations and lower operational costs. Integrated systems eliminate the necessity for multiple surveillance tools and minimise the administrative overhead associated with maintaining separate systems for trade and eComms surveillance.\u003cbr\u003e\u003c/p\u003e\n\u003ch2 id=\"tzec-a-holistic-surveillance-tool\"\u003e\u003cstrong\u003eTZEC: A holistic surveillance tool\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eTZEC - eflow\u0026rsquo;s integrated eComms surveillance solution - addresses these challenges by offering a highly configurable, holistic solution that uses eflow’s sentiment analysis tooling to accurately identify suspicious behaviour, link messages to associated trading activity, all while minimising the reporting of ‘false positives’ that can drain compliance resources.\u003c/p\u003e\n\u003cp\u003eUnlike existing systems that merely provide ‘archive and search’ functionality, TZEC utilises eflow’s Client Lexicon Service to learn firm-specific vocabulary and slang terms that are unique to that organisation. These are then combined with other wider linguistic trends and industry terminology through eflow’s Global Lexicon Service, which enables TZEC to continuously evolve and improve surveillance outcomes based on behavioural-led insights.\u003c/p\u003e\n\u003cp\u003eDiscover how firms are advancing their eComms surveillance, and integrating with trade surveillance in our latest eBook. \u003ca href=\"https://lp.eflowglobal.com/integrating-ecomms-and-trade-surveillance-ebook-0\" target=\"_blank\" rel=\"noopener\"\u003eDownload it today\u003c/a\u003e to delve deeper into this evolving trend.\u003cbr\u003e\u003c/p\u003e\n","date_published":"2024-26-07T14:59:31+0000"},{"title":"How a transaction reporting system can simplify your EMIR reporting processes","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/how-a-transaction-reporting-system-can-simplify-your-emir-reporting-processes/","summary":"\u003cp\u003eIn today\u0026rsquo;s financial landscape, regulatory compliance is non-negotiable. The European Market Infrastructure Regulation (EMIR) imposes stringent reporting requirements on financial institutions engaged in derivative contracts. These demands for transparency and risk mitigation have only intensified with the introduction of \u003ca href=\"https://eflowglobal.com/emir-refit/\"\u003eEMIR Refit\u003c/a\u003e this year. Navigating these regulatory complexities demands operational efficiency and accuracy, which is where eflow’s \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\"\u003eTZTR Transaction Reporting\u003c/a\u003e solution steps in.\u003c/p\u003e\n\u003cp\u003eTZTR has been specifically designed to enable financial institutions to effectively manage their EMIR reporting obligations. By consolidating all reporting activities into a single, integrated digital platform, eflow’s transaction reporting solution offers a robust solution to navigate the complexities of EMIR compliance seamlessly.\u003c/p\u003e\n\u003ch2 id=\"how-tztr-simplifies-your-emir-reporting-processes\"\u003eHow TZTR simplifies your EMIR reporting processes\u003c/h2\u003e\n\u003cp\u003eeflow’s transaction reporting system TZTR has been engineered with a clear objective in mind - to streamline and automate as much of the EMIR reporting process as possible.\u003c/p\u003e\n\u003cp\u003eThrough automated data collation, the system gathers and enriches the data required for the 203 mandatory fields stipulated under EMIR Refit. By cross-referencing your trade data with market data gathered from more than 250 sources, TZTR significantly enhances your data’s accuracy ready for reporting.\u003c/p\u003e\n\u003cp\u003eThe system then generates the ‘regulator-ready’ reports, using advanced error handling and real-time validation capabilities, before automatically submitting them to the relevant Trade Repository in line with regulatory requirements. TZTR also automatically generates a complete digital audit trail of every action taken, which supports compliance audits and internal reviews.\u003c/p\u003e\n\u003cp\u003eBy utilising rigorous process automation and managing data from a centralised digital hub, the risk of reporting errors is greatly reduced and the reporting of vital management information is simplified, driving operational efficiency.\u003c/p\u003e\n\u003ch2 id=\"why-choose-eflows-transaction-reporting-solution-for-emir\"\u003eWhy choose eflow’s transaction reporting solution for EMIR?\u003c/h2\u003e\n\u003cp\u003eeflow’s TZTR platform is the preferred solution for financial institutions looking to streamline their EMIR reporting processes for several reasons.\u003c/p\u003e\n\u003cp\u003eFirstly, TZTR provides a holistic solution by consolidating all EMIR reporting activities into a centralised digital platform. This integration eliminates the inefficiencies associated with using disparate systems and manual processes. By centralising data collection, enrichment, submission, and validation, TZTR enhances operational efficiency and reduces the risk of reporting errors. This unified approach ensures that firms can manage their regulatory obligations more effectively and with greater accuracy.\u003c/p\u003e\n\u003cp\u003eTZTR can also be configured to your specific requirements, including customisation that aligns with the bespoke regulatory strategies and risk profiles of individual financial institutions. The flexibility afforded by the technology is crucial in allowing firms to test, refine and adapt their approach to continuously evolving regulatory requirements. By being able to accommodate changes in regulatory landscapes seamlessly, TZTR enables organisations to scale their operations while having the peace of mind that they will remain fully compliant.\u003c/p\u003e\n\u003cp\u003eeflow’s dedicated customer success team provides expert support to its 120+ global clients. From initial onboarding to maximising the value of the technology, the team ensures a seamless transition onto the platform, regardless of whether they are reporting for the first time or migrating from another system. The team’s collective regulatory expertise and extensive transaction reporting experience can be utilised by clients to inform their regulatory strategy and reduce the resources they need to deploy in order to remain compliant.\u003c/p\u003e\n\u003ch2 id=\"book-an-emir-refit-readiness-audit\"\u003eBook an EMIR Refit Readiness Audit\u003c/h2\u003e\n\u003cp\u003eWith EMIR reporting becoming increasingly complex as a result of the additional requirements outlined by EMIR Refit, firms are increasingly turning to robust solutions like TZTR to streamline their compliance efforts.\u003c/p\u003e\n\u003cp\u003eeflow\u0026rsquo;s 20 years of industry expertise means that our team of resident experts is perfectly placed to help you find the most effective solutions to your regulatory challenges.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://lp.eflowglobal.com/emir-refit-readiness-audit\"\u003eBook a free 30 minute consultation\u003c/a\u003e\u003cem\u003eon how to prepare for the new EMIR Refit regulations, including some of the key pain points firms are experiencing.\u003c/em\u003e\u003c/p\u003e\n","date_published":"2024-23-07T09:07:00+0000"},{"title":"Does borderless trading require a revised approach to trade surveillance? ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/does-borderless-trading-require-a-revised-approach-to-trade-surveillance/","summary":"\u003cp\u003eTrade surveillance has always been an integral part of the broader regulatory framework for those operating in the financial services industry. However, as markets evolve and borderless trading becomes ever more commonplace, the nature of these trade surveillance systems has changed. We have seen a necessary evolution in both the complexity and sophistication of trade surveillance technology in order to maintain market integrity and promote regulatory compliance.\u003c/p\u003e\n\u003cp\u003eWhile tempting, it’s important not to further complicate the topic of trade surveillance in the context of single-border and borderless trading. The broader overarching goals remain: monitoring proprietary and client trades to identify and investigate suspicious trading patterns while ensuring that guilty parties are suitably prosecuted.\u003c/p\u003e\n\u003ch2 id=\"understanding-borderless-trading\"\u003e\u003cstrong\u003eUnderstanding borderless trading\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe best way to describe borderless trading is the seamless exchange of financial instruments across different countries without regulatory friction. This prompts the question: what is the difference between trade surveillance across borderless and single-border markets?\u003c/p\u003e\n\u003cp\u003eIn reality, there are limited differential factors. The risks, vulnerabilities, and technological challenges remain the same but are on a wider scale with the largest challenge belonging to National Competent Authorities (NCA’s) who are responsible for spearheading, potentially international, prosecutions. We still identify market manipulation through executions, cancellations, and amendments, whether a trade on the London Stock Exchange originates in France or England or a trade on the US markets were to originate in the UK (as we will discuss later).\u003c/p\u003e\n\u003cp\u003eThis is very different from, for instance, arbitrage situations, which are perfectly legal and tend to occur where a market is less efficient than the London Stock Exchange. In this scenario, it is also important to appreciate the broader benefits of borderless trading, which enhances market efficiency and liquidity.\u003c/p\u003e\n\u003ch2 id=\"borderless-market-responsibilities-and-prosecution\"\u003e\u003cstrong\u003eBorderless market, responsibilities and prosecution\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThis brings us to the subject of prosecution. Which parties take responsibility for prosecuting illegal trading activity, and how should cross-border regulators cooperate? It is not as big of a problem within the EU due to the harmonisation of trading regulations, but further afield, the situation is less clear. Where US counterparts are dealing in EU markets, or vice versa, the responsibility for prosecution may not be obvious and the difficulties in ensuring extradition are not small.\u003c/p\u003e\n\u003cp\u003eTo circumvent the issues brought about by suspicious cross-border trading, global financial regulators must widen their purview and take a more global, collaborative approach to compliance across investment markets.\u003c/p\u003e\n\u003ch3 id=\"global-regulatory-cooperation\"\u003e\u003cstrong\u003eGlobal regulatory cooperation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eA critical part of worldwide trade surveillance is the cooperation of global regulators. This involves several factors, such as data sharing, information requests, system integrations, and defining specific responsibilities concerning investigations and prosecutions.\u003c/p\u003e\n\u003cp\u003eExamples of cooperation include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eIOSCO (\u003ca href=\"https://www.iosco.org/v2/about/?subsection=mmou\" target=\"_blank\" rel=\"noopener\"\u003eInternational Organization of Securities Commissions\u003c/a\u003e) and national regulators\u003c/li\u003e\n\u003cli\u003eFATF (Financial Action Task Force) and regional regulatory bodies\u003c/li\u003e\n\u003cli\u003eEU and US regulatory cooperation\u003c/li\u003e\n\u003cli\u003eFINRA (Financial Industry Regulatory Authority) and international counterparts\u003c/li\u003e\n\u003cli\u003eG20 and global regulatory frameworks\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eTo put this in context, under IOSCO’s 2002 multilateral memorandum of understanding, information exchanges have increased from just eight in 2003 to 5567 in 2022. It’s also worth noting that ISOCO membership regulates \u003ca href=\"https://www.iosco.org/v2/about/?subsection=about_iosco\" target=\"_blank\" rel=\"noopener\"\u003e95% of the world’s security markets\u003c/a\u003e across 130 jurisdictions.\u003c/p\u003e\n\u003ch2 id=\"the-challenges-of-implementing-borderless-transaction-surveillance\"\u003e\u003cstrong\u003eThe challenges of implementing borderless transaction surveillance\u003c/strong\u003e\u003c/h2\u003e\n\u003ch3 id=\"case-study-navinder-sarao-and-the-flash-crash\"\u003e\u003cstrong\u003eCase Study: Navinder Sarao and the “Flash Crash”\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eLet us look at the case of the “\u003ca href=\"https://www.tradersmagazine.com/news/commentary-two-decades-and-four-flash-crashes/\" target=\"_blank\" rel=\"noopener\"\u003eHound of Hounslow\u003c/a\u003e”, Navinder Sarao. In 2010, he caused panic across global stock markets from a bedroom in his parents\u0026rsquo; home in Hounslow. He instigated a “flash crash”: US markets briefly fell by around $1 trillion before recovering, but not before the trader had banked a multi-million dollar profit.\u003c/p\u003e\n\u003cp\u003eIn a process known as “spoofing,” Sarao used software to manipulate prices on the Chicago Mercantile Index order book. Having recognised that trading algorithms attempted to mimic order book trades before execution, his trading strategy was based on placing and quickly cancelling trades, but not before tricking the algorithms. Heavy buying/selling by automated systems (which also caught the eye of traders and activated stop-loss limits) allowed Sarao to perfectly time counter trades and bank huge profits.\u003c/p\u003e\n\u003ch3 id=\"case-study-the-multi-bank-libor-scandal\"\u003e\u003cstrong\u003eCase Study: The multi-bank LIBOR scandal\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eManipulation of the LIBOR markets between 2003 and 2012 went unnoticed until regulators from the US, Canada, Japan, Switzerland and the UK began working together. Manipulating the LIBOR rate allowed traders to bank huge profits on derivatives but impacted the cost of finance worldwide, with LIBOR used as a base rate for many products.\u003c/p\u003e\n\u003cp\u003eBanking giants such as Citigroup, JP Morgan Chase, Barclays, Royal Bank of Scotland, and UBS were caught up in the scandal, prompting a new era in cross-border regulation. The scandal was revealed due to a separate Barclays Bank criminal settlement, leading to a more in-depth investigation. As public and private prosecutions continue, fines are now in double-digit billion dollars, although the impact on market trust has been much more far-reaching.\u003c/p\u003e\n\u003cp\u003eShould trade or eComms surveillance at the time have identified market manipulation? Can we say with certainty that a similar situation could not emerge in the future? How do firms create compliance programmes that can identify post-trade events and capture pre-trade risks?\u003c/p\u003e\n\u003cp\u003eAI and machine learning are coming to the fore with greater regulatory oversight. With the LIBOR scandal to learn from, it’s unlikely such large-scale manipulation would go unnoticed today, but both regulators and financial firms must remain vigilant.\u003c/p\u003e\n\u003ch2 id=\"solutions-and-strategies-for-post-surveillance-investigation\"\u003e\u003cstrong\u003eSolutions and strategies for post-surveillance investigation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhile real-time surveillance is sometimes leveraged by exchanges, the vast majority of trading firms solely rely on post-trade surveillance. While systems powered by cutting-edge AI technology that monitor trading in real-time di exist, a more simple solution is often the best choice. Regulators must examine past instances of market abuse in order to learn and protect themselves against similar future infringements.\u003c/p\u003e\n\u003cp\u003eWhen Navinder Sarao was convicted of market manipulation, in this case, “spoofing,” by creating false and misleading impressions of price activity for trading bots and high-frequency traders, US prosecutors offered him a deal. After extradition to the US, having spent four months in Wandsworth Prison, he was allowed to return to the UK before sentencing. In exchange, he has been helping authorities catch others attempting to manipulate markets, explaining how the software was able to leverage his influence over traders, prompting the infamous “flash crash” of 2010.\u003c/p\u003e\n\u003cp\u003eA greater understanding of these illegal trading strategies, how they work, and how to combat and identify them as quickly as possible will help broader trade surveillance going forward. In theory, these “spoofing” strategies are very simple, but knowing how they work and the attention to detail will help regulators.\u003c/p\u003e\n\u003ch2 id=\"do-existing-regulations-need-to-be-adapted-to-manage-increases-in-cross-border-trading\"\u003e\u003cstrong\u003eDo existing regulations need to be adapted to manage increases in cross-border trading?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs borderless trading grows, do existing regulations need to change to address specific challenges? Enhanced clarity regarding responsibilities, clear definitions of regulatory boundaries, and confirmation as to where the ultimate power of prosecution lies are all vital pieces of information which must be incorporated if cross-border regulation is to succeed.\u003c/p\u003e\n\u003cp\u003eThe Navinder Sarao saga shows that regulators can work together. They can take a sensible approach to prosecutions and leverage the threat of jail sentences with one eye on the longer term.\u003c/p\u003e\n\u003cp\u003eIronically, insider knowledge of the system used by Navinder Sarao will help teach AI-assisted trade surveillance systems in the future as well as aiding human-set surveillance parameters although it is by its nature retrospective and can’t eliminate such activity at source. This valuable insider knowledge will help identify similar emerging scenarios, allowing regulators to take more prompt action.\u003c/p\u003e\n\u003cp\u003eThere’s no doubt the framework is there, progress has been made, and historic levels of regulatory tribalism have certainly been toned down, but it’s important to continue evolving approaches and being aware of the latest developments in both the pattern and practice of trading.\u003c/p\u003e\n\u003ch2 id=\"future-outlook\"\u003e\u003cstrong\u003eFuture outlook\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAt eflow, we provide a range of cutting-edge reporting and surveillance services, allowing companies in the financial services industry to fulfil their ever-growing regulatory obligations. Our\u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e TZTS Trade Surveillance and Market Abuse solution\u003c/a\u003e will automatically monitor your trading activity, identifying suspicious behaviour and gathering evidence to support regulatory reporting. This, together with our \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eTZEC module providing eComms surveillance\u003c/a\u003e will allow for an integrated approach to surveillance and risk monitoring covering both pre and post trade activity to help generate a more comprehensive overview of risk.\u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eIn answer to the original question in this article, borderless trading does not require a different type of trade surveillance, but it does prompt questions about the responsibility for prosecuting those manipulating markets. There will still be challenges, some of which will be down to regulators protecting their domains and others to local regulations and integrating new technology.\u003c/p\u003e\n\u003cp\u003eTrade surveillance is less challenging in homogeneous environments such as the EU, where all countries share regulatory priorities. The harmonisation of rules and regulations also creates a much firmer base for prosecutions, identifying responsibilities, accountability and legal powers before the event.\u003c/p\u003e\n\u003cp\u003eEven though we are unlikely to see a bona fide global regulator, with financial services integral to many economies such as the UK, these bodies will need to work more closely in the future.\u003cbr\u003eIf you are concerned about your company\u0026rsquo;s ability to retain control of trade surveillance in an ever-changing, ever-expanding market, let\u0026rsquo;s \u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003ebook a consultation\u003c/a\u003e and look at your situation in more detail.\u003c/p\u003e\n","date_published":"2024-16-07T09:00:00+0000"},{"title":"eflow launches enhanced eComms Surveillance tool","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-launches-enhanced-ecomms-surveillance-tool/","summary":"\u003cp\u003e\u003cem\u003eThe TZEC platform ingests data from multiple digital sources – including email providers, Microsoft Teams, Slack, Bloomberg messaging, and Red Box call recording – to detect suspicious behaviour and mitigate market abuse\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eLondon, UK: 11th July 2024\u003c/strong\u003e - In response to the escalating need for comprehensive and effective eComms surveillance in the financial sector, RegTech (Regulatory Technology) scaleup \u003ca href=\"https://eflowglobal.com/\"\u003eeflow Global\u003c/a\u003e today announces the launch of an enhanced, more inclusive version of \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eTZEC\u003c/a\u003e, its AI-powered eComms surveillance platform.\u003c/p\u003e\n\u003cp\u003eDesigned to meet the increasingly sophisticated requirements of global financial firms and regulators, TZEC integrates sophisticated analytics and machine learning to analyse, identify and predict the types of activities that are associated with instances of market abuse, offering firms access to continuously evolving behavioural-led insights.\u003c/p\u003e\n\u003ch3 id=\"tackling-key-trade-surveillance-pain-points\"\u003e\u003cstrong\u003eTackling key trade surveillance pain points\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eSince 2021, over \u003ca href=\"https://eflowglobal.com/h1-enforcement-roundup-firms-systems-and-controls-are-called-into-question/\"\u003e$2.7bn in fines\u003c/a\u003e have been issued by global regulators for eComms surveillance failures, with $95m in fines handed out in the first five months of 2024 alone. With regulatory bodies such as the FCA, SEC, CFTC and FINRA intensifying their focus on eComms surveillance as part of broader market abuse detection strategies, firms are under increasing pressure to monitor the digital channels used by their teams to share information.\u003c/p\u003e\n\u003cp\u003eTZEC addresses these challenges by offering a highly configurable, holistic solution that uses eflow’s sentiment analysis tooling to accurately identify suspicious behaviour, link messages to associated trading activity, all while minimising the reporting of ‘false positives’ that can drain compliance resources. Unlike existing systems that merely provide \u0026lsquo;archive and search\u0026rsquo; functionality, TZEC utilises eflow’s Client Lexicon Service to learn firm-specific vocabulary and slang terms that are unique to that organisation. These are then combined with other wider linguistic trends and industry terminology through eflow’s Global Lexicon Service, which enables TZEC to continuously evolve and improve surveillance outcomes based on behavioural-led insights.\u003c/p\u003e\n\u003cp\u003eBen Parker, CEO and founder of eflow Global, commented: “As regulatory scrutiny intensifies, firms cannot afford to rely on outdated and fragmented surveillance tools. There’s an urgent need for a solution that goes beyond traditional siloed surveillance tools, which drain resources and require multiple teams to \u0026lsquo;join the dots\u0026rsquo; between systems in order to detect market abuse. TZEC represents a significant advancement in our commitment to providing comprehensive, integrated, and intelligent surveillance solutions that not only meet but exceed regulatory requirements.”\u003c/p\u003e\n\u003cp\u003e“By leveraging advanced AI and machine learning, TZEC ensures that our clients can stay ahead of potential compliance issues and focus on their core business operations with confidence,” Parker continued.\u003c/p\u003e\n\u003cp\u003eHaving been engineered to normalise all communications channels, TZEC also allows firms to add new messaging services with ease, future-proofing a firm’s eComms surveillance strategy. It also generates comprehensive digital audit trails to satisfy regulatory record-keeping requirements more efficiently and allows firms to fine-tune the platform’s configuration to their specific needs by experimenting with various parameters in an independent sandbox environment.\u003c/p\u003e\n\u003cp\u003eFor more information and to arrange a demo of TZEC, \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a consultation\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003e\u003cbr\u003e\u003cbr\u003e\u003c/p\u003e\n","date_published":"2024-11-07T09:00:00+0000"},{"title":"H1 enforcement roundup: Firms' systems and controls are called into question","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/h1-enforcement-roundup-firms-systems-and-controls-are-called-into-question/","summary":"\u003cp\u003eWith the first half of the year already behind us, it’s time for eflow’s quarterly review of enforcement action from around the globe. As a brief recap, global enforcement actions related to market conduct resulted in nearly \u003ca href=\"https://eflowglobal.com/enforcements-update-almost-400-million-dished-out-in-the-first-two-months-of-2024/\"\u003e\u003cu\u003e$400 million\u003c/u\u003e\u003c/a\u003e of fines being issued in the first quarter of 2024, affecting broker-dealers, investment advisers, pension providers, and major investment banks.\u003c/p\u003e\n\u003cp\u003eJanuary and February saw significant penalties being issued for J.P. Morgan, with fines of $250 million from the OCC and $98 million from the Federal Reserve Board due to deficiencies in their trade reporting and surveillance systems.\u003c/p\u003e\n\u003cp\u003eThree months on, we have revisited the data to build on the initial findings and take a fresh look at the evolving enforcement landscape for the first half of the year. Spoiler alert: enforcement action is accelerating, with global regulators focusing on the robustness of systems and controls, not just non-compliant activity.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cimg src=\"/images/pie-chart-1b.png\" height=\"536\" width=\"867\" /\u003eA break down of all enforcements in H1 by enforcement type\u003c/em\u003e\u003c/p\u003e\n\u003ch2 id=\"trade-surveillance\"\u003eTrade Surveillance\u003c/h2\u003e\n\u003cp\u003eOn 23 May 2024, we saw the \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8914-24\"\u003e\u003cu\u003econclusion\u003c/u\u003e\u003c/a\u003e of the CFTC’s lengthy investigations into J.P. Morgan Securities’ trade surveillance systems, resulting in an eye-watering $200 million fine. Between 2014 to 2021, they failed to capture and surveil billions of order messages due to misconfigured data feeds. These gaps, impacting sponsored access trading by major algorithmic firms in U.S. markets, occurred because J.P. Morgan\u0026rsquo;s surveillance systems failed to ingest complete trade and order data. The firm wrongly assumed that direct-from-exchange data feeds were an infallible “golden source” and thus exempt from testing and reconciliation processes. This oversight led to substantial deficiencies in monitoring trading activities.\u003c/p\u003e\n\u003cp\u003eIn Europe, the Federal Financial Supervisory Authority (BaFin) \u003ca href=\"https://www.bafin.de/SharedDocs/Veroeffentlichungen/EN/Massnahmen/40c_neu_124_WpHG/meldung_2024_06_20_CitigroupGlobalMarketsEuropeAG_en.html;jsessionid=BE1088D86DB307580880AB79DE20CE00.internet992\"\u003e\u003cu\u003efined\u003c/u\u003e\u003c/a\u003e Citigroup Global Markets Europe AG €12,975m for failing to monitor its algorithmic trades properly, violating the German Securities Trading Act. The fine follows separate penalties imposed by the \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-fines-cgml-27-million\"\u003e\u003cu\u003eFCA\u003c/u\u003e\u003c/a\u003e (£27.77 million) and the Prudential Regulatory Authority (\u003ca href=\"https://www.bankofengland.co.uk/news/2024/may/pra-fines-citygroup-global-markets-limited\"\u003ePRA\u003c/a\u003e) (£33.88 million) for the same incidents. According to the UK regulators, Citigroup breached the skill, care, diligence, and management control principles, and Market Conduct Rule 7A.3.2. This action follows a significant trading incident on 2 May 2022, involving CGML’s Delta 1 Desk, where a trader mistakenly input a US$444 billion equities basket into the order management system due to a data entry error.\u003c/p\u003e\n\u003cp\u003eThe FCA identified critical failings, including inadequate controls to prevent large erroneous orders, poor real-time monitoring, and ineffective handling of alert systems, which amplified the impact of the trader\u0026rsquo;s mistake and failed to mitigate trading risks adequately.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cimg src=\"/images/chart-with-currency2-4x.png\" height=\"2188\" width=\"3538\" /\u003eBreakdown of total value of fines by enforcement type\u003c/em\u003e\u003c/p\u003e\n\u003ch3 id=\"ecomms-deficiencies-persist\"\u003eeComms deficiencies persist\u003c/h3\u003e\n\u003cp\u003eSince March, we’ve seen three fines related to eComms surveillance issued, averaging $4.5 million each. Whilst the value of enforcements do not match the lofty amounts we have seen in the \u003ca href=\"https://www.sec.gov/news/press-release/2024-18\"\u003e\u003cu\u003epreceding months\u003c/u\u003e\u003c/a\u003e, they highlight the persistent issues in eComms surveillance within the financial sector in which firms are repeatedly failing to ensure proper monitoring and record-keeping for personal devices and private messaging applications.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://www.sec.gov/news/press-release/2024-44\"\u003eSenvest Management\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSub-sector\u003c/strong\u003e: Investment Adviser\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eDate\u003c/strong\u003e: 3 April 2024\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eFine\u003c/strong\u003e: $6.5m\u003c/p\u003e\n\u003cp\u003eThe SEC charged Senvest Management with significant failures in maintaining and preserving electronic communications. From January 2019 through to December 2021, Senvest employees, including senior staff, used personal texting platforms and non-Senvest messaging applications for business communications. These off-channel communications were not maintained or preserved as required under federal securities laws and Senvest’s internal policies.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8880-24\"\u003eU.S. Bank\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSub-sector\u003c/strong\u003e: Retail Bank\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eDate\u003c/strong\u003e: 19 March 2024\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eFine\u003c/strong\u003e: $6m\u003c/p\u003e\n\u003cp\u003eThe CFTC issued an order against U.S. Bank, a swap dealer, for failing to maintain and preserve the required records and for inadequate supervision related to their CFTC-registered businesses. From at least 2019, U.S. Bank employees, including senior personnel, used unapproved communication methods such as personal texting for business matters. These communications were not properly maintained or preserved, violating CFTC recordkeeping requirements.\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/chart-2b.png\" alt=\"Breakdown of enforcement by region\" title=\"Breakdown of enforcement by region\" height=\"547\" width=\"884\" /\u003eBreakdown of fined companies by region\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8880-24\"\u003eOppenheimer \u0026amp; Co., Inc.\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSub-sector\u003c/strong\u003e: Investment Bank\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eDate\u003c/strong\u003e: 19 March 2024\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eFine\u003c/strong\u003e: $1m\u003c/p\u003e\n\u003cp\u003eThe CFTC also issued an order against Oppenheimer \u0026amp; Co., an introducing broker, for similar failures as U.S. Bank. Oppenheimer did not maintain or preserve written communications required for their CFTC-registered businesses, and did not supervise their employees adequately. From at least 2019, employees used unapproved methods like personal texts for business communications, which were not stored in compliance with recordkeeping obligations.\u003c/p\u003e\n\u003ch3 id=\"insider-trading\"\u003eInsider trading\u003c/h3\u003e\n\u003cp\u003eRecent insider trading enforcement actions reflect a global crackdown on the misuse of confidential information in financial markets. In the UK, penalties were levied against \u003ca href=\"https://www.fca.org.uk/news/press-releases/stuart-bayes-sentenced-insider-dealing\"\u003e\u003cu\u003eStuart Bayes\u003c/u\u003e\u003c/a\u003e and \u003ca href=\"https://www.fca.org.uk/news/press-releases/mohammed-zina-sentenced-22-months-prison-insider-dealing-and-fraud\"\u003e\u003cu\u003eMohammed Zina\u003c/u\u003e\u003c/a\u003e for exploiting insider information to make substantial profits.\u003c/p\u003e\n\u003cp\u003eBayes capitalised on knowledge of an acquisition to trade in BPI shares, while Zina used his position at Goldman Sachs to benefit from insider information on various mergers and acquisitions. In other parts of Europe, the German regulator, BaFIN, penalised \u003ca href=\"https://www.bafin.de/SharedDocs/Veroeffentlichungen/EN/Massnahmen/40c_neu_124_WpHG/meldung_2024_03_20_MTU_Aero_Engines_AG_en.html;jsessionid=EB67347DC3D430ACB308495BA766F2A3.internet952\"\u003eMTU Aero Engines AG\u003c/a\u003e for failing to promptly disclose inside information, underscoring the critical role of timely transparency under the Market Abuse Regulation.\u003c/p\u003e\n\u003cp\u003eIn the U.S., the SEC and CFTC have taken decisive action against individuals such as \u003ca href=\"https://www.sec.gov/news/press-release/2024-40\"\u003e\u003cu\u003eAndy Bechtolsheim\u003c/u\u003e\u003c/a\u003e and \u003ca href=\"https://www.sec.gov/news/press-release/2024-53\"\u003e\u003cu\u003eFrank T. Poerio Jr.\u003c/u\u003e\u003c/a\u003e for leveraging non-public information for personal financial gain. Poerio agreed to a settlement that permanently enjoins him from violating federal securities laws and requires him to pay disgorgement, pre-judgment interest, and a civil money penalty, with amounts to be decided by the Court. Echtolsheim’s settlement includes a five-year ban from serving as an officer or director of a public company and a civil monetary penalty of $923,740.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=24PR82\"\u003eHong Kong\u003c/a\u003e and \u003ca href=\"https://asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-059mr-cameron-waugh-sentenced-to-two-years-imprisonment-for-insider-trading#!page=6\"\u003e\u003cu\u003eAustralia\u003c/u\u003e\u003c/a\u003e have also demonstrated robust regulatory responses, with Segantii Capital Management facing criminal proceedings and another individual being sentenced for insider trading based on sensitive corporate developments.\u003c/p\u003e\n\u003ch2 id=\"the-role-of-technology\"\u003eThe Role of Technology\u003c/h2\u003e\n\u003cp\u003eThe most substantial fines imposed so far this year have primarily arisen from deficiencies in systems and controls, with regulators clearly clamping down on firms that fail to demonstrate that they have robust and well maintained operational processes in place. This is a continuation of the theme seen in the \u003ca href=\"https://eflowglobal.com/fca-market-watch-79/\"\u003eFCA’s recent Market Watch 79\u003c/a\u003e, which highlighted that regulators are placing much greater focus on how firms use, test and manage the technology that is used to mitigate their regulatory risk.\u003c/p\u003e\n\u003cp\u003eTrade surveillance systems rely on data from various sources, such as trading venues, brokers, and exchanges. Each source may provide data in different formats, and without proper reconciliation processes, surveillance systems may fail to integrate and analyse this data effectively.\u003c/p\u003e\n\u003cp\u003eTools such as eflow’s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eTZTS\u003c/a\u003e can automate the integration and normalisation of data from disparate sources, significantly improving the reconciliation process. Data validation is conducted in real-time, allowing users to identify and correct discrepancies as they arrive, protecting them from some of the costly oversight errors we have seen so far this year.\u003c/p\u003e\n\u003cp\u003eAcross their product line, eflow also provides solutions for \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eeComms surveillance\u003c/a\u003e, \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\"\u003etransaction reporting\u003c/a\u003e for \u003ca href=\"https://eflowglobal.com/tztr-mifir-reporting/\"\u003eMiFIR\u003c/a\u003e and \u003ca href=\"https://eflowglobal.com/emir-refit/\"\u003eEMIR Refit\u003c/a\u003e, and \u003ca href=\"https://eflowglobal.com/tz-best-execution-and-transaction-cost-analysis/\"\u003ebest execution\u003c/a\u003e. If you’d like more information on how eflow could help your firm, \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a free compliance consultation\u003c/a\u003e with a member of our team.\u003c/p\u003e\n","date_published":"2024-04-07T09:00:00+0000"},{"title":"U.S. regulators and the fight against market abuse","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/u.s.-regulators-and-the-fight-against-market-abuse/","summary":"\u003cp\u003e\u003cem\u003eThis article was originally published in  Advisor Perspectives. You can find the original article\u003c/em\u003e \u003ca href=\"https://www.advisorperspectives.com/articles/2024/06/24/u-s-regulators-lead-global-fight-ben-parker\" target=\"_blank\" rel=\"noopener\"\u003e\u003cem\u003ehere\u003c/em\u003e\u003c/a\u003e\u003cem\u003e.\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eThe U.S. is known for enforcing significant penalties for financial misconduct. \u003ca href=\"https://eflowglobal.com/global-trends-in-market-abuse-and-trade-surveillance-form/\" target=\"_blank\" rel=\"noopener\"\u003eOur global trade surveillance report\u003c/a\u003e revealed that 205 fines worth $2.92 billion were levied for market abuse between 2019 and 2023 (Q3). U.S. regulators accounted for 133 of these fines – more than five times as many enforcements as any other region – with a total value of $2.67 billion, representing 91 percent of all financial penalties.\u003c/p\u003e\n\u003cp\u003eIt should be noted that the Commodity Futures Trading Commission (CFTC) fining JP Morgan $920.2 million in 2020 significantly shifts this value upwards for the time period in question. However, even excluding this outlier, the U.S. consistently issues the largest fines by some significant margin.\u003c/p\u003e\n\u003cp\u003eNot only is the country a regulatory leader in enforcing fines but also in terms of implementing new enforcement strategies, such as taking action against instances of non-compliant eComms (electronic communications) surveillance. There have been recent examples of substantial fines related to unmonitored communication channels, while enforcements for conduct relating to digital assets represented \u003ca href=\"https://www.cftc.gov/PressRoom/PressReleases/8613-22\" target=\"_blank\" rel=\"noopener\"\u003emore than 20 percent\u003c/a\u003e of all CFTC actions filed during the 2022 fiscal year.\u003c/p\u003e\n\u003ch2 id=\"does-money-talk\"\u003e\u003cstrong\u003eDoes money talk?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhy does the U.S. sit at the top of the table for market abuse fines?\u003c/p\u003e\n\u003cp\u003eOne reason is strategy. U.S. regulators still see the threat of huge fines as a significant deterrent for firms, as it not only impacts the bottom line of the company but also carries the risk of reputational damage. In the eyes of the regulators, without the threat of such hard-hitting penalties, market abuse has the potential to be an increasingly prevalent problem. This type of enforcement strategy is strongly embedded into U.S. culture. But it is far from a universal tactic.\u003c/p\u003e\n\u003cp\u003eRegulators in the Asia-Pacific (APAC) region take a very different approach. Their enforcement approach is much more discreet and adheres to cultural values where individual accountability and societal harmony carry great importance. This means that the reputational damage associated with a regulatory breach is seen as far more damaging (and therefore more of a deterrent) than handing out large fines in high numbers.\u003c/p\u003e\n\u003cp\u003eOf course, while there are overarching regional trends, individual regulators often demonstrate particular areas of focus, with different forms of abuse bearing higher levels of enforcement action. For example, the CFTC consistently issues the largest fines for market manipulation, whereas the UK’s Financial Conduct Authority (FCA) enforced the most penalties for insider trading.\u003c/p\u003e\n\u003cp\u003eA region’s regulatory strategy and culture undoubtedly play a role in explaining some of the differences between U.S. regulators and other international bodies. However, U.S. enforcement action still outweighs any other region by such an extent that further analysis is required. Are the country’s regulators simply more active in identifying and punishing instances of market abuse than their global counterparts? Or is it more representative of a country with huge resources, wealthy companies and a strategic approach that prioritizes fines?\u003c/p\u003e\n\u003ch2 id=\"the-impact-of-global-shocks-on-enforcement-action\"\u003e\u003cstrong\u003eThe impact of global shocks on enforcement action\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eReviewing historical enforcement data provides a useful indication of the regional variations in regulatory trends. But while the volume and value of fines suggests the U.S. adopts the most stringent approach to market abuse surveillance, the variation in enforcement action typologies says a lot about the ever-evolving world of regulation.\u003c/p\u003e\n\u003cp\u003eThe research that underpins the report illustrates significant year-to-year variation in the total value of fines issued between 2019 and 2023. The impact of the Covid-19 pandemic is one contributory factor. Equally, it could be a change in regulatory approach that causes a significant movement in enforcement action, such as the shift that was caused by the transition from the Trump-Pence administration to the Biden-Harris administration.\u003c/p\u003e\n\u003cp\u003eRegardless of the cause, this imbalance raises interesting questions: What impact does constant change have on markets across the world? Are current fines and regulatory frameworks, processes and technology set up to combat emerging threats, especially in an increasingly interconnected world? With so much variance seen in the U.S. alone, and the same global shocks likely to impact other individual markets, is it realistic to believe that we can fight market abuse on a \u003cem\u003eglobal\u003c/em\u003e scale?\u003c/p\u003e\n\u003cp\u003eUltimately, rather than act as a leader in enforcement alone, does the U.S. need to use its position to lead a collaborative global fight against market abuse?\u003c/p\u003e\n\u003ch2 id=\"a-leader-in-collaboration\"\u003e\u003cstrong\u003eA leader in collaboration\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eA landscape that facilitates cross-market, cross-product and cross-border activity needs a regulatory regime and surveillance system that can do the same thing. New initiatives are emerging that attempt to align regulators more closely than ever before in an attempt to monitor trading activity that is becoming increasingly borderless.\u003c/p\u003e\n\u003cp\u003eThere is an increased focus on under-represented asset classes. As previously noted, a fifth of the CFTC’s enforcements in 2022 were for digital assets. But while the U.S. is showing its ambition with digital asset enforcement, when it comes to legislation it is the EU which has taken a lead in this area. The passing of its Markets in Crypto-Asset Regulation (MiCA) has prompted regulators around the world to align their policies with this framework.\u003c/p\u003e\n\u003cp\u003eDomestically, there have been several attempts to pass legislation on crypto assets through Congress. However, the CFTC has recommended that Congress “\u003ca href=\"https://www.dlapiper.com/en-gb/insights/publications/2023/01/the-cftc-and-a-congressional-framework-for-regulation-of-digital-assets\" target=\"_blank\" rel=\"noopener\"\u003ebridge the gap\u003c/a\u003e” between itself and the Securities Exchange Commission (SEC) “in the regulation of the space by properly defining the difference in commodities versus securities.” This is an area that has yet to be rectified and some confusion remains over which body is best placed to regulate crypto assets.\u003c/p\u003e\n\u003cp\u003eBoth federal regulators are also working on cross-border partnerships and strategies. The CFTC will continue its emphasis on coordination and parallel actions with criminal authorities and regulatory partners internationally, while the SEC is focused on \u003ca href=\"https://www.sec.gov/news/speech/uyeda-remarks-institute-international-bankers-030723\" target=\"_blank\" rel=\"noopener\"\u003eaddressing market abuse challenges in securities markets globally\u003c/a\u003e. This includes providing cross-border clarity on regulatory scope, removing duplicative regulation, and identifying gaps in international regulatory frameworks.\u003c/p\u003e\n\u003cp\u003eFinally, there is the increasing use of surveillance technology, allowing companies to identify market abuse scenarios by asset class. This technology constantly monitors and updates to match a criminal world that is highly sophisticated and operates 24/7. However, to work to its optimum levels, it needs to be part of a collaborative regulatory strategy, as many firms’ regulatory efforts continue to be challenged by organizational and technological silos.\u003c/p\u003e\n\u003ch2 id=\"leading-the-fight\"\u003e\u003cstrong\u003eLeading the fight\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhile financial penalties will always have a role to play in keeping companies in line with regulatory policy, regulators need a forward-looking strategy to prevent future market abuse and support firms in their efforts to operate compliantly.\u003c/p\u003e\n\u003cp\u003eThis could be done in a number of ways. For example, how are regulators sharing information about the enforcement action they’re taking, so that firms can continue to educate themselves about best practices? Are there mechanisms to tackle the root causes of market abuse rather than just levying huge fines as punishment?\u003c/p\u003e\n\u003cp\u003eThe U.S. is clearly a leader in terms of regulatory enforcement. However, its regulators also have an important role to play in informing and shaping regulatory policy on an international scale. As financial services becomes an increasingly globalized and borderless industry, this role is only likely to become more important.\u003c/p\u003e\n","date_published":"2024-19-06T09:00:00+0000"},{"title":"21X selects eflow's regulatory technology as it builds  Europe’s first fully regulated DLT exchange ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/21x-selects-eflow-regulatory-technology/","summary":"\u003cp\u003e\u003cstrong\u003eLondon, UK: Thursday 13 June 2024:\u003c/strong\u003e UK-based RegTech (Regulatory Technology) scaleup eflow today announces that its award-winning digital compliance tools have been selected by Frankfurt-based fintech \u003ca href=\"https://www.21x.eu/\"\u003e21X\u003c/a\u003e to underpin its regulatory compliance strategy.\u003c/p\u003e\n\u003cp\u003e21X has implemented eflow’s solutions for trade surveillance, best execution and transaction reporting to support its mission to build Europe’s first fully regulated Distributed Ledger Technology (DLT) exchange infrastructure for security tokens and crypto assets. The use of eflow’s integrated systems has enabled 21X to streamline its operational processes while meeting the firm’s requirement for stringent regulatory controls.\u003c/p\u003e\n\u003cp\u003eWith 21X being regulated as a financial institution, it will be expected to meet the highest standards of compliance set by regulatory bodies. This meant that it was critically important for 21X to select a technology partner that was able to meet all of its regulatory technology requirements as it develops a trading system that is fully ESMA-regulated.\u003c/p\u003e\n\u003cp\u003eMax Heinzle, CEO at 21X, commented:\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e“21X has partnered with eflow as it has the market-leading tools to ensure we meet the exacting digital market infrastructure compliance and analysis demands of the regulator. We were particularly taken with eflow\u0026rsquo;s market behaviour analysis tools which examine market movements not just by looking at micro factors - company announcements, product news, and industry trends, for example - but also through global events - from earthquakes to national elections. This more holistic approach can be a better way to examine market activity to differentiate between standard market changes and fraudulent behaviour.\u0026quot;\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003eHeinzle added: \u0026ldquo;I also believe eflow’s approach to conducting its business closely aligns with our own as a dynamic start-up organisation with strong ambitions. This stage in a company\u0026rsquo;s development requires great flexibility, a can-do attitude and the right personnel to succeed. Especially in a fast-moving, nascent market environment, as it is for digital assets, you need to bond with like-minded pioneers like eflow.\u0026rdquo;\u003c/p\u003e\n\u003cp\u003eBen Parker, CEO and Founder of eflow, commented:\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e“The regulatory landscape is evolving rapidly, with external threats, the role of AI and the sheer volume of upcoming regulations creating mounting pressure for businesses. 21X is at the forefront of innovation in the blockchain and crypto sectors and our partnership highlights the crucial importance of firms having a truly integrated regulatory solution as a way of staying ahead of the curve. We look forward to continuing to support the business as it continues to scale in the coming years.”\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003chr\u003e\n\u003cp\u003e\u003cbr\u003e\u003cbr\u003e\u003cbr\u003e\u003c/p\u003e\n","date_published":"2024-13-06T08:00:00+0000"},{"title":"Market Watch 79: the need for stronger testing of surveillance systems","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/market-watch-79-the-need-for-stronger-testing-of-surveillance-systems/","summary":"\u003cp\u003eThe FCA’s \u003ca href=\"https://eflowglobal.com/fca-market-watch-79/\"\u003elatest Market Watch\u003c/a\u003e presents findings from a peer review of firms’ testing of automated surveillance models. Undertaken in 2023, the peer review process assessed how investment firms review their surveillance tools and processes to ensure that they are accurately capturing potentially suspicious trading activity that could be classified as market abuse.\u003c/p\u003e\n\u003cp\u003eThis assessment was not intended to analyse the surveillance systems themselves, but rather the testing around these systems to ensure that they were functioning as anticipated.\u003c/p\u003e\n\u003cp\u003eSpecifically, the regulator examined “the frequency and methods used by nine investment banks to test the efficacy of their client order front running models”.\u003c/p\u003e\n\u003ch2 id=\"mixed-performance-from-firms\"\u003eMixed performance from firms\u003c/h2\u003e\n\u003cp\u003eFrom performing this analysis, the FCA found that, while most firms did have formal procedures in place to ensure the accuracy of surveillance models, “the remainder had no formal process or a semi-formalised process”.\u003c/p\u003e\n\u003cp\u003eFirms with a proper review process in place examined:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eParameter calibration\u003c/li\u003e\n\u003cli\u003eModel logic\u003c/li\u003e\n\u003cli\u003eModel code\u003c/li\u003e\n\u003cli\u003eData comprehensiveness and accuracy\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eSome firms opted for a “risk-based approach” to surveillance where the frequency and nature of testing was dependent on the relative risk of the relevant market abuse type.\u003c/p\u003e\n\u003ch2 id=\"the-importance-of-robust-surveillance-controls\"\u003eThe importance of robust surveillance controls\u003c/h2\u003e\n\u003cp\u003eAs regulators enforce penalties for market abuse infringements with ever-increasing rigour, static ‘check-box’ surveillance systems are becoming increasingly ineffective against the impact of digital acceleration, artificial intelligence, and highly dynamic market conditions. Firms are expected not only to have a surveillance system in place, but to rigorously test its configuration to ensure that alerts are being generated as anticipated.\u003c/p\u003e\n\u003cp\u003eIn particular, firms are expected to have nuanced and flexible controls in place which are capable of dynamically adjusting to various data fields and market abuse topologies.\u003c/p\u003e\n\u003cp\u003eIn the newsletter, the FCA specially stated that surveillance systems and processes needed to account for variables such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eAssets traded\u003c/li\u003e\n\u003cli\u003eActors involved\u003c/li\u003e\n\u003cli\u003eTrading methods\u003c/li\u003e\n\u003cli\u003eVenues accessed\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe regulator found that, at present, “firms can take further steps in these areas”, suggesting that there is a lack of dynamism and flexibility in some of the systems that firms currently employ to detect instances of market abuse.\u003c/p\u003e\n\u003ch2 id=\"how-to-avoid-surveillance-failures\"\u003eHow to avoid surveillance failures\u003c/h2\u003e\n\u003cp\u003eMarket Watch 79 finishes with a series of suggestions for firms looking to avoid potential trade surveillance pitfalls.\u003c/p\u003e\n\u003cp\u003eSpecifically, they recommend firms implement processes around data governance, model testing and model implementation/amendment.\u003c/p\u003e\n\u003cp\u003eeflow is able to provide solutions for all of these issues. Our automated data reconciliation, enrichment and health checks ensure that both market and trade data are always aligned and accurate.\u003c/p\u003e\n\u003cp\u003eeflow’s TZTS trade surveillance solution allows users to configure dynamic parameters to automatically adjust to variables and external factors. It also provides users with the option to fine-tune their platform’s configuration in an independent sandbox, which can then be promoted seamlessly to a live environment. This allows for flexible and robust model testing to ensure test parameters are calibrated to ensure there are no gaps in their alerts, while simultaneously reducing false positives.\u003c/p\u003e\n\u003cp\u003eeflow’s support team also takes part in active monitoring to ensure client systems are being utilised correctly. If any suspected issues are detected, eflow will contact the user and help them ensure their system is calibrated to effectively capture instances of suspected market abuse.\u003c/p\u003e\n\u003cp\u003eFor more information on TZTS, \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003eclick here\u003c/strong\u003e\u003c/a\u003e or \u003ca href=\"https://eflowglobal.com/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cstrong\u003ebook a consultation with the eflow team\u003c/strong\u003e\u003c/a\u003e.\u003c/p\u003e\n\u003cbr\u003e","date_published":"2024-20-05T10:00:00+0000"},{"title":"Emerging threats and the importance of market abuse surveillance","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/emerging-threats-and-the-importance-of-market-abuse-surveillance/","summary":"\u003cp\u003eInvestment markets are dynamic and can change and adapt to different situations and scenarios. This has led to a constant battle: locking down existing cases of market abuse while trying to pre-empt emerging trends and leading to the question - how do firms capture risk that has not yet been defined?\u003c/p\u003e\n\u003cp\u003eThe introduction of innovative technology and the emergence of AI, with a more structured and controlled regulatory environment, are helping. However, it is essential to have \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003emarket abuse surveillance services\u003c/a\u003e in place to protect not only your reputation but also the integrity of the marketplace.\u003c/p\u003e\n\u003ch2 id=\"the-changing-nature-of-market-abuse\"\u003eThe changing nature of market abuse\u003c/h2\u003e\n\u003cp\u003eWith the advent of modern technology, including AI and Machine Learning, we are now able to work with technologies that have the capacity to make independent decisions beyond the limits of the, more restricted and rule-based, algos they may replace.\u003c/p\u003e\n\u003cp\u003eA technical \u003ca href=\"https://arxiv.org/abs/2311.07590\"\u003ereport\u003c/a\u003e by Cornell University demonstrated that a ChatGPT large language model had the capacity to not only insider deal (when it knows it shouldn’t) but also attempt to deceive management to obfuscate the reason for the trade. Whilst the capacity to lie to management is not restricted to large language models - how do regulators control AI when it has the ability to act beyond its supposed boundaries and who is responsible when it does?\u003c/p\u003e\n\u003cp\u003eSecondly, how can modern technology help mitigate these risks, and can large language models assist with the parsing of ever-larger volumes of data?\u003c/p\u003e\n\u003cp\u003eMarket abuse monitoring commonly works using a rules-based exception process and effectively manages large volumes of message data. AI systems are not necessarily trading quicker or more often than algos or HFT systems, they are trading more intelligently, and existing market abuse monitoring rules should capture this behaviour effectively.\u003c/p\u003e\n\u003cp\u003eWe are left with eComms Surveillance; where we see large volumes of message data that need to be analysed to construe intent. This is where ChatGPT large language models can be of use; in understanding the intent behind messages/conversations; allowing for more effective surveillance than a simple lexicon-based or a random sample-based approach.\u003c/p\u003e\n\u003cp\u003eBelow, we look at some of the more common market abuse typologies together with examples of cases against those who have tried to profit from them.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eInsider trading\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe trading or placing/amending of orders on the possession of Material Non-Public Information (MNPI) provides an unfair advantage to the trader in question. It allows them to either profit or mitigate losses whilst simultaneously undermining the integrity of investment markets. In 2024 the FCA successfully brought a case against \u003ca href=\"https://www.fca.org.uk/news/press-releases/mohammed-zina-found-guilty-insider-dealing-fraud\"\u003eMohammed Zina\u003c/a\u003e for Insider Dealing whilst working at Goldman Sachs; demonstrating the efficacy of Surveillance systems in finding this type of behaviour yet also highlighting the time taken to bring such cases to fruition (in this case 10 years).\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eFront running\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFront Running is a specific form of Insider Trading wherein a broker buys/sells on his own or his company\u0026rsquo;s account prior to the execution of a known client order. In this case, the MNPI is the client order that would impact the market and \u003ca href=\"https://www.fca.org.uk/publication/final-notices/shroff.pdf\"\u003eunauthorised pre-hedging\u003c/a\u003e or Front Running is not allowed.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eMarket manipulation\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThere are many different forms of market manipulation but they all come under the broad umbrella of the creation of false and/or misleading impressions as to price or liquidity of the underlying instruments. Below we discuss some of the more commonly seen typologies together with appropriate real-world examples.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSpoofing\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe advent of HFT and algorithmic trading systems has given rise to an increase in the number of spoofing cases found by regulators. Spoofing involves the placing of non-bonafide orders on one side of the order book with the intent of obtaining preferential pricing and moving the order book on the opposite side before cancelling said non-bonafide orders. The following \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-fines-and-prohibits-hedge-fund-chief-investment-officer-market-abuse\"\u003ecase\u003c/a\u003e typifies spoofing; wherein a trader ‘falsely represented to the market an intention to buy/sell when his true intention was the opposite’.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eLayering\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eLayering is an abusive behaviour akin to spoofing with the difference being that the non-bonafide orders are across multiple ‘layers’ of the order book with the intent (as per spoofing) to obtain preferential pricing on the opposite side. The following \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-fines-us-based-oil-trader-us-903k-market-manipulation\"\u003ecase\u003c/a\u003eshows how individual traders can use algos/HFT patterns to exhibit this behaviour and the ability of regulators to identify, and prosecute, when it occurs.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eMarket rigging\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eWhen looking at the leading investment/money markets, it\u0026rsquo;s difficult to believe that market rigging is still a threat. While regulations are helping address this situation, we only need to look back at the LIBOR/EURIBOR scandal in 2012 when it was discovered that a group of banks and traders were inflating/deflating rates on a market that underpins trillions of dollars in derivatives. The FCA issued a record \u003ca href=\"https://www.fca.org.uk/news/press-releases/deutsche-bank-fined-%C2%A3227-million-financial-conduct-authority-libor-and-euribor\"\u003efine\u003c/a\u003e to Deutsche Bank for not only participating in the abuse but for misleading the regulator as to their participation.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eAbusive short selling\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eShort selling is legal. Indeed, it plays an instrumental role in market liquidity, but abusive or naked short selling in tandem with spreading false information is illegal. There are now strict regulations regarding short selling and the facilitation of transactions with borrowed shares.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eRamping\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eRamping is a form of market manipulation wherein there is a trading of a significant portion of a financial instrument or derivative, moving the price either up or down, when there is no news or obvious reason/trading rationale for the activity. Not only does this activity cause potential loss to investors it also undermines and damages confidence in the underlying market - as voiced in the following \u003ca href=\"https://www.fca.org.uk/publication/final-notices/simon_eagle.pdf\"\u003ecase\u003c/a\u003e led by the FCA.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eMisuse of information\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eWhile insider trading and market manipulation involve the placing or executing of orders, misusing information, or starting untrue rumours to manipulate prices or investor activity, is also illegal. The idea that you have to trade to physically benefit from misusing information is outdated.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eRegulatory support\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eWhile many forms of market abuse are difficult, if not impossible, to stamp out entirely, there is no doubt that an expanding regulatory framework has significantly reduced their impact whilst simultaneously increasing the capability of investigating and prosecuting malfeasance. The leading UK acts of Parliament and EU regulations relating to market abuse include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eFinancial Services Act 1986\u003c/li\u003e\n\u003cli\u003eFinancial Services and Markets Act 2000\u003c/li\u003e\n\u003cli\u003eMarket Abuse Directive (2003/6/EC) Implementation Regulations 2005 (since superseded by MAR below)\u003c/li\u003e\n\u003cli\u003eFinancial Services Act 2012\u003c/li\u003e\n\u003cli\u003eMarket Abuse Regulations (MAR) 2014/596/EU\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eUnder the umbrella of the five regulatory acts listed above, we have seen the introduction and tweaking of various approaches to, and definitions of, market abuse. However, there remains a consistency of approach, with a broad distinction between market manipulation and insider dealing, yet an overarching purview for regulators to prosecute for abuse of regulated markets.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eEmerging threats in market abuse\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eWhilst market abuse themes remain relatively constant there are, with the advent of tools for quicker decision-making and trading, increases in both the number of trades on exchanges and the commensurate risks of manipulation. Some emerging threats include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eHigh-frequency trading using algorithms\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWhen you combine high-frequency trading systems with cutting-edge algorithms, you have the potential for a market abuse strategy that can be over before slow traders even realise it started. The addition of AI that has the capacity to both ignore human-set boundaries (see the technical report by Cornell University at the start of this article) and act independently creates the risk for novel and potentially even cooperative multiple-model abuse strategies.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eCryptocurrency market manipulation\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWith the crypto market currently worth in excess of $2.4 trillion there are a range of assets with different risk levels and exposure to manipulative practices. Whilst CEX’s are increasingly doing due diligence on listings, the prevalence of pump-and-dump schemes together with the risk of outright manipulation of less liquid instruments, has led to a perception that digital assets can not always be trusted.\u003c/p\u003e\n\u003cp\u003eIn traditional markets a move of 5% would be significant, in crypto it can just be a Tuesday. Identifying the activity, whether individual or by those acting in collusion, and being able to escalate it to the relevant regulatory authorities is vital. The advent of MiCA in the EU, the ongoing regulation-by-enforcement in the USA and the UK’s HMT consultation papers are all putting cryptocurrency regulation at the forefront for those operating Central Limit Order Books.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSocial media\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWhen you consider that Meta (Facebook/Instagram) is valued at $1.3 trillion, the Reddit IPO is rumoured to be valued at $6.5 billion, and Telegram is estimated to be worth circa $30 billion, this highlights the power and prevalence of social media. Rogue traders regularly use social media to facilitate the rapid dissemination of information and often baseless rumours. Whilst APIs exist that can trawl social media sites for information; the harmonising of that data into usable alerts that highlight not just intent, but impact, is an ongoing process.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eDerivatives and OTC markets\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eCross-product manipulation is likely to be one of the focus points for regulators this decade. As computing power increases the capacity of surveillance systems to monitor for manipulative practices across financial instruments, whether in a direct or indirect causal relationship, also does - see Market Watch 73 (\u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-73#:~:text=A%20focus%20of%20our%20review,market%2C%20typically%20in%20illiquid%20stocks.\"\u003enarrowing the spread\u003c/a\u003e) for an example thereof.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eOrganised crime gangs\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe FCA and other regulators are growing more concerned about the influence of organised crime gangs. The FCA regularly publishes a “\u003ca href=\"https://www.fca.org.uk/publications/search-results?p_search_term=market%20watch\"\u003eMarket Watch\u003c/a\u003e\u0026quot; newsletter and updates on various market abuse risks and whilst OCG are not types of market abuse they do highlight the risk of collaborative abuse schemes with multiple participants and the difficulties of analysing the dissemination of relevant communications.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eThe Importance of Trade Surveillance\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eRegarding market abuse, it has always been a case of fighting fire with fire. Today\u0026rsquo;s situation is no different, with high-tech dealing systems on the radar of high-tech market abuse surveillance services.\u003c/p\u003e\n\u003cp\u003eWhile we tend to look forward when considering surveillance systems, it\u0026rsquo;s crucial to appreciate the more recent technological advances. These include:-\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eReal-time monitoring\u003c/li\u003e\n\u003cli\u003eIntegrating Big Data into the process\u003c/li\u003e\n\u003cli\u003eEnhanced accuracy – reducing the ratio of false positives\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eSignificant points of evolution over the years:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eA switch to detecting nuanced forms of market abuse\u003c/li\u003e\n\u003cli\u003eMonitoring the interconnectedness between different asset classes\u003c/li\u003e\n\u003cli\u003eAnalysing textual data\u003c/li\u003e\n\u003cli\u003eIncreasing volumes of trade data\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e\u003cstrong\u003eOvercoming ever-changing challenges in market abuse surveillance\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eInnovation is the key to the success of long-term global investment markets and the ability to move with the times. This presents a number of ever-changing challenges for those providing market abuse surveillance services such as eflow.\u003c/p\u003e\n\u003cp\u003eWhile we are renowned for our cutting-edge technology, there\u0026rsquo;s a lot more to consider, such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eOngoing regulatory compliance\u003c/li\u003e\n\u003cli\u003eIntegration of different data sources\u003c/li\u003e\n\u003cli\u003eThe use of advanced analytics and technology\u003c/li\u003e\n\u003cli\u003eReal-time monitoring\u003c/li\u003e\n\u003cli\u003eCross-market surveillance\u003c/li\u003e\n\u003cli\u003eDetection of trading patterns\u003c/li\u003e\n\u003cli\u003eComprehensive risk assessment\u003c/li\u003e\n\u003cli\u003eInformation sharing and collaborations\u003c/li\u003e\n\u003cli\u003eOngoing training and education\u003c/li\u003e\n\u003cli\u003eContinuous investment, improvements and adaptations\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eEach of these challenges in isolation will assist with detecting instances of market abuse, but the cumulative impact is considerably greater. Those looking to manipulate information flow and prices are constantly trying different approaches and strategies, but the wider the market surveillance net can be thrown, the greater the chances of identifying and disrupting these activities.\u003c/p\u003e\n\u003cp\u003eOne of the main challenges is ensuring that market participants, governments, regulators, and those in the financial services industry are on the same page and pulling in the same direction.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eFuture directions in market abuse surveillance\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eHere at eflow, we appreciate the importance of market abuse surveillance, providing a comprehensive service to a growing number of clients around the world. Automation is the key, and enhanced speeds are critical, but collecting the right data in a timely manner and analysing it in a split-second is priceless.\u003c/p\u003e\n\u003cp\u003eThe ongoing threat of financial penalties for those failing to fulfil their market abuse surveillance obligations in terms of both adequate risk assessments and subsequent lines of defence will prompt many to introduce new systems and audit them appropriately. For most companies, the potential reputational damage will likely encourage them to act and take a forward-thinking approach to this ongoing problem.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eAs a company providing market abuse surveillance services, analysing vast amounts of data, identifying patterns and fulfilling our clients’ regulatory obligations, we tend to look forward to the next challenge. It can be helpful to stop for a moment and look back at the progress we have seen over the years..\u003c/p\u003e\n\u003cp\u003eSometimes, we need to appreciate how far we have come, but we also know that there are still significant challenges ahead. Detecting instances of market abuse is critical from a regulatory standpoint and for the integrity of financial markets and their participants. We appreciate the ever-tightening regulatory oversight, the innovation of those looking to benefit from various types of market manipulation and the need for market participants to concentrate on their core business.\u003c/p\u003e\n\u003cp\u003eFeedback from clients shows that we are making a real difference. We help create the foundations for businesses to grow while protecting their clients. If you would like to chat about your market abuse surveillance needs, please feel free to \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003econtact us\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2024-15-05T09:00:00+0000"},{"title":"FCA Market Watch 79 highlights firms’ fundamental trade surveillance failures ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fca-market-watch-79/","summary":"\u003cp\u003eThe latest edition of Market Watch published by the Financial Conduct Authority (FCA) focuses on some of the most common failures of firms’ trade surveillance strategies. It also details the findings from the regulators’ recent peer review of firms’ testing of front-running surveillance models.\u003c/p\u003e\n\u003ch2 id=\"regulator-highlights-common-trade-surveillance-failures\"\u003eRegulator highlights common trade surveillance failures\u003c/h2\u003e\n\u003cp\u003eThe Market Abuse Regulation (UK MAR) clearly outlines how firms must identify and report instances of potential market abuse. A firm must have effective arrangements, systems and procedures in place to detect and report suspicious activity. These should be appropriate and proportionate to the scale, size and nature of their business activities.\u003c/p\u003e\n\u003cp\u003eWith many firms using \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" title=\"TZTS Trade Surveillance\" target=\"_blank\" rel=\"noopener\"\u003ethird-party systems\u003c/a\u003e to achieve regulatory compliance, the regulations also provide detailed information on the steps that firms need to take to govern, implement, test, review and rectify issues with the functioning of these systems.\u003c/p\u003e\n\u003cp\u003eMarket Watch 79 explains that in recent years, the FCA has regularly seen examples of trade surveillance systems that are not functioning as intended and, in some cases, have resulted in non-compliant processes that the firm is not even aware of. While the specific nature of these technological issues will vary from firm to firm, the regulator has summarised some of the most common faults based on their investigation of firms’ trade surveillance operations:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eA section of a firm’s activity, such as a segment of business sent to a particular exchange, might not be monitored for market abuse in any way.\u003c/li\u003e\n\u003cli\u003eAn alert scenario that has been configured incorrectly within a system could be generating alerts, but not for all instances of market abuse resulting in a firm only having a partially effective monitoring solution in place.\u003c/li\u003e\n\u003cli\u003eAn alert scenario for a specific type of market abuse hasn’t been set up or tested correctly, resulting in a complete lack of alert generation and significant gaps in a firm’s trade surveillance.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe FCA also highlights the wide range of timescales taken by firms to take remediatory action in the event of process or system flaws being identified.\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e“Sometimes, firms identify and remediate these issues in a few weeks, or less. On other occasions, the discovery takes several months. In some extreme cases, we have seen firms unaware of faults for two years or more”.\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003ch2 id=\"real-life-examples-of-system-failures\"\u003e\u003cstrong\u003eReal-life examples of system failures\u003c/strong\u003e\u003c/h2\u003e\n\u003ch4 id=\"firm-a---a-failure-to-identify-insider-dealing\"\u003e\u003cstrong\u003eFirm A - A failure to identify insider dealing\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eFirm A was active across a range of asset classes, including cash equities. They implemented a new third-party automated surveillance system that was designed to identify any potentially suspicious trading, by monitoring:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003esignificant price moves\u003c/li\u003e\n\u003cli\u003ethe release of news\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eHowever, Firm A did not undertake the required testing as part of the system implementation which resulted in the news feed not being activated. Without this functionality in place, no insider dealing alerts were generated for over three years before the failure was identified.\u003c/p\u003e\n\u003cp\u003eIn fact, Firm A was only made aware of the operational issue when they were contacted by the FCA in relation to some potentially suspicious trading where it had not submitted a suspicious transaction and order report (STOR).\u003c/p\u003e\n\u003ch5 id=\"how-eflow-would-have-avoided-this\"\u003e\u003cstrong\u003eHow eflow would have avoided this\u003c/strong\u003e\u003c/h5\u003e\n\u003cp\u003eEvery eflow client benefits from a thorough onboarding process, supported by a dedicated project team. As part of this initiation, before going live, the system undergoes meticulous testing by both eflow specialists and your team within a User Acceptance Testing (UAT) environment. This is followed by a five-day auto-testing period, during which the system operates independently to confirm functionality and identify any issues without external intervention. Upon successful completion of these tests, the system is seamlessly transitioned into live operations.\u003c/p\u003e\n\u003ch4 id=\"firm-b---design-faults-within-an-in-house-trade-surveillance-system\"\u003e\u003cstrong\u003eFirm B - Design faults within an ‘in-house’ trade surveillance system\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eFirm B designed and implemented their own in-house surveillance model to identify potential insider dealing in corporate bonds, covering trading by clients and its own traders.\u003c/p\u003e\n\u003cp\u003eAs part of the alert logic within their system, news did not need to be released for an alert to trigger as this would be considered during an alert review. Instead, it required a price movement at or above a defined threshold (X%) within a defined period after a trade to trigger an alert.\u003c/p\u003e\n\u003cp\u003eA mistake made during the system coding meant that for an alert to trigger, the firm had to trade in the instrument on the day that the price moved. This requirement meant that the monitoring of liquid, frequently traded instruments was largely unimpeded. However, the alert would not trigger for less liquid instruments which increased the risk of insider trading going undetected.\u003c/p\u003e\n\u003cp\u003eAs the system was generating alerts with an expected frequency and quality, the fault went undetected for several years. This led the firm to mistakenly believe that the model was working as intended and only discovered otherwise when it received a front office escalation.\u003c/p\u003e\n\u003ch5 id=\"how-eflow-would-have-avoided-this-1\"\u003e\u003cstrong\u003eHow eflow would have avoided this\u003c/strong\u003e\u003c/h5\u003e\n\u003cp\u003eThe pros and cons of a third-party trade surveillance system versus an in-house build have been debated for some time. However, the resources and expertise required to engineer, test and constantly enhance complex technology of this type is significant. eflow’s specialist team of engineers constantly refine our products to ensure that they meet the regulatory and operational requirements of global regulators.\u003c/p\u003e\n\u003cp\u003eOne critical advantage of eflow is our meticulous attention to detailed functionality, for each of our tests. Uniquely, eflow considers additional contextual information, such as market conditions. An example specific to this case would be to allow for the adjustment of look-back periods based on an instrument\u0026rsquo;s liquidity. This specific capability is just one among many customisable features we provide to meet our clients\u0026rsquo; diverse needs.\u003c/p\u003e\n\u003ch4 id=\"firm-c---incorrect-system-configuration\"\u003e\u003cstrong\u003eFirm C - Incorrect system configuration\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eFirm C offered clients direct market access (DMA) to certain trading venues, with some clients directly connecting to one of these venues (sponsored DMA – or SDMA), rather than connecting through Firm C. This was captured using a trading private order feed (POF) for inclusion in the firm’s surveillance.\u003c/p\u003e\n\u003cp\u003eAs part of the implementation of the firm’s third-party automated surveillance system, it believed that all POF trade and order data would be sent daily for ingestion and processing. However, this was not the case and resulted in its POF trading activity going unmonitored for cases of market abuse for several years.\u003c/p\u003e\n\u003cp\u003eThe firm’s non-POF trades and orders were subject to surveillance and were generating the associated alerts. As a result, this gave the firm false comfort that all relevant data was being ingested into the system as anticipated.\u003c/p\u003e\n\u003cp\u003eThe FCA has seen similar issues relating to POF, SDMA, and broader data ingestion gaps repeated at other firms as well.\u003c/p\u003e\n\u003ch5 id=\"how-eflow-would-have-avoided-this-2\"\u003e\u003cstrong\u003eHow eflow would have avoided this\u003c/strong\u003e\u003c/h5\u003e\n\u003cp\u003eOnce live, eflow provides the capability for autonomous ad-hoc reconciliation, enabling firms to verify historic data and ensure accuracy in the data generated. It\u0026rsquo;s essential for firms to have a third-party surveillance system like eflow that offers straightforward ad-hoc reconciliation of historical data. This functionality is crucial for ensuring that the correct data is consistently monitored and for identifying any discrepancies that may have occurred during the testing process.\u003c/p\u003e\n\u003cp\u003eeflow will of course proactively ensure that clients are notified if any data expected during the scoping process is not received. However, for added peace of mind, our clients also have the ability to independently verify data reception themselves, providing an extra layer of assurance and control.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eIf your firm is looking to implement a trade surveillance solution capable of monitoring for front-running and other forms of market abuse,\u003c/em\u003e \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a consultation with eflow today\u003c/a\u003e\u003cem\u003e.\u003c/em\u003e\u003c/p\u003e\n\u003cbr\u003e","date_published":"2024-10-05T16:00:00+0000"},{"title":"SEBI approves amendments to market abuse regulations","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/sebi-approves-amendments-to-market-abuse-regulations/","summary":"\u003cp\u003eIn their \u003ca href=\"https://www.sebi.gov.in/media-and-notifications/press-releases/apr-2024/sebi-board-meeting_83115.html\"\u003e205th meeting\u003c/a\u003e held in Mumbai on April 30th, The Securities and Exchange Board of India (SEBI) approved enhancements to the SEBI (Mutual Funds) Regulations, 1996. Intended to curtail a recent surge in front-running cases, the updated regulation will strengthen rules surrounding the deterrence and identification of market abuse for Asset Management Companies (AMCs).\u003c/p\u003e\n\u003ch2 id=\"improved-controls\"\u003eImproved controls\u003c/h2\u003e\n\u003cp\u003eThe new amendment states that AMCs must implement a “structured institutional mechanism for identification and deterrence of potential market abuse including front-running and fraudulent transactions in securities.”\u003c/p\u003e\n\u003cp\u003eIn particular, these structured institutional mechanisms must consist of enhanced surveillance systems which can identify instances of abusive trading. Such surveillance systems ingest trade data and test for potential instances of abusive or manipulative trading, flagging them for further investigation. (\u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003e\u003cem\u003eSee eflow’s trade surveillance solution TZTS for further detail\u003c/em\u003e\u003c/a\u003e)\u003c/p\u003e\n\u003cp\u003eThe technology itself, however, is only one part of the equation - these surveillance systems must also be backed up by internal processes. The SEBI board states that, beyond the surveillance technology itself, the institutional mechanism must consist of “internal control procedures and escalation processes to identify, monitor and address specific types of misconduct including front running, insider trading and misuse of sensitive information.”\u003c/p\u003e\n\u003cp\u003eThe specific standards to which these institutional mechanisms must adhere will be outlined by the Association of Mutual Funds in India (AMFI) in consultation with SEBI.\u003c/p\u003e\n\u003ch2 id=\"front-running\"\u003eFront running\u003c/h2\u003e\n\u003cp\u003eThe decision to strengthen regulations against front-running in particular comes off the back of a series of recent non-compliance cases observed by the regulator.\u003c/p\u003e\n\u003cp\u003eIn February of this year, \u003ca href=\"https://www.livemint.com/companies/news/how-axis-mf-fraud-case-was-executed-11677694675126.html\"\u003ethe regulator barred Viresh Joshi\u003c/a\u003e - the former chief dealer of Axis Mutual Fund - along with 20 other individuals from accessing the securities market as a result of alleged front-running. Another \u003ca href=\"https://economictimes.indiatimes.com/markets/stocks/news/front-running-case-sebi-bans-two-persons-from-securities-market-for-3-years-slaps-rs-77-lakh-fine/articleshow/108797684.cms?from=mdr\"\u003erecent case\u003c/a\u003e saw SEBI ban two individuals from the securities market while imposing over ₹77 lakh worth of fines.\u003c/p\u003e\n\u003cp\u003eFront running - also sometimes referred to as tailgating - is an abusive trading tactic in which an investor or broker makes a trade while possessing undisclosed inside knowledge of a future transaction which will significantly affect the price of the traded asset.\u003c/p\u003e\n\u003cp\u003eThe particular focus placed on this area of market abuse marks a clear point of emphasis from the regulator going forward.\u003c/p\u003e\n\u003ch2 id=\"communications\"\u003eCommunications\u003c/h2\u003e\n\u003cp\u003eAs well as these amendments, SEBI’s board approved an exemption for \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003ecommunication monitoring\u003c/a\u003e as part of this latest meeting.\u003c/p\u003e\n\u003cp\u003eThe regulator previously mandated all communications by dealers and fund managers to be recorded. However, worries about the strain this rule placed on AMCs have led to SEBI softening this regulation.\u003c/p\u003e\n\u003cp\u003eThe press release accompanying the board meeting states that “the Board approved exemption from the requirement of recording face to face communication, including out of office interactions, during market hours.”\u003c/p\u003e\n\u003cp\u003eThis amendment will be enforced along with the institutional mechanism ruling and aims to maintain proper oversight while fostering a less restrictive working environment.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eIf your firm is looking to implement a trade surveillance solution capable of monitoring for front-running and other forms of market abuse,\u003c/em\u003e \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003ebook a consultation with eflow today\u003c/a\u003e\u003cem\u003e.\u003c/em\u003e\u003c/p\u003e\n\u003cbr\u003e","date_published":"2024-07-05T10:00:00+0000"},{"title":"The need for borderless surveillance","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/the-need-for-borderless-surveillance/","summary":"\u003cp\u003e\u003cem\u003eThis article was originally published in Director of Finance. You can find the original article\u003c/em\u003e \u003ca href=\"https://dofonline.co.uk/2024/03/20/why-borderless-markets-need-borderless-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cem\u003ehere\u003c/em\u003e\u003c/a\u003e\u003cem\u003e.\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eTwo trends are currently challenging how firms approach trade surveillance: AI and complex cross-border regulations.\u003c/p\u003e\n\u003cp\u003eThe rise of AI is transforming the trading landscape. It is fuelling massive advances in data-driven trading, but it also has a darker potential to not only execute illegal financial trades, but cover them up. The problem is that AI and traders don’t need to operate within borders. And currently, regulations do. New research has revealed that three quarters of compliance managers believe cross-border regulatory challenges are an issue for their organisations.\u003c/p\u003e\n\u003cp\u003eBorderless markets require borderless surveillance. Yet conducting trade surveillance across borders and addressing issues like cross-market spoofing presents several challenges.\u003c/p\u003e\n\u003cp\u003eRegulatory frameworks can vary between regions in terms of market structure, trading practices, and surveillance mechanisms. Traders can therefore exploit loopholes and move activities across jurisdictions with varying levels of oversight and enforcement. Moreover, financial markets use various trading platforms and technologies that may differ across borders. This can complicate the integration of surveillance systems to monitor activities seamlessly and successfully.\u003c/p\u003e\n\u003cp\u003eSo, why do we need borderless surveillance? And how can we achieve it?\u003c/p\u003e\n\u003cp\u003eTrading is more complex than ever. There are more players involved across a wider scope of markets and products/assets, with myriad fintechs, crypto, social media platforms and regulatory jurisdictions adding complexity to trading tactics and increasing the chance of market abuse. With so many interactions happening simultaneously, effectively monitoring and regulating cross-border market activities is a real challenge.\u003c/p\u003e\n\u003cp\u003eFrom the diversification of trading platforms to social media’s ever-growing reach, the global financial landscape is becoming increasingly interconnected and digitised. This is altering the flow of market dynamics, presenting bad actors with a host of new opportunities for market abuse; this means that they can potentially exploit regulatory gaps that sit beyond the remit of traditional surveillance and regulations.\u003c/p\u003e\n\u003cp\u003eSo, when it comes to regulatory efforts, a variety of frameworks play into the hands of market abusers. Traders can capitalise on regulatory arbitrage to execute trades in a domain that suits their purposes, using different digital tools to mask their activity and target areas with less risk and little enforcement. With regards to surveillance, differences in the infrastructure, trading protocols and data formats of trading markets make integrating surveillance systems that much harder.\u003c/p\u003e\n\u003cp\u003eThis is already a lot to consider, and we haven’t even mentioned AI’s role yet. With the growing use of AI in trading, it can be increasingly difficult for regulators to identify whether a trade is legitimate or not. AI empowers traders with new ways to perform insider trading, and the variability created around the authenticity of trades is perfectly suited for illicit activity.\u003c/p\u003e\n\u003cp\u003eNot only does AI create this direct risk, but it also amplifies the risk of bias and misinformation and allows those with little trading knowledge to use its capabilities to execute trades, adding to the challenges of growing interconnectivity and more individuals participating in trades.\u003c/p\u003e\n\u003cp\u003eThe path towards ever-more connectivity is irreversible – the modern world will depend on it more and more. In this world, regulators are not only dealing with a lack of visibility of market abuse, but also in their knowledge of what firms are doing about it. This is leading them to up their expectations around how firms explain their controls. So, new initiatives are badly needed to align regulators and modernise institutions.\u003c/p\u003e\n\u003cp\u003eIn an effort to amplify transparency around market abuse, regulators are fostering collaborative partnerships with national authorities, enforcement agencies and private companies. These cooperative networks are a key tool in moving to an intelligence-driven approach in identifying market abuse and capitalising on the overlap of objectives between regulators and the private sector.\u003c/p\u003e\n\u003cp\u003eBoth the \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-fines-three-broker-firms-failures-relating-detection-market-abuse#:~:text=of%20market%20abuse-,FCA%20fines%20three%20broker%20firms%20%C2%A34%2C775%2C200%20for%20failures,the%20detection%20of%20market%20abuse\u0026amp;text=The%20FCA%20has%20fined%20BGC,to%20effectively%20detect%20market%20abuse.\"\u003e\u003cstrong\u003eFCA\u003c/strong\u003e\u003c/a\u003e and the \u003ca href=\"https://www.iosco.org/library/pubdocs/pdf/IOSCOPD730.pdf\"\u003e\u003cstrong\u003eIOSCO\u003c/strong\u003e\u003c/a\u003e have highlighted the importance of these ‘partnerships’ between regulatory bodies and market players to combat risks to market integrity and limit regulatory arbitrage. And in a sign of looking to address the issue globally, not just domestically, the SEC is looking to streamline regulation beyond its jurisdiction (the US). This includes providing clarity on cross-border regulatory scope, addressing regulatory arbitrage across jurisdictions, and removing duplicative regulation.\u003c/p\u003e\n\u003cp\u003eThis push is alongside an industry shift to focus on asset classes that, in the past, have merited less attention for market abuse, such as non-equity asset classes.\u003c/p\u003e\n\u003cp\u003eDespite the need for greater uniformity in cross-border regulation, when it comes to firms monitoring market abuse, market interconnectivity does not equate to taking a homogenous approach. Regulators have made it clear that a one-size-fits-all approach is not acceptable. It’s not just necessary for firms to have automated surveillance controls, but specific and targeted surveillance tools – each abuse check needs to be tailored for its market and product. Why has this shift emerged?\u003c/p\u003e\n\u003cp\u003eTraditional surveillance methods are insufficient in the digitised cross-border trading market that has emerged – and one that now has AI executing trades. In order to keep up with a rapidly evolving trading landscape, regulators are looking to AI and regulatory technology (RegTech) to better monitor market abuse. Through encouraging the wider use of surveillance technology, which has the ability to identify market abuse scenarios by asset class, they can match the sophistication shown by criminals that are executing trades. This sets a new standard for the industry – but for firms, it also brings a new, weighty expectation with it.\u003c/p\u003e\n\u003cp\u003eIn order to stay compliant, firms need to adapt to market challenges and regulatory expectations quickly. The use of technology has not just become an expectation from regulators, but an essential step to stay compliant and manage market threats effectively. If some firms have tech and others don’t, or if they are working off systems of widely differentiating sophistication, the perpetrators of market abuse can profit. As a minimum, coherent adoption of RegTech can create an efficient and streamlined reporting process that stands up to scrutiny.\u003c/p\u003e\n\u003cp\u003eBut if firms want to go a step further and embed AI into their systems, they can vastly improve their existing capabilities. For example, RegTech platforms can use AI to learn subtle patterns of market abuse and increase the precision of identifying and risk-scoring transactions. It’s a demonstration of using AI to fight AI.\u003c/p\u003e\n\u003cp\u003eThe current regulatory landscape is stuck behind the rapidly evolving trading market: AI and traders have the luxury of working across borders, whereas regulators and firms are bound by differing and complex regulatory frameworks. So, first and foremost, all parties involved in market surveillance need to foster cross-border collaboration to successfully monitor a congested and interconnected trading market that is prone to abuse.\u003c/p\u003e\n\u003cp\u003eBut even with this approach being adopted by regulators, it’s near impossible to fight AI- and tech-fuelled market abuse without the use of RegTech (and AI). Borderless markets require borderless surveillance. And regulatory technology will have a vital role to play.\u003c/p\u003e\n","date_published":"2024-23-04T09:00:00+0000"},{"title":"The impact of inaccurate instrument reference data on MiFIR reporting","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/the-impact-of-inaccurate-instrument-reference-data-on-mifir-reporting/","summary":"\u003cp\u003eThe FCA\u0026rsquo;s latest Market Watch newsletter discusses the completeness and accuracy of instrument reference data (IRD) under RTS 23 of MiFIR. In particular, this issue relates to:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eRecognised Investment Exchanges (RIEs)\u003c/li\u003e\n\u003cli\u003eMultilateral Trading Facilities (MTFs)\u003c/li\u003e\n\u003cli\u003eOrganised trading facilities (OTFs)\u003c/li\u003e\n\u003cli\u003eSystematic internalisers (SIs)\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"background\"\u003eBackground\u003c/h2\u003e\n\u003cp\u003eRTS 23 is a regulatory technical standard implemented as part of the MiFIR transaction reporting regime which states that the firm types listed above are required to report reference data for instruments traded on their venues and/or trading platforms. These reports are issued to National Competent Authorities (NCAs) on a daily basis.\u003c/p\u003e\n\u003cp\u003eThe driving force behind the implementation of this RTS was to improve standardisation and consistency of transaction reports submitted by MiFIR reporting firms in accordance with RTS 22. The IRD submitted by trading venue operators and systematic internalisers is intended to validate and supplement the transaction reports received by the FCA, thereby improving their ability to monitor markets effectively.\u003c/p\u003e\n\u003cp\u003eIn this edition of Market Watch, the FCA has expressed concern at the accuracy of IRD being submitted, and the consequent loss of oversight that this is causing.\u003c/p\u003e\n\u003ch2 id=\"data-quality\"\u003eData quality\u003c/h2\u003e\n\u003cp\u003eIn response to these observed issues, the regulator emphasises the importance of data quality processes to ensure the accuracy of IRD. They state “IRD submitting entities must have methods and arrangements to identify incomplete or inaccurate data and report data in a timely manner”, continuing that “these processes should not be limited to rejections and warnings received.”\u003c/p\u003e\n\u003cp\u003eIn particular, the FCA noted issues with invalid legal entity identifiers (LEIs) and Market Identifier Codes (MIC), inconsistent maturity dates and trade dates, and duplicate records. An overview of the ten most common rejection types can be found \u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-78\"\u003ehere\u003c/a\u003e.\u003c/p\u003e\n\u003ch2 id=\"exception-management\"\u003eException management\u003c/h2\u003e\n\u003cp\u003eBeyond the quality of the data itself, an overarching theme of insufficient processes around exception handling becomes apparent . The regulator raises concern around the handling of IRD submissions which have been rejected, stating that “some firms are repeatedly submitting identical records after receiving a rejection message,” indicating that most IRD submitting entities do not have proper controls in place to review and resubmit inaccurate IRD.\u003c/p\u003e\n\u003cp\u003eOne instance of such mishandling of exceptions is the cancellation of erroneous IRD records. The regulator states that “if an entity submits IRD to us in error, they should cancel it” in FCA FIRDS. However, despite this, they claim that only 23 IRD submitting entities have cancelled records since March 2022, indicating that the vast majority of IRD submitting entities have not used this functionality. This process of cancellation is vital to maintaining the accuracy of IRD and transaction reports submitted under MiFIR.\u003c/p\u003e\n\u003cp\u003eOn the point of handling inaccurate IRD, the newsletter emphasises that trading venues and systematic internalisers are required to “notify [the regulator] promptly when they identify IRD that is incomplete or inaccurate.” Since 2018, only 135 breach notification forms have been submitted, again leading to concerns that IRD submitting entities are not using this functionality.\u003c/p\u003e\n\u003cp\u003eBeyond this, they also express concern at the use of dummy data in certain fields, in particular:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eInstrument classification\u003c/li\u003e\n\u003cli\u003eName of index/benchmark of a floating bond\u003c/li\u003e\n\u003cli\u003eIdentifier of the index/benchmark of a floating rate bond\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e\u003cbr\u003eThe newsletter stresses that dummy data should \u003cem\u003e\u003cstrong\u003enot\u003c/strong\u003e\u003c/em\u003e be used, and that firms must implement processes to ensure that their IRD submissions are complete and accurate instead.\u003c/p\u003e\n\u003cp\u003eFor more information on eflow’s solutions and how they can automate and enhance your regulatory reporting processes, \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\"\u003eclick here\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2024-11-04T11:00:00+0000"},{"title":"The pros and cons of AI in trading","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/the-pros-and-cons-of-ai-in-trading/","summary":"\u003cp\u003e\u003cem\u003eThis article was originally published on Finance Derivative. You can find the original article\u003c/em\u003e \u003ca href=\"https://www.financederivative.com/ai-time-for-change-the-pros-and-cons-of-ai-in-trading/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cem\u003ehere\u003c/em\u003e\u003c/a\u003e\u003cem\u003e.\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eAI is single-handedly changing how traders trade. So much so that the online trading market is expected to reach a value of around \u003ca href=\"https://builtin.com/artificial-intelligence/ai-trading-stock-market-tech\"\u003e$12 billion by 2028\u003c/a\u003e, largely due to its increased use. Its ability to analyse millions of data points to identify trends in the market, provide investment ideas and execute trades is driving new levels of data-driven trading.\u003c/p\u003e\n\u003cp\u003eBut there’s a more dangerous side to this development. A \u003ca href=\"https://www.bbc.co.uk/news/technology-67302788\"\u003estudy\u003c/a\u003e released towards the end of last year suggested that AI can not only carry out illegal financial trades, but it can even cover them up. This was demonstrated at the UK’s AI safety summit, when “a bot used made-up insider information to make an ‘illegal’ purchase of stocks without telling the firm”.\u003c/p\u003e\n\u003cp\u003eNow, new research has revealed this threat is causing widespread concern in the financial services industry: a survey of 250 senior compliance professionals revealed three quarters are worried about bots manipulating markets and being able to cover up their actions. On top of this, a massive 94% acknowledged that financial professionals using AI bots for manipulation is a challenge.\u003c/p\u003e\n\u003cp\u003eThese fears align with upcoming findings of a new report into global trade surveillance, with regulated firms citing AI as the most likely cause of compliance issues over the coming year.\u003c/p\u003e\n\u003cp\u003eSo, with such widespread acknowledgement of the threat, how does the industry manage it?\u003c/p\u003e\n\u003cp\u003eFor regulators, it becomes a case of fighting fire with fire, where using AI is necessary to combat the potentially darker side of its use.\u003c/p\u003e\n\u003ch2 id=\"challenges-regulating-ai-market-manipulation\"\u003e\u003cstrong\u003eChallenges regulating AI market manipulation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe rapid and large-scale deployment of AI in trading is delivering efficiency and advanced trading capabilities. However, this rapid deployment is also creating unique risks, increasing the threat of market abuse and manipulation. The use of algorithmic trading is nothing new, but backed by these new technologies it could take on new forms altogether.\u003c/p\u003e\n\u003cp\u003eThis combination of AI and algorithmic trading provides major challenges in ensuring market integrity. It provides room for inadvertent or deliberate market abuse and also adds further complexity and unpredictability to market dynamics. How so?\u003c/p\u003e\n\u003cp\u003eAI is highly susceptible to market manipulation. Machine learning (ML) models are built to optimise for their objectives. So, if they can hit these objectives through market manipulation strategies, they might inadvertently or explicitly use this route. What’s more, if ML algorithms can see there is a profit to be made, they can learn and adapt manipulative strategies. Without adequate supervision, these objectives, such as maximising profit, might inadvertently align with manipulative behaviours.\u003c/p\u003e\n\u003cp\u003eTheir complexity and explainability also add extra complications for regulators. ML trading algorithms can be hard to understand and explain, with internal adjustments making their behaviour unpredictable. If regulators and market participants don’t have an explicit understanding of how these algorithms work, it becomes very hard for them to decipher between what is legitimate trading activity and what is potential market manipulation.\u003c/p\u003e\n\u003ch2 id=\"future-implications-for-market-surveillance\"\u003e\u003cstrong\u003eFuture implications for market surveillance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThis use of AI in trading decisions has the potential to totally transform the market. The uncertainty produced around the legitimacy of certain trading transactions plays into the hands of bad actors, facilitates illegal activity and makes it harder for regulators to pin them down. However, there are broader future implications of its use as well.\u003c/p\u003e\n\u003cp\u003eIt could further amplify misinformation and discrimination. For one, AI has been known for exacerbating bias. The creation of biased algorithms could result in discriminatory trading practices that will create an unfair trading environment. Moreover, algorithmic trading platforms might also perpetrate misinformation, misleading genuine market participants and triggering suboptimal trading decisions.\u003c/p\u003e\n\u003cp\u003eThere is also a new and growing risk. The accessibility of LLMs like Open AI’s GPT4 provides the opportunity for individuals – with little or no technical background or knowledge – to form trading strategies. This increases the chance that non-professional investors, by accident or intention, become wrongdoers of market abuse.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://www.prospectmagazine.co.uk/views/people/63738/can-we-make-ai-safe\"\u003eThe Apollo study\u003c/a\u003e, which was explored at the UK AI summit, epitomises these concerns and shows that, in that instance, the bot saw helping the company as more beneficial than maintaining honesty.\u003c/p\u003e\n\u003cp\u003eWhile the Apollo Chief Executive recognised that current models are not powerful enough to be deceptive “in any meaningful way”, he added that “it’s not that big of a step from the current models to the ones that I am worried about, where suddenly a model being deceptive would mean something”.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eRead the complete article\u003c/em\u003e \u003ca href=\"https://www.financederivative.com/ai-time-for-change-the-pros-and-cons-of-ai-in-trading/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cem\u003ehere\u003c/em\u003e\u003c/a\u003e\u003cem\u003e.\u003c/em\u003e\u003c/p\u003e\n","date_published":"2024-01-04T09:00:00+0000"},{"title":"Cross-border compliance is a challenge for 74% of firms ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/cross-border-compliance-is-a-challenge-for-74-of-firms-/","summary":"\u003cp\u003e\u003cem\u003eThis article was originally published in Finance Feeds. You can find the original article\u003c/em\u003e \u003ca href=\"https://financefeeds.com/cross-border-compliance-is-a-challenge-for-74-eflow-study-finds/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cem\u003ehere\u003c/em\u003e\u003c/a\u003e\u003cem\u003e.\u003c/em\u003e\u003c/p\u003e\n\u003ch2 id=\"cross-border-compliance-and-market-abuse---a-rising-challenge\"\u003eCross-border compliance and market abuse - a rising challenge\u003c/h2\u003e\n\u003cp\u003eIn February 2024, eflow published their report \u0026ldquo;\u003ca href=\"https://eflowglobal.com/global-trends-in-market-abuse-and-trade-surveillance-form/\"\u003eGlobal trends in market abuse and trade surveillance\u003c/a\u003e\u0026rdquo;. The purpose of this report was to analyse market abuse enforcement and perpetration over the past several years to identify recurring themes and better understand how regulators are responding.\u003c/p\u003e\n\u003cp\u003eThree key trends emerged:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eGlobal shocks\u003c/li\u003e\n\u003cli\u003eMarket evolution\u003c/li\u003e\n\u003cli\u003eConvergence\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThese trends will be discussed in this article.\u003c/p\u003e\n\u003ch2 id=\"ai-and-geopolitics-driving-compliance-issues\"\u003e\u003cstrong\u003eAI and geopolitics driving compliance issues\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eGlobal shocks such as the pandemic, supply chain disruptions, geopolitical conflicts, an inflation crisis, banking sector turmoil, and the advent of artificial intelligence (AI) and digital assets have reshaped the terrain of market abuse and regulation. Notably, global instability and the use of AI are seen as the primary drivers of compliance issues in the coming year.\u003c/p\u003e\n\u003cp\u003eThe report also sheds light on the difficulties of cross-border compliance, with 74% of firms acknowledging it as a challenge and 60% struggling to adapt to evolving regulations. In response, 90% of compliance managers are seeking to invest in borderless technology solutions to address these challenges.\u003c/p\u003e\n\u003cp\u003eThe report concludes that nearly all compliance professionals (96%) plan to invest in technology to address future compliance issues. With the financial sector becoming more transparent and regulatory pressure increasing, the demand for innovative solutions to navigate the complex, interconnected global market is more critical than ever.\u003c/p\u003e\n\u003ch2 id=\"bad-actors-are-exploiting-technological-advancements-to-bypass-regulatory-measures\"\u003e\u003cstrong\u003e“Bad actors are exploiting technological advancements to bypass regulatory measures”\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eBen Parker, CEO and Founder of eflow Global, commented: “In recent years, the financial sector has undergone significant transformation, necessitating the adoption of innovative tools by businesses to address them. Central to these changes is the role of technology. On one hand, bad actors are exploiting technological advancements to bypass regulatory measures, while on the other, regulatory bodies are leveraging technology to uphold industry stability. Within this dynamic landscape, businesses need to equip themselves with the most effective tools to remain compliant.”\u003c/p\u003e\n\u003cp\u003eDr. Sian Lewin, an expert in regulation, risk \u0026amp; Regtech, said: “The modern financial landscape is becoming ever-more digitized and interconnected, leading to the accelerated adoption of technology, increasing data-led regulatory scrutiny, and a greater need for global collaboration. This has fundamentally transformed market dynamics, information flow, and the nature of market abuse. This intricate web demands a re-evaluation of how participants engage and combat misconduct.”\u003c/p\u003e\n","date_published":"2024-21-03T09:00:00+0000"},{"title":"Risk orchestration and transaction reporting","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/risk-orchestration-and-transaction-reporting/","summary":"\u003cp\u003eWhile the term risk orchestration may be relatively new to many people, it is a critical concept regarding the cost and efficiency of services such as transaction reporting and risk management. In simple terms, this is a strategic approach integrating various activities, processes, data and teams across a company. In layperson\u0026rsquo;s terms, if you have a team of superstars, but they don\u0026rsquo;t work together, then your returns will be limited. Risk orchestration ensures that the team are all sing from the same hymn sheet and, above all, cooperating.\u003c/p\u003e\n\u003cp\u003eIn this article, we will look at the different elements of risk orchestration, relate them to transaction reporting and reflect on the long-term benefits. We’ll also seek to include how we feel this will have to flex to incorporate T+1 settlement, which is topical.\u003c/p\u003e\n\u003ch2 id=\"what-is-risk-orchestration-and-how-does-it-work\"\u003e\u003cstrong\u003eWhat is risk orchestration, and how does it work?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eIt is essential to appreciate the various elements of risk orchestration, the combined benefits and how they will impact your business in the future. These are the main elements of risk orchestration:\u003c/p\u003e\n\u003ch3 id=\"collaboration-and-communication\"\u003e\u003cstrong\u003eCollaboration and communication\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs we touched on above, even if you have a team of high performers, but they aren\u0026rsquo;t communicating or working together, your successes will be limited. While our transaction reporting services are based on the latest cutting-edge technology, there still needs to be an element of collaboration and communication between intra-company departments and outside connections.\u003c/p\u003e\n\u003ch3 id=\"integration-of-systems-and-data\"\u003e\u003cstrong\u003eIntegration of systems and data\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eUsing market-leading technology, we have integrated global reporting systems, depositories, and local regulatory nuances. This allows us to create detailed transaction reports, highlighting areas of concern which will need further investigation. We will cover costs later in the article, but there are significant savings in the short, medium and long term when using highly-skilled third parties such as eflow.\u003c/p\u003e\n\u003ch3 id=\"risk-identification-and-assessment\"\u003e\u003cstrong\u003eRisk identification and assessment\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIn order to maximise risk identification and assessment, all data needs to be formatted on a constant basis to be able to compare and contrast. This is critical with risk identification because, for example, the rating agencies have different scales. So if one of your internal/external systems is using Moody\u0026rsquo;s and one is using S\u0026amp;P for a risk credit assessment, they have different classifications for the same risk groups. Mapping is critical.\u003c/p\u003e\n\u003ch3 id=\"automation-and-use-of-dynamic-modern-technology\"\u003e\u003cstrong\u003eAutomation and use of dynamic, modern technology\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eSpeed is obviously of the essence across the investment world, as are regulatory and transaction reporting obligations. However, with enhanced speed, using the latest automated cutting-edge technology comes even greater demands for accuracy and timely transfer of data. Risk orchestration will become an even more critical element of everyday transaction reporting when the US markets move to T+1 settlement, and their European counterparts eventually follow suit.\u003c/p\u003e\n\u003ch3 id=\"monitoring-and-responding\"\u003e\u003cstrong\u003eMonitoring and responding\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eUltimately, using non-siloed, third-party regulatory technology with transaction reporting has a clear end goal; the ability to monitor and respond to ongoing risk assessments quickly and with coordination across the business.\u003c/p\u003e\n\u003cp\u003eThe speed at which these potential risks can be mitigated or managed is critical to the long-term success of any business, especially those operating in the investment industry. On one side, introducing T+1 settlement will reduce market and company risk. However, it places a considerable onus on the numerous elements of the reporting chain to deliver the data and assessments on time.\u003c/p\u003e\n\u003cp\u003eOne break in the chain could have significant consequences for all parties.\u003c/p\u003e\n\u003ch2 id=\"transaction-reporting\"\u003e\u003cstrong\u003eTransaction reporting\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWithout timely, accurate transaction reporting, market confidence and integrity would quickly disappear. Then there is the ongoing issue of detecting and preventing market abuse by monitoring not only individual trade details but also internal company communications and those with clients. Creating a virtual \u0026ldquo;paper trail\u0026rdquo;, which will routinely involve many different parties, allows all the essential data to be combined in one concise report. Then, for the risk assessment!\u003c/p\u003e\n\u003cp\u003eIf we look at the European market, there are three primary transaction reporting bodies which are:-\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eMiFIR - focused on the detection of market abuse\u003c/li\u003e\n\u003cli\u003eEMIR - the control of systemic risk protection to protect financial markets\u003c/li\u003e\n\u003cli\u003eSFTR - also focused on systemic risk and supporting financial markets\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWhile these three bodies monitor and report on different risk elements, they must work together to create a broader picture. At eflow, we work with many regulatory bodies, depositories and market operators to accumulate and collate vast amounts of data. Due to the flexibility of our systems, we can manage risk orchestration in a timely and accurate manner.\u003c/p\u003e\n\u003ch3 id=\"working-with-multiple-vendors\"\u003e\u003cstrong\u003eWorking with multiple vendors\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eA recent report by LexisNexis highlighted the fact that, on average, financial services providers depend on five external data vendors/solutions to carry out their risk compliance obligations. Creating a real-time connection with these parties and delivering data in the correct format and reviewed as part of a broader process is challenging.\u003c/p\u003e\n\u003cp\u003eThis is where eflow can add significant value to your operations, working with external parties behind the scenes to create one continuous flow of data. Rather than continually investing in your platform, using third-party services like ours allows you to benefit from our investment in new technology and innovation. No interruptions, no formatting issues and no need to adjust your systems when the vendors make any changes - we will look after that. Risk orchestration at its best is seamless.\u003c/p\u003e\n\u003cp\u003eThis brings us to the next question; self-building your own platform or using the cutting-edge plug-and-play solutions available today.\u003c/p\u003e\n\u003ch3 id=\"should-you-be-looking-at-a-self-build-platform-or-a-plug-and-play-solution\"\u003e\u003cstrong\u003eShould you be looking at a self-build platform or a plug-and-play solution?\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003ePlug-and-play solutions, by definition, are flexible and able to adapt to existing systems, creating an overlay which brings all information channels and data together. Historically, many companies in the world of finance have been reluctant to use outside services, instead often deciding to self-build what can be complex solutions.\u003c/p\u003e\n\u003cp\u003eThere are many issues to consider, such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eCompatibility\u003c/li\u003e\n\u003cli\u003eAnnual running costs\u003c/li\u003e\n\u003cli\u003eBuild costs\u003c/li\u003e\n\u003cli\u003eOnward maintenance\u003c/li\u003e\n\u003cli\u003eOnward development\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eSome reports have put the difference between a self-build and buy-in at as much as £4 million over an initial three-year period. While this will depend upon the services required and the complexity, it does give you an idea of the difference. The benefits of using third-party technology for transaction reporting and risk management include:-\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eBenefiting from third-party investment spread amongst all clients\u003c/li\u003e\n\u003cli\u003eOne central focal point, with companies such as eflow able to plan ahead\u003c/li\u003e\n\u003cli\u003eExpertise and focus on specific processes and solutions\u003c/li\u003e\n\u003cli\u003eOngoing support means that issues are usually resolved very quickly\u003c/li\u003e\n\u003cli\u003eReduced in-house investment in technicians and maintenance staff\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe opportunity to utilise cutting-edge third-party services also has potentially substantial efficiency benefits, allowing you to focus on what you do best, i.e. financial services. In practice, by using eflow reporting services, your clients won\u0026rsquo;t see a difference in the services you offer - however, the internal benefits, both practical and monetary, are there.\u003c/p\u003e\n\u003ch3 id=\"keeping-up-with-changing-regulations-and-obligations\"\u003e\u003cstrong\u003eKeeping up with changing regulations and obligations\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eLooking back to the 1980s, there were some ground-breaking regulatory changes, but the pace and number of changes was nowhere near that of recent years. As mentioned above, the US authorities are moving towards T+1 settlement in the first half of 2024, with UK and European markets likely to switch in 2025.\u003c/p\u003e\n\u003cp\u003eIt is not difficult to see potential reporting/settlement issues with counterparties attempting to deal with different settlement timings. Whether parties in foreign markets will need to run dual transaction reporting systems remains to be seen, but there will be challenges ahead. Therefore, risk orchestration will become standard practice across the industry, effectively outsourcing elements of risk management to outside parties.\u003c/p\u003e\n\u003cp\u003eAs a provider of regulatory compliance solutions for the financial services industry, eflow is at the vanguard of new technology. We take away the pressure of adjusting internal systems for new regulations, maintaining transaction reporting even during times of change. We are in constant contact with regulators, allowing us to plan concerning potential and confirmed changes. It is critical that we are one step ahead so that we can maintain a competitive edge for clients.\u003c/p\u003e\n\u003ch3 id=\"what-is-the-primary-role-of-eflow\"\u003e\u003cstrong\u003eWhat is the primary role of eflow?\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhen it comes to risk orchestration, our position is akin to the leader of the band, the person with the baton, controlling the show and bringing in different parts of the team as and when required. We know how to combine the various strands of our technology and risk management platform to create the perfect note, i.e. seamless service. Constantly seeking to improve, evolve and look to the future, we appreciate the challenges of our clients, their business and regulatory obligations.\u003c/p\u003e\n\u003cp\u003eOur ongoing investment in personnel and technology, together with our in-depth understanding of markets, regulations and transaction reporting, has seen us become essential partners for many clients.\u003c/p\u003e\n\u003cp\u003eWhile the regulatory and reporting element of the financial services industry is essential to the efficiency and integrity of markets, the ever-growing burden has diverted the attention of many clients from what they do best, financial services. There is a high cost in terms of funding, time and staffing for those determined to build their own in-house risk assessment platform. As the regulatory goalposts continue to move, these are not one-off costs; they are constant and, in many cases, growing.\u003c/p\u003e\n\u003cp\u003eIf you would like to discuss the benefits of risk orchestration in terms of transaction reporting and other elements of your regulatory obligations, we welcome the chance to discuss your circumstances in more detail. Contact us today, and let\u0026rsquo;s see how we can improve your transaction reporting and risk management.\u003c/p\u003e\n\u003cbr\u003e","date_published":"2024-11-03T08:00:00+0000"},{"title":"Enforcements update: almost $400 million dished out in fines in the first two months of 2024","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/enforcements-update-almost-400-million-dished-out-in-the-first-two-months-of-2024/","summary":"\u003cp\u003eOn February 13th 2024, eflow launched an extensive research-based \u003ca href=\"https://eflowglobal.com/global-trends-in-market-abuse-and-trade-surveillance-form/\" target=\"_blank\" rel=\"noopener\"\u003ereport \u003c/a\u003eexploring global market abuse trends, including quantitative analysis on market abuse enforcement from 2019-2023 across eight jurisdictions. This shed valuable insight on the challenges that firms are facing, and the key areas of focus for regulators.\u003c/p\u003e\n\u003cp\u003eThis piece is eflow’s latest update on global market abuse enforcements, providing an overview of the busy start to 2024 which has hit broker-dealers, investment advisers, pension providers and major investment banks alike.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eIn the first two months of 2024, we saw 24 market conduct enforcements:\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/graph-2-pie.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eThese enforcements were across four jurisdictions:\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e\u003cimg src=\"/images/graph-3-2x-2x.png\" height=\"742\" width=\"1200\" /\u003e\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eThey totalled $397.6 million\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e\u003cimg src=\"/images/graph-6-2x-2x.png\" height=\"742\" width=\"1200\" /\u003e\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThese numbers tell their own story. There is clearly a continuous regulatory drive to clean up market conduct, led by the US with a sharp focus on eComms Surveillance and a heavy hand for failures in trade reporting.\u003c/p\u003e\n\u003cp\u003eThe following sections provide details on the key enforcements that you should know about.\u003c/p\u003e\n\u003ch2 id=\"trade-reporting\"\u003eTrade reporting\u003c/h2\u003e\n\u003cp\u003eTrade and transaction reporting represent a complex set of obligations that many firms have struggled to fully implement. Their importance is not up for debate however, as accurate and timely trade reporting forms the basis from which fundamental risks such as market abuse can be monitored and mitigated.\u003c/p\u003e\n\u003cp\u003eThe most substantial fine so far in 2024 was issued for lapses in trade reporting. Specifically, JP Morgan Chase and Co is set to pay \u003ca href=\"https://www.reuters.com/markets/us/jpmorgan-pay-about-350-mln-fine-trade-reporting-failures-2024-02-16/\"\u003e~$350 million\u003c/a\u003e civil penalty for failing to feed certain trade and order data to its internal \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance\u003c/a\u003e platforms. These surveillance platforms are a critical piece of the puzzle, used to ensure the integrity of markets, monitor for fraudulent activities, ensure regulatory compliance and, ultimately, protect the interests of investors. Any related reporting deficiencies, whether it be incomplete, missing or incorrect data, significantly diminishes the efficacy of firms’ surveillance algorithms.\u003c/p\u003e\n\u003cp\u003eThe firm has undertaken corrective actions, which involve improvements to both the inventory management and the data accuracy controls within its Corporate and Investment Banking division. Additionally, as a condition of the anticipated agreements with the two regulatory bodies, the firm has indicated it will be required to “complete its remediation, engage an independent consultant, and pay aggregate civil penalties of approximately $350 million.”\u003c/p\u003e\n\u003ch2 id=\"trade-surveillance\"\u003eTrade surveillance\u003c/h2\u003e\n\u003cp\u003eThe start of 2024 saw regulators uncover two notable instances in which institutions did not have appropriate procedures and/or technology in place for analysts to identify suspicious trade activity.\u003c/p\u003e\n\u003cp\u003eOnline broker, TradeStation, failed to reasonably escalate suspicious customer trading activity flagged by their automated surveillance system due to \u003ca href=\"https://www.financemagnates.com/forex/online-broker-fails-to-catch-pump-and-dump-schemes-finra-finds/\"\u003einadequate procedures\u003c/a\u003e for analysts reviewing the alerts. Certain examples of potentially suspicious activity were said to have slipped through the cracks as a result; these include a customer involved in potential pump-and-dump schemes and an institutional customer with significant alerts for wash trades and layering.\u003c/p\u003e\n\u003cp\u003eGoldman Sachs, on the other hand, was found to have had more fundamental gaps in their surveillance technology, with circa 5,000 alerts for potentially manipulative trading going undetected between 2009 and 2023. During this time, Goldman failed to include warrants, rights, units, and certain over-the-counter (OTC) equity securities in automated surveillance reports used to detect potentially manipulative trading by the firm and its customers.\u003c/p\u003e\n\u003ch2 id=\"ecomms-surveillance\"\u003eeComms surveillance\u003c/h2\u003e\n\u003cp\u003e2022 and 2023 were record-breaking years for all the wrong reasons, with regulators issuing north of $2.6bn in financial sanctions to a host of banks - including some of Wall Street\u0026rsquo;s biggest - for widespread use of private messaging, or “off-channel” communications. At the end of 2022, Chair of the U.S. Securities and Exchange Commission, Gary Gensler, made it clear that the regulator was just getting started in its punishment of recordkeeping violations.\u003c/p\u003e\n\u003cp\u003eThe latest swathe of penalties demonstrate the supervisors unwavering intent to pursue and penalise institutions who fail to monitor business-related communications. At the beginning of February, the SEC ordered sixteen firms to pay more than \u003ca href=\"https://www.sec.gov/news/press-release/2024-18\"\u003e$81 million\u003c/a\u003e combined to settle charges for widespread recordkeeping failures.\u003c/p\u003e\n\u003cp\u003eThe SEC’s probe uncovered pervasive and longstanding uses of unapproved communications (from at least 2019 or 2020) across five broker-dealers, seven dually registered broker-dealers and investment advisers and five affiliated investment advisers. Importantly, investigators found that employees at all levels of the organisation, including supervisors and senior managers, had sent and received off-channel communications related to recommendations made or proposed to be made.\u003c/p\u003e\n\u003ch2 id=\"insider-trading\"\u003eInsider trading\u003c/h2\u003e\n\u003cp\u003eAt the start of 2024, the Financial Conduct Authority (FCA) delivered its first insider trading conviction since 2019. A former Goldman Sachs analyst was sentenced to 22 months in prison after being convicted of nine counts of insider dealing and fraud. The individual falsely obtained bank loans for home improvements but used these funds for 46 illegal trades under his siblings\u0026rsquo; names, hiding the activity from Goldman Sachs. The FCA\u0026rsquo;s proactive stance is evident, with 17 ongoing insider dealing investigations, signalling the need for firms to align with regulatory standards.\u003c/p\u003e\n\u003ch2 id=\"the-role-of-technology\"\u003eThe role of technology\u003c/h2\u003e\n\u003cp\u003eThe role of modern, specialised technologies in solving these problems is now clear to the industry, with \u003ca href=\"https://eflowglobal.com/global-trends-in-market-abuse-and-trade-surveillance-form/\"\u003e96% of compliance professionals planning to invest in technology\u003c/a\u003e. However, these enforcements point to the importance of holistic coverage, due to the knock-on effects of a single weak link.\u003c/p\u003e\n\u003cp\u003eFor example, JP Morgan’s trade reporting failures meant that its \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance\u003c/a\u003e capabilities were also compromised, as they were operating without the necessary data. Similarly, the recent wave of eComms enforcements reflect the realisation that market abuse is easier to detect when supported by contextualising communications data.\u003c/p\u003e\n\u003cp\u003eActively tracking enforcements enables eflow to continuously innovate and shape its solutions to the present demands of the market. This involves developing solutions specifically tailored to the problems that are causing enforcement actions against firms, including the need for a comprehensive compliance suite:\u003c/p\u003e\n\u003ch3 id=\"tztr-transaction-reporting\"\u003eTZTR Transaction Reporting\u003c/h3\u003e\n\u003cp\u003eeflow’s universal \u003ca href=\"/tztr-emir-reporting/\" target=\"_blank\" rel=\"noopener\"\u003etransaction reporting module\u003c/a\u003e includes solutions for EMIR and MiFIR via a single platform. It acts as the centralised digital hub from which you can manage all aspects of your reporting strategy.\u003c/p\u003e\n\u003ch3 id=\"tzts-trade-surveillance-and-market-abuse\"\u003eTZTS Trade Surveillance and Market Abuse\u003c/h3\u003e\n\u003cp\u003eeflow’s dynamic and highly configurable \u003ca href=\"/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003etrade surveillance tool\u003c/a\u003e is powered by machine learning and behavioural analytics to automatically monitor your trades for over 40 forms of market abuse.\u003c/p\u003e\n\u003ch3 id=\"tzec-ecomms-surveillance\"\u003eTZEC eComms Surveillance\u003c/h3\u003e\n\u003cp\u003eeflow’s \u003ca href=\"/tz-ecomms-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eeComms surveillance system\u003c/a\u003e generates a comprehensive view of various communication channels, identifies potentially suspicious behaviour, and helps you to make informed, data-led decisions.\u003c/p\u003e\n\u003ch3 id=\"tzbe-best-execution\"\u003eTZBE Best Execution\u003c/h3\u003e\n\u003cp\u003eTZBE is eflow’s \u003ca href=\"/tz-best-execution-and-transaction-cost-analysis/\" target=\"_blank\" rel=\"noopener\"\u003eBest Execution and Transaction Cost Analysis (TCA) tool\u003c/a\u003e and offers your firm a configurable digital solution to comply with these requirements quickly, efficiently and accurately.\u003c/p\u003e\n\u003cp\u003eIf your firm could benefit from additional expertise and tooling in navigating the regulatory landscape, \u003ca href=\"/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003ebook a consultation today\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003ePlease note that the above does not constitute an exhaustive list of all regulatory enforcements across all jurisdictions, nor does it constitute legal advice. It is intended as a thorough sampling and analysis of regulatory enforcement from the world\u0026rsquo;s largest financial regulators.\u003c/em\u003e\u003c/p\u003e\n","date_published":"2024-05-03T09:00:00+0000"},{"title":"MiFIR, EMIR \u0026 SFTR: The ongoing impact of Brexit","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/mifir-emir-sftr-the-ongoing-impact-of-brexit/","summary":"\u003cp\u003eMiFIR significantly increased the reporting obligation, encompassing 65 fields of reportable data in one binding legislative act, a significant increase from the 24 equity and debt-related instruments under the comparatively less binding MiFID ‘goals’, for which many of the fields were changed.\u003c/p\u003e\n\u003cp\u003eThe complexity of FCA \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\"\u003e\u003cu\u003etransaction reporting\u003c/u\u003e\u003c/a\u003e can’t be underestimated, and MiFIR-quality reporting is now a regulatory expectation. Nor can the consequences of non-compliance be downplayed. In the UK, the FCA fined Goldman Sachs International (GSI) more than £30m (which would have been closer to £50m were it not for early settlement) for failing to provide timely and accurate reporting between 2007 and 2017.\u003c/p\u003e\n\u003cp\u003eThe time period predates MiFIR, but it is another sure sign among many that regulators can and will impose significant financial penalties for non-compliance in any areas critical to the detection of market manipulation. FCA transaction reporting, as with all transaction reporting across key global markets, remains a key regulatory concern.\u003c/p\u003e\n\u003cp\u003eThis piece will focus on the impact of Brexit on a firm’s obligations relating not just to MiFIR but also EMIR and SFTR, two legislative diktats focused on the identification of systemic risk within financial markets, but no less of a regulatory priority.\u003c/p\u003e\n\u003ch2 id=\"brexits-continued-regulatory-relevance\"\u003e\u003cstrong\u003eBrexit’s continued regulatory relevance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eGiven the UK was a member of both the EU and the EEA on 3\u003csup\u003erd\u003c/sup\u003e January 2018 when the current regulation on FCA transaction reporting came into effect, the advent of Brexit has introduced further divergence in regulatory reporting frameworks.\u003c/p\u003e\n\u003cp\u003eWe’re now significantly past the transition period and the relative stability afforded by the Temporary Equivalence Arrangements into a landscape with no passporting, with dual reporting, and difficulties both with trading on EU venues and sharing data.\u003c/p\u003e\n\u003cp\u003eWith that said, the UK recognises the centrality of the financial sector to its own economic fortunes and has mirrored as best it can the reporting requirements, with fields and formats designed to be consistent with that of the EU.\u003c/p\u003e\n\u003cp\u003eThere is an obvious inseparability between regulatory obligations and political dynamics. While there remains any tension over the UK’s non-membership of the EU, the risk is that UK firms operate under a threat – large or small – of having their access to EU venues restricted and friction in the sharing of data and other sensitive regulatory aspects.\u003c/p\u003e\n\u003ch3 id=\"green-shoots-of-cooperation\"\u003e\u003cstrong\u003eGreen shoots of cooperation?\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe regulatory landscape continues to evolve post-Brexit, and both the UK and EU will make further changes to their respective reporting requirements. Firms have had to closely monitor these developments and adapt their reporting processes accordingly.\u003c/p\u003e\n\u003cp\u003eAt the end of June 2023, The EU and the UK signed their memorandum of understanding on regulatory cooperation. Long delayed, largely due to tensions in other Brexit battlegrounds, it is a positive step, but with the two areas fundamentally in competition with each other, it is unlikely to reap much by way of commercial sympathy and concession for either side by the other.\u003c/p\u003e\n\u003cp\u003eThere are some areas in which a more efficient relationship can be expected, however, regulatory divergence remains, in our view, the most likely outcome. This will come in the form of a drift over time, placing pressure on legacy systems and internal compliance operations, especially where there remains an overreliance on manual processes or inflexible technology.\u003c/p\u003e\n\u003ch3 id=\"april-2024-uk-regulatory-changes\"\u003e\u003cstrong\u003eApril 2024 UK regulatory changes\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe drift referenced above won’t always be negative for both sides of the Brexit divide.\u003c/p\u003e\n\u003cp\u003eIn April 2024, a raft of changes will be rolled out in the UK, supporting global competition for UK firms and best execution for investors. Pre-trade, reference prices from overseas venues will be able to be used, and post-trade processes will be streamlined.\u003c/p\u003e\n\u003cp\u003eAny firms registered with the FCA as Systematic Internalisers (SI) will benefit from the separation of the granting of SI status from OTC reporting requirements.\u003c/p\u003e\n\u003cp\u003eThe inherent point here is that, whilst the post-Brexit decoupling of regulatory policy may well support firms in a commercial sense – these measures are pro-competitiveness for UK firms at least – they represent another set of variables for compliance teams when it comes to FCA transaction reporting and, indeed, to global regulators.\u003c/p\u003e\n\u003ch3 id=\"emir\"\u003e\u003cstrong\u003eEMIR\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/emir-refit/\" target=\"_blank\" rel=\"noopener\"\u003eEMIR\u003c/a\u003e demands that all UK or EU-established participants (those who enter into, modify, or terminate a transaction) in derivative contract trading must submit comprehensive trade details. These reports are submitted to Trade Repositories, which aggregate the information and share it with regulator bodies. Regulators then utilise this data to assess inherent systemic risks.\u003c/p\u003e\n\u003cp\u003eDerivatives \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\"\u003e\u003cu\u003etransaction reporting\u003c/u\u003e\u003c/a\u003e hasn’t escaped the impact of Brexit, although the relative lack of breadth of EMIR in terms of the instruments covered does partially mitigate this impact.\u003c/p\u003e\n\u003cp\u003eFollowing the end of the Brexit transition period, UK-based entities faced added complexity in terms of \u003ca href=\"https://eflowglobal.com/tztr-emir-reporting/\"\u003eEMIR reportin\u003c/a\u003eg. EEA counterparties must report to EEA trade repositories, with UK entities must report under UK EMIR to an FCA-registered trade repository to cover their FCA transaction reporting responsibilities.\u003c/p\u003e\n\u003cp\u003eBranches of UK firms in the EU must report under UK EMIR, while UK-managed EEA Alternative Investment Funds (AIFs) face a double reporting requirement.\u003c/p\u003e\n\u003cp\u003eTransactions have to be reported separately under MiFIR and EMIR as the two sets of legislation exist for different reasons. Should an OTC derivative have a venue-traded underlying, this would generally fall under both EMIR and MiFIR. This is in itself not a Brexit impact but we again return to divergence. Any divergence in the reportable data effectively creates the requirement for four reports of differing content for certain transactions.\u003c/p\u003e\n\u003ch3 id=\"sftr\"\u003e\u003cstrong\u003eSFTR\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThere are some similarities between SFTR and EMIR related to the ultimate objective of the legislation, that is to monitor transparency and, thus, risk within markets. However, the data requirements are quite different between SFTR and both EMIR and MiFIR, differing in terms of scope, asset classes and content of the data.\u003c/p\u003e\n\u003cp\u003eSFTR, which focuses on securities financing transactions, necessitates data that is tailored to these types of transactions, encompassing a range of asset classes and specific content requirements. This unique data landscape makes the impact of Brexit on SFTR particularly complex, requiring financial firms to adapt their reporting systems, data models, and processes to meet the specific data demands of both the EU SFTR framework (for transactions involving EU entities) and the UK SFTR framework (for transactions involving UK entities) while ensuring data accuracy and continuity. This underscores the nuanced challenges posed by Brexit.\u003c/p\u003e\n\u003ch2 id=\"bringing-efficiency--simplicity-to-transaction-reporting\"\u003e\u003cstrong\u003eBringing efficiency \u0026amp; simplicity to transaction reporting\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eRegardless of geopolitical interference, transaction reporting brings with it diverse reporting requirements and the need for complex data enrichment and validation, which, when handled manually, are time-consuming and error-prone.\u003c/p\u003e\n\u003cp\u003eRegulatory updates, of course, further intensify the operational burden.\u003c/p\u003e\n\u003cp\u003eThere are myriad operational challenges faced by financial institutions as they comply with complex regulations such as MiFIR, EMIR, and SFTR. This was, in reality, the case pre-Brexit, given the overreliance on legacy systems and manual processing, but for firms subject to FCA transaction reporting and their EU counterparts, Brexit has added a layer of complexity to an already convoluted area which is a frictional drag on top and bottom lines.\u003c/p\u003e\n\u003cp\u003eFinancial institutions also grapple with managing multiple reporting obligations simultaneously, including those involving cross-border operations post-Brexit.\u003c/p\u003e\n\u003cp\u003eLegacy systems often struggle to adapt to evolving regulatory demands and limited internal resources while maintaining a comprehensive audit trail, back-testing historical data, and ensuring data accuracy are resource-intensive tasks.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\" target=\"_blank\" rel=\"noopener\"\u003eTZTR\u003c/a\u003e offers a comprehensive transaction reporting solution that simplifies and streamlines compliance with key regulations, including \u003ca href=\"https://eflowglobal.com/tztr-mifir-reporting/\" target=\"_blank\" rel=\"noopener\"\u003eMiFIR\u003c/a\u003e and \u003ca href=\"https://eflowglobal.com/tztr-emir-reporting/\" target=\"_blank\" rel=\"noopener\"\u003eEMIR\u003c/a\u003e encompassing the entire reporting lifecycle within a single system and with seamless connectivity to all major European regulatory entities.\u003c/p\u003e\n\u003cp\u003eTZTR offers backtesting of client trade data to ensure retrospective compliance and provides continuity of historical reporting data, establishing a reliable audit trail. From data upload to final submission, TZTR\u0026rsquo;s intuitive workflow enhances compliance while minimising disruption to your reporting procedures. It\u0026rsquo;s a robust solution for financial institutions seeking efficient, accurate, and hassle-free regulatory reporting under MiFIR, EMIR, and SFTR, be that FCA transaction reporting or to a host of overseas NCAs.\u003c/p\u003e\n\u003cp\u003eKey features include automatic report submissions, meticulous data enrichment, validation, and 3-way reconciliation, ensuring data accuracy and compliance. TZTR also offers field-by-field editing and the ability to ingest response files from National Competent Authorities (NCAs), Approved Reporting Mechanisms (ARMs), and Trade Repositories (TRs).\u003c/p\u003e\n\u003cp\u003eGeopolitics and international competitiveness are more than ever an existential reality within EU and UK financial markets, and these two forces alone will be enough to see a divergence in underlying regulations as regulators come under pressure from market participants to create competitive advantages for them and as regulators themselves prioritise and deprioritise territory-specific areas of risk. Brexit has thrown a highly competitive fox into the henhouse of regulation.\u003c/p\u003e\n\u003cp\u003eThe case for the delegation of global NCA and FCA \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\"\u003e\u003cu\u003etransaction reporting\u003c/u\u003e\u003c/a\u003e responsibilities to a fluid, intuitive, and continually-updated system continues to grow stronger.\u003c/p\u003e\n","date_published":"2024-28-02T10:00:00+0000"},{"title":"FCA releases Market Watch 77","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fca-releases-market-watch-77/","summary":"\u003cp\u003eThe FCA’s latest Market Watch (77) highlights a very particular concern, namely insider dealing by Organised Crime Groups (OCGs) whether on their own account or through the use of mules.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003e“Suspicious trading by members of OCGs in products whose underlying securities are UK and internationally listed equities, forms a significant component of the overall volume of suspicious trading we observe in equity markets.”\u003c/strong\u003e\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eFCA Market Watch 77\u003c/strong\u003e\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eWith 84% of all suspicious transaction and order reports (STORs) in 2022 being insider dealing, it is unsurprising to find the FCA placing a significant emphasis on this topic. It is important to note that the Regulator has highlighted particular patterns of activity that firms should be aware of and could lead to enhanced risk. These include:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003eRegular generation of STORs by a client.\u003c/li\u003e\n\u003cli\u003eClients that frequently trade before M\u0026amp;A activity.\u003c/li\u003e\n\u003cli\u003eClients opening positions shortly before, and closing those positions. immediately after, publication of speculation about M\u0026amp;A in the media, without waiting until any relevant issuer has commented on the speculation.\u003c/li\u003e\n\u003cli\u003eSeveral clients trading in the same security for the first time.\u003c/li\u003e\n\u003cli\u003eClients with any connection to other current or former clients about whom the firm has concerns, or whose trade has resulted in STORs. This might include trading in similar ways.\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003e\u003cstrong\u003eWhat action should firms take?\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe FCA has outlined a series of measures that firms should consider in order to mitigate against these risks. Firms should:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003eDisseminate their Market Abuse standards to clients, explain how they share information with the Regulator, and outline how they liaise with law enforcement agencies.\u003c/li\u003e\n\u003cli\u003eHave thorough AML checks and controls in place as these are vital tools in guarding against Insider Dealing risks from OCGs.\u003c/li\u003e\n\u003cli\u003eRequest all overseas broking firms that are clients to submit documentary evidence of adequate surveillance arrangements and a zero-tolerance approach to market abuse.\u003c/li\u003e\n\u003cli\u003eGuard against staff being recruited by OCGs as a source of inside information by advising employees working in M\u0026amp;A advisory about the risks of publicising their potential access to inside information.\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003e\u003cstrong\u003eMitigating against the risk of insider trading\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eeflow’s TZTS\u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eTrade Surveillance\u003c/a\u003e technology monitors and analyses suspected instances of market manipulation through a mix of data enrichment, automated monitoring and real-time insights. It automatically monitors for more than 40 forms of market abuse and can be configured to offer firms a highly personalised and dynamic trade surveillance system that adapts to organisational and environmental change.\u003c/p\u003e\n\u003cp\u003eThe platform’s ability to analyse both real-time and historical data ensures a thorough scrutiny of trading activities. The integrated workflow management system aids in the swift investigation and documentation of these alerts, ensuring regulatory compliance and facilitating detailed reporting on detected market abuse incidents.\u003c/p\u003e\n\u003cp\u003eFor more information on TZTS, \u003ca href=\"/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eclick here\u003c/a\u003e or get in touch to arrange a consultation.\u003c/p\u003e\n","date_published":"2024-16-02T12:30:00+0000"},{"title":"eflow launches Global Trends in Market Abuse and Trade Surveillance report ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-launches-new-market-abuse-and-trade-surveillance-report/","summary":"\u003cp\u003e\u003cstrong\u003eeflow launches Global Trends in Market Abuse and Trade Surveillance report as 60% of financial firms report that they struggle to keep up with regulatory changes\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cem\u003eeflow\u0026rsquo;s new report offers a unique deep dive into historic market abuse enforcement, and reveals current and future challenges facing regulated firms and regulatory bodies\u003c/em\u003e\u003c/li\u003e\n\u003cli\u003e\u003cem\u003eQuantitative research shows that 74% of firms struggle with cross-border compliance, and AI and global instability threaten a new wave of criminal and compliance issues\u003c/em\u003e\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e\u003cstrong\u003eLondon, UK:\u003c/strong\u003e \u003cstrong\u003e13th February 2024\u003c/strong\u003e UK-based RegTech (Regulatory Technology) scaleup \u003ca href=\"https://eflowglobal.com/\"\u003e\u003cu\u003eeflow \u003c/u\u003e\u003c/a\u003etoday launches an extensive research-based report exploring the regulatory landscape, global market abuse trends, and the compliance challenges that regulated firms are experiencing across global markets.\u003c/p\u003e\n\u003cp\u003eThe \u003cstrong\u003eGlobal Trends in Market Abuse and Trade Surveillance\u003c/strong\u003e report includes new research gathered from 250 senior compliance professionals operating in the sector. The in depth report was commissioned by eflow alongside leading regulatory research experts and details the pressures faced by regulated firms in UK, North America, Europe and Asia Pacific. Three meta themes arise from the study: global shocks, market evolution and convergence.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eGlobal shocks\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe market is in the wake of a series of global shocks - including the pandemic, supply chain crises, geopolitical conflicts, an inflation emergency, banking market upheavals, and events involving artificial intelligence (AI) and digital assets. While all of these events are shifting the landscape of market abuse and regulation, global instability \u003cstrong\u003e(56%)\u003c/strong\u003e was cited as the second most likely cause of compliance issues in the next 12 months, after the use of AI \u003cstrong\u003e(57%)\u003c/strong\u003e.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eConvergence challenges\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eAs the global landscape becomes increasingly interconnected, it also opens new avenues for market abuse. This interconnectivity enables perpetrators to exploit regulatory gaps and unmonitored spaces, previously beyond the reach of traditional surveillance and regulations. The survey revealed that \u003cstrong\u003e60%\u003c/strong\u003e of financial services businesses are now struggling to keep up with evolving regulations. On top of this, cross-border challenges are clear, with \u003cstrong\u003e74%\u003c/strong\u003e of compliance managers recognising them as an issue and \u003cstrong\u003e90%\u003c/strong\u003e now looking to invest in borderless technology to help combat this.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eBen Parker, CEO and Founder of eflow,\u003c/strong\u003e commented: “In recent years, the financial sector has undergone significant transformation, necessitating the adoption of innovative tools by businesses to address them. Central to these changes is the role of technology. On one hand, bad actors are exploiting technological advancements to bypass regulatory measures, while on the other, regulatory bodies are leveraging technology to uphold industry stability. Within this dynamic landscape, businesses need to equip themselves with the most effective tools to remain compliant.”\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eDr Sian Lewin, expert in regulation, risk \u0026amp; RegTech, said:\u003c/strong\u003e “The modern financial landscape is becoming ever-more digitised and interconnected, leading to the accelerated adoption of technology, increasing data-led regulatory scrutiny and a greater need for global collaboration. This has fundamentally transformed market dynamics, information flow, and the nature of market abuse. This intricate web demands a re-evaluation of how participants engage and combat misconduct.”\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eMarket evolution\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eWhen it comes to tackling future compliance issues, the research revealed that almost all \u003cstrong\u003e(96%)\u003c/strong\u003e of compliance professionals plan to invest in technology. In an ever-more digitised and interconnected landscape, spanning global trading platforms to the role of ‘influencers’ operating on social media, regulatory pressure is rising, with \u003cstrong\u003e81%\u003c/strong\u003e of financial firms feeling that they need to be more transparent with regulators.\u003c/p\u003e\n\u003cp\u003e\u003ca target=\"_blank\" rel=\"noopener\" href=\"https://eflowglobal.com/global-trends-in-market-abuse-and-trade-surveillance-form/\"\u003eThe full report is available for download here\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2024-13-02T00:00:00+0000"},{"title":"FCA releases Market Watch 76","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fca-releases-market-watch-76/","summary":"\u003cp\u003e\u003cem\u003e\u003cstrong\u003e“We continue to see instances of possible flying and printing in several markets, including fixed income, commodities, and currencies in instruments such as bonds, swaps and options.”\u003c/strong\u003e\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eThe FCA’s latest Market Watch (76) re-emphasises the regulator\u0026rsquo;s ongoing concerns about firms publishing incorrect volume data and the possible market abuse risks that ensue. “Flying” and “Printing” were first brought to light as a concern in November 2018, in the \u003ca href=\"https://www.fca.org.uk/publication/newsletters/market-watch-57.pdf\" target=\"_blank\" rel=\"noopener\"\u003eFCA’s 57th edition of the Market Watch series\u003c/a\u003e.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eFlying\u003c/strong\u003e involves a firm or individual falsely communicating to clients or other market participants that it has bids (offers to buy) or offers (offers to sell) which are not actually backed by a genuine order. This communication can be done through various channels such as trading screens, instant messages, voice calls, or other electronic methods.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003ePrinting\u003c/strong\u003e involves falsely communicating that a trade has been executed at a specific price and/or size when, in reality, no such trade has occurred.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eBoth flying and printing intend to distort the true supply and demand dynamics in both quoted and OTC markets, influencing the perceived value of, or demand for, assets, prompting other market participants to trade based on false and/or misleading information. Despite highlighting these market abuse typologies in Market Watch 57, the FCA continues to see instances surfacing in a range of markets. Additionally, the regulator has ongoing concerns related to organisations’ management failing to deal with these behaviours in a robust and timely manner, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eFailing to recognise the risks of flying and printing\u003c/li\u003e\n\u003cli\u003eFailing to implement appropriate surveillance\u003c/li\u003e\n\u003cli\u003eFailing to submit suspicious transaction and order reports, or market observations, relating to flying or printing\u003c/li\u003e\n\u003cli\u003eTaking a long time to investigate potential misconduct\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"case-study-fca-fines-tfs-icap-344-million-for-market-misconduct\"\u003eCase study: FCA fines TFS-ICAP £3.44 million for market misconduct\u003c/h3\u003e\n\u003cp\u003e\u003cem\u003eIn November 2020, the FCA imposed a fine of £3.44m against TFS-ICAP Ltd, an FX options broker, for ‘printing trades’ between 2008 and 2015. This involved brokers communicating to their clients that a trade had occurred at a particular price and/or quantity when no such trade had actually taken place. TFS-ICAP brokers, across multiple broking desks, did this openly and over a prolonged period.\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eThe firm\u0026rsquo;s failure to detect or prevent these actions, a lack of record-keeping, and inadequate oversight highlighted significant compliance deficiencies\u003c/em\u003e\u003c/p\u003e\n\u003ch1 id=\"which-firms-need-to-take-note\"\u003eWhich firms need to take note?\u003c/h1\u003e\n\u003cp\u003eThe FCA\u0026rsquo;s regulations of market conduct apply to a wide array of financial firms, including investment banks, brokerage firms, asset managers, and entities involved in trading derivatives, commodities, and currencies. However, certain firms are at higher risk of dealing with practices such as flying and printing than others.\u003c/p\u003e\n\u003cp\u003ePrice Printing and Flying are more at risk of occurring in firms that have clients, such as brokerage firms and sell side firms, and are trying to generate interest to trade or execute. While buy-side firms are less likely to be at risk, precautionary measures still need to be considered.\u003c/p\u003e\n\u003cp\u003eHedge funds, for example, with their substantial capital, are capable of significantly influencing market prices and liquidity. Their use of complex strategies, alongside high-frequency and algorithmic trading, increases the potential for inadvertently engaging in activities that could be perceived as market manipulation. This heightened risk profile necessitates stringent compliance and surveillance measures to ensure these firms adhere to market integrity standards.\u003c/p\u003e\n\u003ch1 id=\"what-firms-can-do\"\u003eWhat firms can do\u003c/h1\u003e\n\u003cp\u003eIn addressing the risks of market manipulation through flying and printing, the FCA advises firms to adopt stringent measures to preserve market integrity:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eProhibit misleading practices\u003c/strong\u003e: Incorporate explicit prohibitions against flying and printing in compliance manuals, and secure annual attestations of compliance.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eEnhance training programs\u003c/strong\u003e: Implement training that covers the nature, prohibition, and consequences of flying and printing, with a focus on enhanced training for high-risk desks.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eImplement clear disciplinary procedures\u003c/strong\u003e: Establish clear and consistent disciplinary processes for handling misconduct, ensuring that decisions are not influenced by commercial interests.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eStrengthen surveillance systems\u003c/strong\u003e: Ensure surveillance systems are robust enough to detect and report flying and printing activities. This may involve advanced detection techniques that can identify tell-tale signs of manipulation through spread compression, order cancellation rates, order to trade ratios, and the use of specific lexicons in electronic communications.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"advanced-detection-techniques\"\u003eAdvanced detection techniques\u003c/h2\u003e\n\u003cp\u003eEffective surveillance hinges on sophisticated algorithms capable of detecting irregularities indicative of market manipulation:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eFor flying\u003c/strong\u003e: Algorithms analyse order books for abnormal patterns, such as high volumes of non-executed orders, and monitor for spoofing activities where large orders are swiftly cancelled. Statistical benchmarks and correlation analysis further aid in identifying discrepancies between orders and actual trades.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eFor printing\u003c/strong\u003e: Trade reconciliation processes are crucial, identifying mismatches between reported and executed trades. Surveillance also extends to monitoring communication channels through NLP techniques to flag mentions of non-existent trades, alongside analysing trade sequences for manipulation patterns.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"tzts-a-cutting-edge-trade-surveillance-and-market-abuse-solution\"\u003eTZTS: A cutting-edge trade surveillance and market abuse solution\u003c/h2\u003e\n\u003cp\u003eeflow\u0026rsquo;s TZTS solution exemplifies how technology can be leveraged to monitor for and analyse suspected instances of market manipulation effectively. This comprehensive \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance platform\u003c/a\u003e utilises a mix of data enrichment, automated monitoring and real-time insights to identify manipulative patterns, including insider trading and market abuse. Its ability to analyse both real-time and historical data ensures a thorough scrutiny of trading activities.\u003c/p\u003e\n\u003cp\u003eTZTS can be configured to meet specific regulatory demands and uses sophisticated algorithms to automatically monitor your trades for more than 40 types of market abuse, facilitating the prompt identification of suspicious activities. The integrated workflow management system aids in the swift investigation and documentation of these alerts, ensuring regulatory compliance and facilitating detailed reporting on detected market abuse incidents.\u003c/p\u003e\n\u003cp\u003eFor more information on TZTS, click here or get in touch to arrange a consultation.\u003c/p\u003e\n","date_published":"2024-09-02T07:01:00+0000"},{"title":"US move to T+1 settlement puts pressure on UK and EU markets","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/us-move-to-t+1-puts-pressure-on-eu/","summary":"\u003cp\u003eThe US move to trade settlement T+1 has been well flagged, with industrywide testing beginning on 14 August 2023. While the official switch from T+2 to T+1 settlement will not occur until May 2024, the move places significant pressure on the UK, EU and Swiss markets to follow suit.\u003c/p\u003e\n\u003cp\u003eThere are already timing issues between the EU and the UK concerning the EMIR Refit, and the market does not need any more challenges. So, what are the pros and cons, and potential dangers, of a move to T+1 settlement?\u003c/p\u003e\n\u003ch2 id=\"why-is-the-move-to-t1-settlement-so-important\"\u003e\u003cstrong\u003eWhy is the move to T+1 settlement so important?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eTo quote a phrase by the former SEC commissioner, J Carter Reese: \u0026ldquo;Nothing good ever happens between the trade date and settlement date.\u0026rdquo;\u003c/p\u003e\n\u003cp\u003eSince \u0026ldquo;Big Bang\u0026rdquo; in the 1980s, electronic settlement and trade reporting systems have been moving towards shorter settlement periods. The basic premise is simple: to reduce counterparty risk, make markets more efficient and reduce the overall cost of trading. Many believe that, ultimately, we will move to T+0, what is commonly referred to as instant or atomic settlement.\u003c/p\u003e\n\u003cp\u003eThey say that history repeats itself in investment markets. Well, if we look back to 2017, the US SEC led the way again, moving from T+3 to T+2 settlement, forcing a host of markets to follow suit. While first discussed by the US regulator in 2022, have the EU, UK, Swiss and other international markets been too slow to react?\u003c/p\u003e\n\u003ch3 id=\"eu-and-uk-respond-to-us-move\"\u003e\u003cstrong\u003eEU and UK respond to US move\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eOn 5 October 2023, the European Securities and Markets Authority (ESMA) released a \u0026ldquo;call for evidence\u0026rdquo; on shortening the settlement cycle in line with US moves. While market participants have until 15 December 2023 to make their views known, feedback won’t be considered until the first quarter of 2024, with a final report towards the end of the year. Considering the US will be moving to trade settlement T+1 in May 2024, even a relatively quick response to the ESMA report would see EU settlement changes in 2025 at the earliest.\u003c/p\u003e\n\u003cp\u003eLooking towards the UK, the authorities responded directly to the US move when Jeremy Hunt, Chancellor of the Exchequer, launched an “Accelerated Settlement Task Force” on 9 December 2022. This will look at the practicalities of a move to T+1 and also investigate the potential to move to T+0. Split into four different sections, the report, expected towards the end of 2023, will look at:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eConsequences for different stakeholders\u003c/li\u003e\n\u003cli\u003eCost-benefit analysis\u003c/li\u003e\n\u003cli\u003eStakeholder feedback\u003c/li\u003e\n\u003cli\u003ePotential legal and regulatory changes\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eSome observers believe that the UK will look to take a more proactive approach than their EU counterparts as a means of demonstrating the “Brexit dividend”, which was promised at the time of the referendum. While the authorities have the same concerns as their EU, Swiss and broader global counterparts, it will be interesting to see the various timelines emerging.\u003c/p\u003e\n\u003ch2 id=\"pros-and-cons-of-t1-settlement\"\u003e\u003cstrong\u003ePros and cons of T+1 settlement\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAkin to many new trends and regulations in investment markets, it is only when you begin to dig a little deeper that the real impact becomes more evident. It is clear that the EU and UK regulators will not be rushed as there are many obvious and not-so-obvious issues to consider.\u003c/p\u003e\n\u003cp\u003eFor example, despite the vast technological advancements in recent years, it is easy to forget that not all domestic and international bank transfers are instant, and credit card payments can often take more than 24 hours to register on your account. Therefore, attempting to move investment markets to T+1 or even T+0 globally is unlikely to be straightforward!\u003c/p\u003e\n\u003cp\u003eBefore we look at the pros and cons in more detail, there are many other activities which will be impacted. These include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eStock lending\u003c/li\u003e\n\u003cli\u003eListed/OTC derivatives\u003c/li\u003e\n\u003cli\u003eCustody\u003c/li\u003e\n\u003cli\u003eMargin\u003c/li\u003e\n\u003cli\u003eCollateral processing\u003c/li\u003e\n\u003cli\u003eForeign exchange\u003c/li\u003e\n\u003cli\u003eCash borrowing\u003c/li\u003e\n\u003cli\u003eCorporate actions\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe more complex the transaction, the more moving parts, the greater the danger that one or more delays could lead to a settlement failure. We will now look at the pros and cons of settlement T+1, beginning with the benefits.\u003c/p\u003e\n\u003ch3 id=\"reduction-of-risk\"\u003e\u003cstrong\u003eReduction of risk\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe shorter the settlement period, the lower the potential counterparty, market and credit risk, which is especially prevalent in volatile markets.\u003c/p\u003e\n\u003ch3 id=\"associated-costs\"\u003e\u003cstrong\u003eAssociated costs\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe less time a position is \u0026ldquo;open\u0026rdquo;, the less risk, which translates into a reduced margin call. This allows companies to better manage their capital and risk profile.\u003c/p\u003e\n\u003cp\u003eThe US Depository Trust \u0026amp; Clearing Corporation believes a one-day reduction in the settlement process will result in a 41% reduction in the volatility element of Central Counterparty (CCP) margin obligations.\u003c/p\u003e\n\u003ch3 id=\"enhanced-liquidity\"\u003e\u003cstrong\u003eEnhanced liquidity\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eLiquidity is the key to any successful investment market; the ability to buy and sell in significant sizes during any market conditions. The more liquid the market, the more efficient and reflective asset prices will be of the underlying situations.\u003c/p\u003e\n\u003cp\u003eAs you would expect, with such a monumental change in settlement procedures, there are some issues to be aware of. These include:-\u003c/p\u003e\n\u003ch3 id=\"compressed-settlement-process\"\u003e\u003cstrong\u003eCompressed settlement process\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eA move from two-day to one-day settlement would suggest a reduction of 50% in the processing time. However, data from the Association for Financial Markets in Europe (AFME) suggests an 83% reduction in the processing timescale, from 12 to 2 hours of post-trade operation time.\u003c/p\u003e\n\u003ch3 id=\"global-complexities\"\u003e\u003cstrong\u003eGlobal complexities\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhile there are significant challenges with domestic trading, regarding the switch to T+1 settlement on a global basis, further issues will arise. Something as simple as different time zones could reduce communication times and, in some cases, the opportunity for next-day settlement.\u003c/p\u003e\n\u003ch3 id=\"securities-lending\"\u003e\u003cstrong\u003eSecurities lending\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe ability to lend securities not only enhances liquidity but also allows holders to create additional income and enhance returns. Reducing the timescale to arrange and complete lending procedures will likely increase the number of failed trades using the current system.\u003c/p\u003e\n\u003ch3 id=\"regulatory-challenges\"\u003e\u003cstrong\u003eRegulatory challenges\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIn a perfect world, when it comes to trade settlement and transaction reporting, all major financial markets would be on the same page. However, this is one of the most competitive industries in the world, and each market is looking to gain an advantage over the other. Eventually, trading processes and procedures tend to merge, but this can take some time.\u003c/p\u003e\n\u003ch3 id=\"the-us-leads-where-the-rest-follow\"\u003e\u003cstrong\u003eThe US leads where the rest follow\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThere is no doubt that the proposed move to T+1 (and eventually T+0) by the US authorities has spurred others into action. This is a reflection of the global power and influence of the US markets:-\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThe US accounts for 46% of the global equity market\u003c/li\u003e\n\u003cli\u003eInternational investors own about 40% of corporate US value\u003c/li\u003e\n\u003cli\u003eForeign share purchases in the US totalled $30 trillion in 2021\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eOn the one hand, international investors have a significant say in the US markets, while on the other, US market operators can dictate changes in settlement procedures. In reality, if the US markets say jump, their global counterparts are prone to say how high?\u003c/p\u003e\n\u003ch3 id=\"is-the-technology-available\"\u003e\u003cstrong\u003eIs the technology available?\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIt is no secret that the FinTech market has disrupted many areas of the financial services industry, bringing a new lease of life to what was, in the eyes of many, the last bastion of tradition. Similarly to Moore\u0026rsquo;s Law about microchips, the number of transistors will double every two years while the cost of computers halves; settlement processing is subject to ongoing improvements.\u003c/p\u003e\n\u003cp\u003eExperts believe that Distributed Ledger Technology (DLT), of which blockchain technology is a subset, together with smart contracts, will become central to the ever-improving settlement process. In theory (more likely in practice), these two technologies will allow for the synchronising of digital data across multiple locations, sites and institutions and the real-time settlement of transactions.\u003c/p\u003e\n\u003cp\u003eWhen you incorporate artificial intelligence and machine learning, with new technology able to learn on the job, the question is surely not if, but when real-time settlement will emerge?\u003c/p\u003e\n\u003ch3 id=\"could-eu-institutions-move-to-the-us\"\u003e\u003cstrong\u003eCould EU\u003c/strong\u003e \u003cstrong\u003einstitutions move to the US?\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhile much of the focus is currently on the US market, switching from T+1 to T+2 settlement, it is important to recognise that India and China already operate some stock dealings on same-day settlement. In reality, the US will lead the way, dictating regulations and changes in settlement procedures due to it’s influence over the global market. However, there may be a downside for the EU and UK financial sectors.\u003c/p\u003e\n\u003cp\u003eThere is little sign yet, but some experts are concerned that European financial institutions could look towards the US as their future base. As a consequence of delays with the EU and the UK adopting the move to T+1 settlement, and various costs and regulatory challenges, some companies may decide to move their headquarters.\u003c/p\u003e\n\u003cp\u003eWhile global regulators have the legal powers and the obligation to protect investors, there is one overriding principle: to ensure market integrity and efficiency. A switch to a reduced settlement timetable before the participants are ready could have damaging long-term consequences. Who would be a regulator stuck between a rock and a hard place?\u003c/p\u003e\n\u003ch3 id=\"will-t1-settlement-become-the-worldwide-standard\"\u003e\u003cstrong\u003eWill T+1 settlement become the worldwide standard?\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eInterestingly, several experts have highlighted the challenges of the jump from T+2 to T+1 as very similar to the eventual move to T+0. Therefore, in theory, yet to be discussed in real detail, would it not be worthwhile for European/UJK regulators to consider skipping the T+1 stage and going straight to T+0?\u003c/p\u003e\n\u003cp\u003eAs we touched on above, China and India, as two examples, are currently operating on same day settlement for a select group of securities. It is possible, they have proven it, although to roll this out on a global scale would require regulators to work together. However, looking back at the technological advances over the last 100 years is like looking at night and day.\u003c/p\u003e\n\u003ch3 id=\"trade-reporting-and-settlement\"\u003e\u003cstrong\u003eTrade reporting and settlement\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAs a provider of cutting-edge regulatory compliance solutions for the financial services industry, we fully appreciate the challenges of reduced settlement times. Central to the success of this ongoing change is the trade reporting process, the ability to cross-check for potential fraud and bring all of the elements of individual trades together promptly.\u003c/p\u003e\n\u003cp\u003eIn a similar fashion to the different timelines of the EU and the UK regarding the EMIR Refit, this will be an issue as the US moves to T+1 settlement potentially up to a year (or more) in advance. The situation in the EU is relatively complex because of the number of markets, governments, regulators and additional bodies which need to work together. The US situation is less complicated due to the overarching power of the SEC and the ability to move relatively quickly.\u003c/p\u003e\n\u003ch2 id=\"summary\"\u003e\u003cstrong\u003eSummary\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eEven though the US is the leading global investment market, it is crucial to recognise that it is not the first to switch to a shorter settlement period. China and India have made progress towards T+0, atomic settlement, although this is still an ongoing process, with more stocks being added to the new system on a regular basis.\u003c/p\u003e\n\u003cp\u003eThe US is by far and away the most influential market, and therefore, the move to T+1 settlement next year will see others inevitably follow. The difference in timescales will cause issues with trade settlement, which is where services provided by eFlow will prove invaluable. Using the latest technology, we can collate all of the required information very quickly, running the relevant checks and speeding up the settlement process.\u003c/p\u003e\n\u003cp\u003eWhether you are switching to the new settlement timetable or faced with a two-tier approach to trade reporting on different timescales, we would welcome the opportunity to discuss your needs in more detail. Please feel free to call our team of experts at your convenience.\u003c/p\u003e\n","date_published":"2024-30-01T10:00:00+0000"},{"title":"eflow announces international expansion and key strategic hires","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-announces-plans/","summary":"\u003cp\u003e\u003cstrong\u003eLondon, UK: 17th January 2024:\u003c/strong\u003e UK-based Regtech (Regulatory Technology) scaleup \u003ca href=\"https://eflowglobal.com/\"\u003e\u003cu\u003eeflow Global\u003c/u\u003e\u003c/a\u003e has today announced global expansion plans for its regulatory compliance technology platform, with acceleration of its presence in the US and the appointment of several senior hires.\u003c/p\u003e\n\u003cp\u003eWith eflow’s client base growing by 57% in the last year, the company has appointed Jonathan Dixon as Head of Surveillance, who brings a wealth of specialist experience from Eventus, where he worked as Director of Regulatory Affairs (EMEA), as well as Kraken, Barclays and Accenture. Jonathan will oversee the strategic development of eflow’s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance solutions\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eTo drive expansion in the US, Boston-based Casey Stanley joins eflow as Sales Director and brings with him 20+ years of experience, including roles at S\u0026amp;P Global and Thomson Reuters. Equally, with 20+ years in B2B marketing, Sam Roberts will lead eflow’s global brand and promotional activity as Head of Marketing.\u003c/p\u003e\n\u003cp\u003eOver the last 12 months, eflow has achieved a 96% client retention rate and welcomed dozens of new international clients from across Europe, North America and APAC. Its current client base now totals more than 110 firms, many of which use multiple eflow solutions to help with market abuse surveillance, transaction-cost analysis, transaction reporting and \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eeComms surveillance\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eeflow’s expansion has also seen the company deliver a suite of new technology to the market during 2023, including a new aggregator model for TZTR (transaction reporting platform) and three major updates to its trade surveillance and best execution modules.\u003c/p\u003e\n\u003cp\u003eBen Parker, CEO and Founder at eflow Global, commented: “Global socioeconomic events and the surge in AI’s capabilities in the past 12 months have all played a part in mounting regulatory pressure that financial firms are facing. It’s harder than ever to stay compliant, and we know first hand that increasing scrutiny from global regulators and cross border challenges have contributed to this.”\u003c/p\u003e\n\u003cp\u003eHe added: “eflow’s expansion will help mitigate these issues across the board and we’re excited to bring our technology to a new audience of financial institutions worldwide. The appointment of our new senior hires will help us to execute this vision and make a huge difference in supporting firms with their regulatory challenges.”\u003c/p\u003e\n\u003cp\u003eJonathan Dixon, Head of Surveillance at eflow Global commented: “The only way for businesses to keep pace with continuously evolving regulation is through the implementation of cutting-edge technology. With regulator expectations growing and new legislation, such as the EMIR Refit, coming into play in 2024, I\u0026rsquo;m thrilled to be joining the team to help redefine compliance for businesses worldwide.”\u003c/p\u003e\n\u003cp\u003eThe company’s emphasis on enabling firms to simplify compliance procedures while strengthening their governance has gained eflow Global a reputation as a leading RegTech provider. Its solutions are currently used by over 110 financial institutions including Aegon Asset Management and Plus500.\u003c/p\u003e\n\u003cp\u003eeflow has also launched a new brand and go-to-market proposition to reflect the innovative, global leader that it has evolved into. Read more here: \u003ca href=\"https://eflowglobal.com/the-path-ecosystem/\"\u003e\u003cu\u003ehttps://eflowglobal.com/the-path-ecosystem/\u003c/u\u003e\u003c/a\u003e\u003c/p\u003e\n","date_published":"2024-17-01T09:01:00+0000"},{"title":"Build vs buy - should you use a third-party trade surveillance system? ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/build-vs-buy-trade-surveillance/","summary":"\u003cp\u003eTrade surveillance has an integral role in maintaining the integrity and transparency of global markets and a correspondingly significant influence over the compliance and reputation of global financial institutions.\u003c/p\u003e\n\u003cp\u003eThe dynamics aren’t supportive of a business having a static regulatory solution for monitoring trading activity, either, be it digital, in the form of \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance software\u003c/a\u003e, or manual. The growing complexity of local market regulation, a response to the evolving threat and sophistication of criminality, continually strengthens the need for effective, adaptable surveillance tools and processes.\u003c/p\u003e\n\u003ch2 id=\"what-is-trade-surveillance\"\u003e\u003cstrong\u003eWhat is trade surveillance?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhen considering the nuances of \u003ca href=\"https://eflowglobal.com/what-is-trade-surveillance-market-abuse-monitoring-explained/\"\u003e\u003cu\u003etrade surveillance\u003c/u\u003e\u003c/a\u003e, the greater detail, we define it simply as the process of monitoring financial transactions for the presence of suspicious, potentially illegal market abusive activity.\u003c/p\u003e\n\u003cp\u003eExamples of such activity include insider trading, front running, wash trading, pump and dump, spoofing, and so on through a long list of ever more sophisticated methods, further enhanced by technological advancements.\u003c/p\u003e\n\u003ch3 id=\"regulations-enforcing-market-abuse-monitoring\"\u003e\u003cstrong\u003eRegulations enforcing market abuse monitoring\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eDespite variance in definitions, most global regulators require comprehensive trade surveillance software and processes to be in place and if you’re a financial institution handling securities transactions of any kind then it’s likely you’re included in the ‘must have’ cohort.\u003c/p\u003e\n\u003cp\u003eMiFID II, MAR, Dodd-Frank, MAS Requirements, and ASIC Market Integrity Rules all legislate for robust defence against market manipulation.\u003c/p\u003e\n\u003ch2 id=\"the-rise-of-automated-trade-surveillance\"\u003e\u003cstrong\u003eThe rise of automated trade surveillance\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe sophistication and speed with which asset prices and markets are able to be manipulated has left compliance teams with a moving target when it comes to detection. Manual review is now at best a time-inefficient way to monitor but, in most cases, an automated system is a regulatory requirement, supporting the deployment of \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance software\u003c/a\u003e in businesses of varying sizes.\u003c/p\u003e\n\u003cp\u003eSome surveys point to a shortage of high quality compliance professionals which, along with the blind spots created by manual processes and oversight, and the speed of processing available, supports the need for automation.\u003c/p\u003e\n\u003ch3 id=\"the-consequences-of-not-having-a-rigorous-trade-surveillance-system\"\u003e\u003cstrong\u003eThe consequences of not having a rigorous trade surveillance system\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWe are undergoing a significant shift towards much stricter enforcement of \u003ca href=\"https://eflowglobal.com/market-abuse-enforcements/\"\u003e\u003cu\u003emarket integrity\u003c/u\u003e\u003c/a\u003e by global financial institutions.\u003c/p\u003e\n\u003cp\u003eRegulatory penalties range from censure and fines to criminal proceedings, and all carry a direct and often lasting commercial impact.\u003c/p\u003e\n\u003cp\u003eOutside of the regulatory consequences, the commercial impact of inefficient, or unfit-for-purpose systems and processes is significant, too.\u003c/p\u003e\n\u003cp\u003eRegulatory or internal, these consequences are avoidable, as we cover below.\u003c/p\u003e\n\u003ch2 id=\"what-are-the-options\"\u003e\u003cstrong\u003eWhat are the options\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eA common response to this commercial reality is to build your own in-house \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance software\u003c/a\u003e solution which is bespoke to the needs of the business and, on the surface, appealing.\u003c/p\u003e\n\u003cp\u003eBut the reality is different.\u003c/p\u003e\n\u003cp\u003eThis involves a business contacting their third-party tech provider – or providers - scoping the required changes, ordering their build, beta, and launch, and then fully implementing.\u003c/p\u003e\n\u003cp\u003eThis comes at a high cost – money and time – and with no guarantee that the end result will be aligned with a regulatory landscape that has shifted throughout the build period.\u003c/p\u003e\n\u003cp\u003eAdding complexity to the decision-making process, within the bespoke build approach, there are two routes.\u003c/p\u003e\n\u003ch2 id=\"the-limitations-of-multiple-providers\"\u003eThe limitations of multiple providers\u003c/h2\u003e\n\u003cp\u003eFirstly, you can adopt a best-of-breed strategy, which involves combining multiple vendors and solutions.\u003c/p\u003e\n\u003cp\u003eWhile this approach allows for the implementation of industry-leading solutions for each area, it has commercially limiting aspects. When dealing with multiple vendors, the process can become convoluted, inefficient, and, at times, stressful for the organisation to manage effectively. It is also very difficult to ensure a level of cohesion where data is utilised optimally at every step, and a synchronised process when combining siloed systems.\u003c/p\u003e\n\u003ch3 id=\"develop-what-you-already-have\"\u003e\u003cstrong\u003eDevelop what you already have\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe second strategy involves using but overhauling your incumbent IT resources. This often includes modernising your technology stack, developing new in-house components, integrating existing closed systems, and sometimes performing full-scale rewrites of hard-coded trade surveillance software.\u003c/p\u003e\n\u003cp\u003eHowever, this path is not without its challenges. It demands significant time and resource commitments, potentially resulting in delays. Moreover, reshaping existing infrastructure can be challenging when it comes to improving the overall construction to meet the evolving demands and expectations of today\u0026rsquo;s regulators, and today’s trading behaviour.\u003c/p\u003e\n\u003cp\u003eData quality and management is a frictional force. Businesses can find it very difficult to extract relevant data from legacy systems, with much time sunk into cleansing and normalising. Additionally, new communication methods aren’t easily adopted by legacy systems and regulators are ever more concerned with the proliferation and therefore monitoring of new digital communications channels.\u003c/p\u003e\n\u003ch2 id=\"the-best-of-all-worlds\"\u003e\u003cstrong\u003eThe best of all worlds\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThird-party trade surveillance software has emerged as an attractive option for financial institutions.\u003c/p\u003e\n\u003cp\u003eThese systems provide a reliable and efficient means of ensuring compliance with a multitude of requirements imposed by various regulatory bodies worldwide.\u003c/p\u003e\n\u003cp\u003eOne of the central advantages lies in the expertise and specialisation of the provider. These systems are meticulously designed and continually updated to align with the latest regulatory changes by a business which, to put it simply, does nothing else but regulatory work and across a wide cross section of the financial sector, ensuring that financial institutions remain ahead of the compliance curve.\u003c/p\u003e\n\u003cp\u003eIncorporating a new regulatory directive doesn’t involve lengthy project management commitments and unplanned costs from scope creep. Nor does it involve multiple such instances with several trade surveillance software partners. The risk of operating a system that has reached the limit of its customisable functionality and must be replaced is also negated.\u003c/p\u003e\n\u003cp\u003eMoreover, third-party systems benefit from a depth of experience gained from serving a diverse clientele, allowing them to offer comprehensive solutions that still cater to the unique needs of each institution but also incorporate the best practice firms like Eflow Global see, day in, day out.\u003c/p\u003e\n\u003ch3 id=\"data-quality\"\u003e\u003cstrong\u003eData quality\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eData management is critical. To enhance trade surveillance outcomes to an acceptable level, organisations must ensure the accuracy and quality of their data, facilitate comprehensive data aggregation and analysis, establish transparent data lineage, and maintain rigorous records. Working with a partner firm with deep experience in data governance across many financial institutions and across myriad traded instruments is critical.\u003c/p\u003e\n\u003ch3 id=\"training-costs\"\u003e\u003cstrong\u003eTraining costs\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIn the UK, the proportion of the compliance budget being spent on staff training and development has dropped from 70% in 2020 to 60% in 2023. 30% is now spent on third-party technology solutions. The positive impact this will have on profit margins will be a compounding one, felt over decades.\u003c/p\u003e\n\u003cp\u003eAppointing an outsourced provider has the twin benefits of reducing the need for such comprehensive in house training (and indeed hiring) and shifting some training and development burden onto the partner. At Eflow, we take seriously our responsibility in guiding your team on how to work with us.\u003c/p\u003e\n\u003ch3 id=\"scalability\"\u003e\u003cstrong\u003eScalability\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThird-party trade surveillance software is also underpinned by and facilitating of scale.\u003c/p\u003e\n\u003cp\u003eSeamless interconnection with internal reporting systems mitigates costly manual work, while also acting as a robust safeguard against regulatory risks. Increased trading volumes can be accommodated without the need for rewriting of procedures and costly tech adaptations, and aggressive hiring is not required.\u003c/p\u003e\n\u003ch3 id=\"taking-action\"\u003e\u003cstrong\u003eTaking action\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe realm of compliance is inherently complex, with regulations often varying by region and evolving over time. It\u0026rsquo;s natural to feel that there are areas of risk and exposure within your current processes.\u003c/p\u003e\n\u003cp\u003eThe first step is to reach out to a specialist. We offer free consultations which, among other things, will help you gain clarity on what your exact requirements are. From here, the process of selecting a solution becomes much simpler.\u003c/p\u003e\n\u003cp\u003eBy outsourcing this critical aspect of compliance and incorporating third party trade surveillance software into the regulatory processes, financial institutions can not only save valuable time and resources but also tap into the wealth of knowledge and best practices embedded within these systems.\u003c/p\u003e\n\u003cp\u003eThe outcome is a partnership that empowers financial institutions to focus on their core competencies and strategic growth initiatives, knowing that their surveillance needs are handled by a business that will continually be up to speed and that expansion plans do not have to be restricted by compliance considerations.\u003c/p\u003e\n\u003cp\u003ePlease feel free to \u003ca href=\"/book-a-consultation/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cu\u003econtact us today\u003c/u\u003e\u003c/a\u003e to arrange your consultation, and take the first step towards enhancing your trade surveillance.\u003c/p\u003e\n","date_published":"2024-10-01T07:01:00+0000"},{"title":"Integrating eComms and trade surveillance","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/integrating-ecomms-and-trade-surveillance/","summary":"\u003ch1 id=\"the-future-of-surveillance-integrating-ecomms-and-trade\"\u003eThe future of surveillance: Integrating eComms and trade\u003c/h1\u003e\n\u003cp\u003eRecent enforcement actions highlight a critical shift in regulatory focus, emphasising the importance of modern \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eeComms surveillance systems\u003c/a\u003e. A notable example is the substantial penalties imposed on major Wall Street banks for failures in record-keeping related to unauthorised messaging apps, notably WhatsApp. In August 2023, U.S. regulators announced a \u003ca href=\"https://www.cnbc.com/2023/08/08/regulators-hit-wall-street-banks-with-549-million-in-penalties-for-record-keeping-failures-.html#:~:text=Evelyn%20Hockstein%20%7C%20Reuters-,U.S.%20regulators%20on%20Tuesday%20announced%20a%20combined%20%24549%20million%20in,electronic%20records%20of%20employee%20communications\" target=\"_blank\" rel=\"noopener\"\u003ecollective fine of $549 million\u003c/a\u003e, after a groundbreaking package of \u003ca href=\"https://fortune.com/2022/09/27/wall-street-fines-employee-use-of-whatsapp-unauthorized-messaging-apps/\" target=\"_blank\" rel=\"noopener\"\u003efines worth more than $2 billion in September 2022\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eWhile these enforcement actions have been predominantly U.S.-centric, there is a growing expectation that global regulators will take note and initiate their own investigations. This international ripple effect underscores the need for a proactive approach in upgrading eComms surveillance, moving beyond mere compliance to a more robust, integrated surveillance strategy.\u003c/p\u003e\n\u003cp\u003eThe recent eComms enforcement cases have often revealed deficiencies in the context of broader market abuse investigations. While these deficiencies did not directly establish instances of market abuse, they indicated a lack of adequate configuration in surveillance systems to detect such malpractices if they were to occur. In many instances, these fines were attributed to systemic failures in controlling and monitoring mechanisms, which significantly impeded the regulators\u0026rsquo; ability to identify and demonstrate market abuse.\u003c/p\u003e\n\u003cp\u003eCurrent technological limitations hinder the full integration and effective utilisation of eComms data, particularly in using it with trade data. This lack of integration leaves some breadth and depth in surveillance yet to be unlocked. An integrated surveillance system that effectively combines eComms and trade data can provide a much-needed 360-degree view, enhancing both detection capabilities and regulatory compliance.\u003c/p\u003e\n\u003ch2 id=\"challenges\"\u003eChallenges\u003c/h2\u003e\n\u003cp\u003eIntegrating trade and eComms surveillance into a unified system presents a range of complex challenges:\u003c/p\u003e\n\u003ch3 id=\"data\"\u003eData\u003c/h3\u003e\n\u003cp\u003eThe integration of diverse data sources is a substantial undertaking. Financial firms deal with a mix of structured data, like trade logs, and unstructured data, such as emails and instant messages. This disparity requires sophisticated systems capable of processing and analysing varied data formats. Additionally, the sheer volume of data, compounded by the rapid expansion of communication channels, presents a significant logistical hurdle. The task involves not just collecting and storing this data but also ensuring its accessibility for effective surveillance.\u003c/p\u003e\n\u003cp\u003eFor information on how our data-agnostic platform can ingest and analyse both structured and unstructured data as part of a holistic compliance strategy, \u003ca href=\"https://eflowglobal.com/contact-us/\" target=\"_blank\" rel=\"noopener\"\u003eget in touch\u003c/a\u003e.\u003c/p\u003e\n\u003ch3 id=\"privacy\"\u003ePrivacy\u003c/h3\u003e\n\u003cp\u003eBalancing effective eComms surveillance with privacy is a delicate task. Firms must navigate various privacy laws and regulations, which can vary significantly across jurisdictions, whilst still maintaining the effectiveness of the surveillance systems. These challenges are not only relevant during surveillance, but also in  recordkeeping - how, where and when the data is stored needs to work for surveillance and privacy purposes.\u003c/p\u003e\n\u003ch3 id=\"surveillance-and-detection\"\u003eSurveillance and detection\u003c/h3\u003e\n\u003cp\u003eOne of the most intricate aspects of integrating eComms and trade surveillance systems is the identification of meaningful signals amidst vast amounts of data. Criminal activities are often discussed using complex, coded words and phrases, and trade activity is disguised and complex, making detection a highly nuanced task. Surveillance systems need to be intelligent enough to identify potential red flags from these deliberately distorted views. Moreover, the issue of false positives - where innocent communications are flagged as suspicious - can lead to unnecessary investigations and resource drain. Developing systems that can accurately distinguish between legitimate and illicit activities is crucial for effective surveillance, but is an almost inevitable challenge when experimenting with new techniques.\u003c/p\u003e\n\u003cp\u003eFor more on our trade surveillance solution, \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eclick here\u003c/a\u003e.\u003c/p\u003e\n\u003ch2 id=\"opportunities\"\u003eOpportunities\u003c/h2\u003e\n\u003cp\u003eThe integration of eComms and trade surveillance systems, despite its challenges, opens up significant opportunities for financial firms:\u003c/p\u003e\n\u003ch3 id=\"enhanced-ability-to-detect-market-abuse\"\u003eEnhanced ability to detect market abuse\u003c/h3\u003e\n\u003cp\u003eIntegrating eComms with trade data provides a richer, more contextual information set, enabling firms to detect subtle signs of market manipulation that might otherwise go unnoticed. An integrated system can correlate communication patterns with trade activities, uncovering potential market abuses that are more complex and harder to detect. This enhanced detection capability could be crucial in an environment where market manipulators are continually evolving their tactics.\u003c/p\u003e\n\u003ch3 id=\"compliance-and-reputation-management\"\u003eCompliance and reputation management\u003c/h3\u003e\n\u003cp\u003eIn the wake of hefty fines and heightened regulatory scrutiny, an integrated surveillance system serves as a critical tool for compliance. By effectively monitoring both eComms and trade data, firms can significantly reduce the risk of non-compliance and the associated financial penalties. Moreover, demonstrating a commitment to comprehensive surveillance can enhance a firm’s reputation.\u003c/p\u003e\n\u003ch3 id=\"operational-efficiency\"\u003eOperational efficiency\u003c/h3\u003e\n\u003cp\u003eCurrently, many firms rely on manual processes to tie their eComms and trade data together during investigations, which can be time-consuming and prone to human error. An integrated system automates these processes, significantly reducing the time and resources needed for surveillance. This efficiency not only reduces operational costs but also allows compliance teams to focus on more strategic tasks, such as analysing trends and refining surveillance techniques.\u003c/p\u003e\n\u003ch2 id=\"the-future-of-surveillance---one-step-at-a-time\"\u003eThe future of surveillance - one step at a time\u003c/h2\u003e\n\u003cp\u003eAs criminal activities become more sophisticated, leveraging modern communication and automation technologies, firms must reassess their surveillance capabilities. For many, this means upgrading their eComms and Trade Surveillance systems separately to manage immediate compliance risks. For those at the beginning of their technology transformation, gradual changes ensure responsible and sustainable progress.\u003c/p\u003e\n\u003cp\u003eThe future of surveillance, shaped by emerging technologies like AI, is rapidly evolving. This future is likely to embrace the interconnected nature of our globalised, digital world, linking once disparate data within systems capable of interpreting their collective implications.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/contact-us/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cem\u003eSpeak to our team today if you would like advice on how to set up an integrated eComms and trade surveillance system. \u003c/em\u003e\u003c/a\u003e\u003c/p\u003e\n","date_published":"2023-11-12T08:00:00+0000"},{"title":"Harmonising EMIR Refit with global standards: Ensuring consistency in derivatives regulation","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/harmonising-emir-refit-with-global-standards-ensuring-consistency-in-derivatives-regulation/","summary":"\u003ch1 id=\"emir-refit-and-global-derivatives-regulation\"\u003e\u003cstrong\u003eEMIR Refit and global derivatives regulation\u003c/strong\u003e\u003c/h1\u003e\n\u003cp\u003eWhile some sensationalised media headlines suggest that the UK and the EU financial services regulators are constantly at loggerheads, this is not always the case. They may be competing for business, but both parties recognise the need to harmonise global standards concerning derivatives. \u003c/p\u003e\n\u003cp\u003eWe only need to look back at the 2007/8 financial crisis, which saw contagion sweeping through the markets and bringing many governments and financial institutions to their knees. It is critical that regulators can monitor not only their local derivatives markets but also global trends. By homogenising derivatives reporting regulations, the risk of noncompliance would be greatly reduced.\u003c/p\u003e\n\u003cp\u003eThis article will look at harmonising derivatives regulations and EMIR REFIT, which will see global standards more closely aligned.\u003c/p\u003e\n\u003ch2 id=\"fundamental-changes-and-objectives-of-the-emir-refit\"\u003e\u003cstrong\u003eFundamental changes and objectives of the EMIR Refit\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThere are several critical changes to the reporting system, which include:-\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eIncreasing the number of reportable fields from 129 to 203 to align with CPMI-IOSCO standards\u003c/li\u003e\n\u003cli\u003eSwitching from submissions in CSV to XML (using ISO 20022 standards)\u003c/li\u003e\n\u003cli\u003eThe removal of irreconcilable fields and tolerance levels in the UK system\u003c/li\u003e\n\u003cli\u003eUnique Product Identifiers (UPIs) will reduce inconsistencies but at a cost\u003c/li\u003e\n\u003cli\u003eUnique Trade Identifiers (UTIs) will remove a degree of discretion, creating a more formalised process\u003c/li\u003e\n\u003cli\u003eUTIs must be provided by 10am T+1, thereby ensuring that both parties can report trades on time\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIt is important to note that the new regulations cover market traded and OTC derivatives, thus giving regulators information across the entire market.\u003c/p\u003e\n\u003ch2 id=\"emir-refit-what-is-the-ultimate-aim\"\u003e\u003cstrong\u003eEMIR Refit: What is the ultimate aim?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe objectives are simple:\u003c/p\u003e\n\u003cp\u003e“\u003cem\u003eTo further enhance the harmonisation and standardisation of reporting under EMIR.\u003c/em\u003e\u0026quot;\u003c/p\u003e\n\u003cp\u003eThe new reporting system will allow regulators to better monitor systemic risk, which has the potential to bring down not only individual entities but entire financial systems/investment markets. It is also a means of controlling regulatory and reporting costs across the whole financial services industry.\u003c/p\u003e\n\u003cp\u003eAs both sides of each transaction need to match, it is asynchronous, and a sign of slight regulatory divergence post-Brexit, that Europe will go live with its version of the EMIR REFIT on 29 April 2024 while the UK is a little later, on 30 September 2024. This means that some financial counterparties will be operating two different reporting systems for a period. The overlap is due to the UK government being committed to an 18-month introductory period between the announcement of the EMIR REFIT (slightly delayed) and the switch to the new reporting system. Yes, there will be harmonisation, but at a later date.\u003c/p\u003e\n\u003ch2 id=\"international-regulatory-standards-and-initiatives\"\u003e\u003cstrong\u003eInternational regulatory standards and initiatives\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe G20 and, by proxy, the Financial Stability Board (FSB) are at the heart of the push to harmonise international derivatives regulations. This body promotes global financial stability by working with regulators and supervisory bodies from G20 members and non-member countries. The FSB was a successor to the Financial Stability Forum (FSF), with the need for change in light of the 2007/8 financial crisis.\u003c/p\u003e\n\u003cp\u003eThe FSB was created to:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eIdentify and review potential vulnerabilities of the global financial system\u003c/li\u003e\n\u003cli\u003ePromote the exchange of information between different regulators and reporting bodies\u003c/li\u003e\n\u003cli\u003eAssess the potential impact of regulatory changes on global markets\u003c/li\u003e\n\u003cli\u003eAdvise on best practices for regulatory standards\u003c/li\u003e\n\u003cli\u003eWork with international standard-setting bodies to co-ordinate global regulations\u003c/li\u003e\n\u003cli\u003eSet guidelines for establishing and supporting supervisory colleges\u003c/li\u003e\n\u003cli\u003eSupport contingency planning for cross-border crisis management\u003c/li\u003e\n\u003cli\u003eCollaborate with the IMF to conduct early warning exercises\u003c/li\u003e\n\u003cli\u003ePromote the harmonisation of global reporting standards\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWhere historically local regulators, taking in an array of different reporting systems, would be defensive of their domestic oversight, instances of contagion have brought these parties together. As we saw just recently, we were for a time staring contagion down the barrel when the US banking sector wobbled, and some banks needed additional financial backing.\u003c/p\u003e\n\u003cp\u003eThe introduction of EMIR REFIT now brings the EU and the UK more in line with the US market. While the broader benefits have been detailed above, some US institutions will encounter margin calls in the future due to regulatory harmonisation. \u003c/p\u003e\n\u003ch2 id=\"the-benefits-of-global-harmonisation\"\u003e\u003cstrong\u003eThe benefits of global harmonisation\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs the leading financial markets, such as the US, UK, EU and APAC, come together to harmonise global derivative regulations, this forces others to follow suit. EMIR REFIT has also brought together actively traded derivatives against OTC markets to provide a global picture. This allows regulators to assess ongoing and even predict systemic risk, which, as we have seen, can bring down markets and economies.\u003c/p\u003e\n\u003cp\u003eAs a result of this ongoing harmonisation of derivatives regulations, there will be improved transparency and risk management. In hindsight, it was apparent before the 2007/8 financial crisis that derivatives exposure placed the US subprime mortgage market in a perilous situation. Such was the use of derivatives to slice and dice, repackage and resell mortgage obligations that a wobble and a sudden drop in confidence would bring the market crashing down. However, hindsight is a beautiful thing!\u003c/p\u003e\n\u003cp\u003eThis prompted the US government to bring in new regulations to restrict the power/influence of derivatives. On the flip side, it is crucial to recognise the role that derivatives play in creating liquid markets. \u003c/p\u003e\n\u003ch2 id=\"cross-border-trade\"\u003e\u003cstrong\u003eCross border trade\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eGrowth in cross-border derivatives trading is a significant factor which brought together G20 regulators and other non-members across the globe. While everyone from Warren Buffett to the Vatican has expressed concern about derivatives, they are an integral part of the global financial markets. Enhanced transparency and information sharing will create a more stable trade environment and, hopefully, reduce the threat of contagion as we advance.\u003c/p\u003e\n\u003ch2 id=\"challenges-in-achieving-global-consistency\"\u003e\u003cstrong\u003eChallenges in achieving global consistency\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs investment and money markets around the world become more entwined, with cross-border transactions now as easy as dealing with your neighbour, there is a need for greater regulatory consistency. While OTC derivatives markets are primarily unregulated, there is an indirect degree of control as the financial institutions/counterparts are usually regulated. This provides an element of regulatory harmonisation, but bringing together reporting systems and formats is very different.\u003c/p\u003e\n\u003cp\u003eThe main challenges in achieving global consistency in reporting standards are as follows:\u003c/p\u003e\n\u003ch3 id=\"economic-and-political-considerations\"\u003e\u003cstrong\u003eEconomic and political considerations\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe US, UK and EU continue to battle it out to become leaders in all areas of the investment/money markets. However, each country, political party and regulator will have domestic challenges to consider in line with international pressures. While they all know they need to work together, it is often akin to a game of poker; who will blink first, who will lead and who will follow.\u003c/p\u003e\n\u003ch3 id=\"different-jurisdictions-different-regulationsnbsp\"\u003e\u003cstrong\u003eDifferent jurisdictions, different regulations\u003c/strong\u003e \u003c/h3\u003e\n\u003cp\u003eThere are three central leading bodies regarding global investment regulations; the US, UK/EU and various parties in the Far East. However, even though the UK and the EU are moving in the same direction, they are moving at different speeds. As cross-border trade continues to grow and investors/financial institutions demand greater protection and transparency, other regulators will eventually be forced to fall into line.\u003c/p\u003e\n\u003ch3 id=\"technologicaloperational-challenges\"\u003e\u003cstrong\u003eTechnological/operational challenges\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe RegTech sector, a subsector of the wider FinTech industry, has attracted massive investment over the last decade or so. This has prompted governments and regulators to be more appreciative of new technology and innovation while also looking to retain a degree of control. Then there are the operational challenges, the increase in short-term costs and challenges to profitability.\u003c/p\u003e\n\u003cp\u003eUltimately, global regulators know they must work together to create a transparent regulatory structure. One that will help them identify potential problems, such as the systemic pressures building before the 2007 financial crisis, and take pre-emptive action.\u003c/p\u003e\n\u003ch3 id=\"regulatory-cooperation-and-the-next-steps\"\u003e\u003cstrong\u003eRegulatory cooperation and the next steps\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe fact that the UK and EU, according to the broader media, appear to be at loggerheads regarding their financial services industries, but working together on derivatives regulations, says everything. \u003c/p\u003e\n\u003cp\u003eThey are both well aware of the need to cooperate and add the next piece of the global regulatory jigsaw because cross-border trading is now as simple as pressing a button. \u003c/p\u003e\n\u003cp\u003eWhile impossible to rule out entirely in the future, the convergence of derivatives reporting regulations makes catastrophic market events less likely or, at least, less damaging.\u003c/p\u003e\n\u003cp\u003eEven though the 2007 financial crash began in the US subprime mortgage market, an inability to identify the risk from derivatives led to contagion and a worldwide economic crash. \u003c/p\u003e\n\u003cp\u003eWe would be surprised if, despite partisanship, countries didn’t see the benefits in alignment and synchronizing of at least the important aspects of derivatives regulation. \u003c/p\u003e\n\u003ch2 id=\"conclusion\"\u003e\u003cstrong\u003eConclusion\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eBringing together domestically traded derivatives and OTC markets is important, but doing this worldwide is critical. This enhanced transparency allows regulators to adapt and control margin obligations to account for underlying market conditions. \u003c/p\u003e\n\u003cp\u003eIt is vital that the EU, the UK, and global partners look to harmonise EMIR REFIT and their comparative domestic regulations. \u003c/p\u003e\n\u003cp\u003eThe ongoing UK and EU EMIR REFIT regulatory changes in the derivatives market are the next stage in what some see as an eventual global regulatory system. \u003c/p\u003e\n\u003cp\u003eAt eflow, we provide various regulatory compliance solutions for the financial services industry, using continually-updated, market-leading technology to ensure accuracy and reporting speeds. \u003c/p\u003e\n\u003cp\u003eIf you would like to chat about your future obligations under the EMIR REFIT, \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003eget in touch\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2023-05-12T10:00:00+0000"},{"title":"MAS and ASIC update transaction reporting requirements","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/mas-and-asic-update-transaction-reporting-requirements/","summary":"\u003ch1 id=\"preparing-for-apacs-upcoming-derivatives-reporting-regulations\"\u003ePreparing for APAC’s upcoming derivatives reporting regulations\u003c/h1\u003e\n\u003ch2 id=\"background\"\u003eBackground\u003c/h2\u003e\n\u003cp\u003eThe global transformation in trade reporting regulations continues its march, with 2024 marking a pivotal year as these changes reach the Asia-Pacific (APAC) region. The Australian Securities and Investments Commission (ASIC) and the Monetary Authority of Singapore (MAS) are introducing comprehensive revisions to their transaction reporting requirements, seeking alignment with global standards, increased transparency and to incorporate feedback from their respective reporting entities.\u003c/p\u003e\n\u003cp\u003eFirms engaged in over-the-counter (OTC) derivatives trades must now develop a comprehensive understanding of these new rules and evaluate how they map to their firm\u0026rsquo;s existing compliance process. The onus is on these entities to devise a robust strategy that ensures their readiness and full compliance ahead of the October 2024 deadlines. As part of our ongoing commitment to remain at the forefront of regulatory developments in the financial markets, we have reviewed the changes and distilled their implications for firms, producing this blog to give you a head start.\u003c/p\u003e\n\u003ch2 id=\"what-are-asics-changes-in-derivatives-reporting\"\u003eWhat are ASIC’s changes in derivatives reporting?\u003c/h2\u003e\n\u003cp\u003eOn December 19, 2022, ASIC unveiled the ASIC Derivative Transaction Rules (Reporting) 2024. The modifications brought forth by the Rules Rewrite initiative cover all five presently reportable asset classes—Credit, Interest Rates, Equities, Commodities, and Foreign Exchange—in addition to Valuation and Margin reporting. As well as easing certain regulatory pressures, by extending the transaction reporting deadline (from T+1 to T+2) and introducing a small-scale buy-side entity exemption, they have taken measures to increase transparency and accountability.\u003c/p\u003e\n\u003ch4 id=\"reporting-format-and-style\"\u003eReporting format and style\u003c/h4\u003e\n\u003cp\u003eThe reporting format is now mandated to be in extensible markup language (XML) as per the ISO 20022 standard. Lifecycle reporting will be mandated for all derivatives, ensuring intra-day changes to transactions are captured.\u003c/p\u003e\n\u003ch4 id=\"delegated-reporting\"\u003eDelegated reporting\u003c/h4\u003e\n\u003cp\u003eAlthough firms can still delegate their reporting obligations, the ‘safe harbour’ benefits, protections that reduce a firm’s liability for reporting errors made by their delegates, have been removed. This aligns with global practices but places an increased burden on reporting entities to ensure complete and accurate reporting by their delegates.\u003c/p\u003e\n\u003ch4 id=\"lei-requirements\"\u003eLEI requirements\u003c/h4\u003e\n\u003cp\u003eThe use of Legal Entity Identifiers (LEIs) has been tightened, with only LEIs permitted as entity identifiers under specific conditions. A renewed LEI is mandatory for the reporting entity, counterparty 1, and the central counterparty.\u003c/p\u003e\n\u003ch4 id=\"data-elements\"\u003eData elements\u003c/h4\u003e\n\u003cp\u003eASIC has introduced a Unique Transaction Identifier (UTI) waterfall to guide entities on who should generate the UTI, and a Unique Product Identifier (UPI) is also required as a reportable data element. More broadly, ASIC is aligning its reporting regime with the critical data elements (CDE) introduced in IOSCO\u0026rsquo;s CDE Guidance, adding various other new reportable fields:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eCounterparty details\u003c/strong\u003e: the client’s country name when there is no LEI.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003ePlatform identifier\u003c/strong\u003e: the trading facility for a transaction, equivalent to the ‘Venue’ field in European regulations.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eInterest rates related fields:\u003c/strong\u003e capturing details of the interest rate spread, including the spread notation, value of the spread, and the currency of the spread for both legs of the transaction\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eOptions related fields\u003c/strong\u003e: including the Delta, which measures the sensitivity of an option\u0026rsquo;s price to changes in the price of the underlying asset, and the Option Premium Payment Date, capturing the date on which the option premium is paid\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch4 id=\"transaction-to-position-conversion\"\u003eTransaction-to-position conversion\u003c/h4\u003e\n\u003cp\u003eIn line with other standards (e.g. ESMA), ASIC now requires position reporting, necessitating the termination of the original transaction and reporting of the new position with a new UTI.\u003c/p\u003e\n\u003ch3 id=\"what-are-mas-changes-in-derivatives-reporting\"\u003eWhat are MAS’ changes in derivatives reporting?\u003c/h3\u003e\n\u003cp\u003eIn July 2021, MAS initiated the process of soliciting opinions on the prospective modifications to the Securities and Futures (Reporting of Derivatives Contracts) Regulations 2013. The new reporting requirements will cover a broad range of derivatives including interest rate, commodity, credit, foreign exchange, and equity derivatives.\u003c/p\u003e\n\u003ch4 id=\"adoption-of-global-standards\"\u003eAdoption of global standards\u003c/h4\u003e\n\u003cp\u003eMAS aligns closely with global practices, adopting UPI, UTI, and IOSCO’s CDE guidance, and mandating the ISO 20022 XML message format for reporting, reflecting a concerted effort towards harmonisation.\u003c/p\u003e\n\u003ch4 id=\"uti-generation\"\u003eUTI generation\u003c/h4\u003e\n\u003cp\u003eReporting entities and counterparties will have the flexibility to agree on the UTI generating entity, which can be a third party.\u003c/p\u003e\n\u003ch4 id=\"data-elements-and-reporting-obligations\"\u003eData elements and reporting obligations\u003c/h4\u003e\n\u003cp\u003eMAS has added data elements like “Package Identifier”, “Asset Class”, and “Contract Type”, and removed certain fields to streamline reporting. The reporting of collateral and margin information is also mandated, but for specific exemptions.\u003c/p\u003e\n\u003ch4 id=\"fx-swaps-reporting\"\u003eFX Swaps Reporting\u003c/h4\u003e\n\u003cp\u003eMAS mandates FX swaps to be reported as two separate contracts, linked with an \u0026lsquo;FX Swap Link ID\u0026rsquo;, accommodating industry data storage practices.\u003c/p\u003e\n\u003ch2 id=\"how-to-comply\"\u003eHow to comply\u003c/h2\u003e\n\u003cp\u003eNavigating the updated transaction reporting requirements from ASIC and MAS necessitates a strategic and proactive approach. These are five areas for firms to consider:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003e\u003cstrong\u003eStrategic Mapping and Gap Analysis\u003c/strong\u003e: Engage regulatory experts, whether in-house or external, to dissect the changes’ implications on your current compliance processes. Pinpoint the gaps and allocate resources to address these areas, ensuring a thorough understanding of the new requirements.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eEnsuring Data Readiness\u003c/strong\u003e: At its core, reporting is a data-centric challenge. Prioritise establishing high-quality, robust, and scalable data pipelines and infrastructure. This foundation of data excellence not only facilitates current reporting needs but also positions firms advantageously for future regulatory shifts.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eTechnology Enhancement\u003c/strong\u003e: Transitioning to new reporting formats and managing additional data fields, potentially in high volumes, warrants an assessment of your technology systems. Ensure your technology is not just compliant, but also efficient and capable of handling the new requirements without significantly inflating time and costs.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eWorkflow Optimization\u003c/strong\u003e: Regulatory changes can expose operational inefficiencies, introducing uncertainties and vulnerabilities. Proactively streamline and optimise your workflows now to enhance preparedness and resilience for future changes.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eValidation and Quality Assurance\u003c/strong\u003e: Establish rigorous data validation and quality assurance processes as your last line of defence against reporting inaccuracies. This step is crucial to catch and correct any discrepancies before submission, safeguarding against non-compliance.\u003c/li\u003e\n\u003c/ol\u003e\n\u003ch2 id=\"the-bigger-picture\"\u003eThe bigger picture\u003c/h2\u003e\n\u003cp\u003eThe upcoming enhancements to regulations in Australia and Singapore are part of a global trend aiming at higher data quality and standardisation in transaction reporting. Similar initiatives are unfolding worldwide, with significant changes seen in the EMIR Refit in the EU, HKMA’s upcoming revisions in Hong Kong, and the CFTC Rewrite in the United States.\u003c/p\u003e\n\u003cp\u003eFirms operating globally need to stay vigilant and adaptable in this uneven and evolving regulatory landscape. The diversity in rules and timelines across jurisdictions necessitates robust data and technology infrastructures, as well as workflow optimization to manage the complexities of compliance.\u003c/p\u003e\n\u003cp\u003eInvesting in digital regulatory reporting tools and seeking expertise to navigate these changes is not just a response to immediate compliance needs; it’s an investment in long-term operational resilience. As regulatory demands continue to evolve, firms that proactively enhance their reporting processes and infrastructure will be better positioned to navigate future challenges, ensuring sustained compliance and operational efficiency.\u003c/p\u003e\n","date_published":"2023-28-11T14:00:00+0000"},{"title":"Understanding the Markets in Crypto-Assets regulation ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/understanding-the-markets-in-crypto-assets-regulation-/","summary":"\u003ch1 id=\"an-overview-of-mica\"\u003eAn Overview of MiCA\u003c/h1\u003e\n\u003cp\u003eIn a 2008 whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”, a programmer or group of programmers under the pseudonym Satoshi Nakamoto unveiled the first ever cryptocurrency, Bitcoin. Its creators hoped to address the shortcomings of the traditional financial system which had been criticised for its centralisation, high transaction fees, lengthy settlement times, and lack of transparency. The primary motivation behind Bitcoin\u0026rsquo;s creation was to establish a decentralised digital currency that operates without the need for intermediaries such as banks or governments. Cryptocurrencies remained largely misunderstood throughout the early 2010’s, pushed by a relatively small group of advocates with an almost cult-like persistence.\u003c/p\u003e\n\u003cp\u003eDigital assets and cryptocurrencies truly infiltrated public consciousness in 2017 during their meteoric rise in market capitalisation and trading volumes, followed by an equally thrilling - and for many, painful - fall from grace. While we’ve heard a few success stories from the 2017 crypto rally, it left countless victims in its wake. Following Crypto’s 2017 rise and fall, Executive Vice-President Dombrovskis, in a letter addressed to the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA), urged them to reiterate their warnings to investors. This FinTech Action Plan mandated that the EBA and ESMA assess the applicability and suitability of the existing regulatory framework to crypto-assets.\u003c/p\u003e\n\u003cp\u003eUltimately, this assessment found that while some crypto-assets \u003cem\u003ecould\u003c/em\u003e fall within the scope of EU legislation, effectively applying this to these assets was far from straightforward. At the same time, the EBA and ESMA underlined that – beyond EU legislation aimed at combating money laundering and terrorism financing – most crypto-assets fall outside the scope of EU financial services legislation and therefore are not subject to provisions on consumer and investor protection and market integrity, among others, although they give rise to these risks.\u003ca href=\"#_ftn1\"\u003e[1]\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003eMiCA (Markets in Crypto-assets) was proposed by the European Commission on September 24, 2020 with the primary objective of establishing a comprehensive and harmonised regulatory framework for crypto-assets, including cryptocurrencies, utility tokens, and stablecoins, within the EU. The proposal came with four general and related objectives:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003e\u003cstrong\u003eLegal certainty\u003c/strong\u003e - develop a sound legal framework, clearly defining the regulatory treatment of all crypto-assets that are not covered by existing financial services legislation.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eSupport innovation\u003c/strong\u003e - promote the development of crypto-assets and the wider use of Distributed Ledger Technology (DLT) via a safe and proportionate framework to support innovation and fair competition.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eInvestor protection\u003c/strong\u003e - crypto poses many of the same risks as more familiar financial instruments, these must be addressed with the same rigour as with traditional financial markets.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eFinancial stability\u003c/strong\u003e - Crypto-assets are continuously evolving. While some have a quite limited scope and use, others, such as the emerging category of ‘stablecoins’, have the potential to become widely accepted and potentially systemic.\u003c/li\u003e\n\u003c/ol\u003e\n\u003ch2 id=\"what-does-mica-mean-for-firms-trading-crypto-assets\"\u003eWhat does MiCA mean for firms trading crypto assets?\u003c/h2\u003e\n\u003cp\u003eMiCA aims to safeguard investors through enhanced transparency and the establishment of a comprehensive framework for issuers of digital assets and service providers including trading venues. This framework includes adherence to anti-money laundering and market abuse regulations, aligning the crypto industry to the EU’s broader regulatory frameworks including the EU Market Abuse Regulation (MAR) and MiFID II.\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/mica-diagram.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eFigure 1 - Timeline for MiCA implementation\u003c/strong\u003e\u003c/p\u003e\n\u003ch3 id=\"aml--kyc\"\u003eAML \u0026amp; KYC\u003c/h3\u003e\n\u003cp\u003eMiCA requires that firms engaged in crypto asset activities establish robust anti-money laundering (AML) and know your customer (KYC) processes. These processes, which were previously considered nice to have, are now mandatory for operating within the EU.  CASPs will be obligated to conduct due diligence on all clients, including verifying their identities, ensuring they are not sanctioned individuals, and storing personal and Money Laundering/Terrorist Financing prevention data.\u003c/p\u003e\n\u003cp\u003eThe need for robust customer due diligence is made greater by the introduction of the revised Transfer of Funds Regulation in parallel with MiCA. TFR aims to implement the Financial Action Task Force’s (FATF’s) Recommendation 16 (Travel Rule) to virtual asset transfers involving European CASPs. In these cases, information on the source and beneficiary of the asset must “travel” with the transaction. This information includes data pertaining to the client\u0026rsquo;s identity (name, address, date of birth, place of birth, etc.) as well as proof that the customer is \u003cem\u003enot\u003c/em\u003e a sanctioned individual.\u003c/p\u003e\n\u003ch3 id=\"market-abuse\"\u003eMarket Abuse\u003c/h3\u003e\n\u003cp\u003eMiCA, the Markets in Crypto-assets Regulation, introduces a set of rules specifically addressing market abuse in the crypto asset industry. The market abuse rules under MiCA apply to all individuals engaged in actions related to crypto-assets admitted to trading platforms authorised under MiCA or crypto-assets that have sought admission to trading. These rules closely resemble the established framework of the Market Abuse Regulation (MAR) in traditional finance, providing a familiar grounding for trading firms:\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eDisclosure of Inside Information and Insider Dealing\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eMiCA mandates that crypto asset issuers publicly disclose inside information related to their company and tokens in a timely and widespread manner. Inside information refers to data that can significantly impact the value of crypto assets. While issuers may delay the disclosure in certain circumstances to protect their legitimate interests, such delays should not mislead the public and confidentiality must be ensured.\u003c/p\u003e\n\u003cp\u003eIn other cases, where normal procedures and channels are not used, the disclosure of inside information is not authorised. And MiCA otherwise strictly prohibits insider dealing, which involves using undisclosed inside information for personal trading or recommending investment actions to others.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eMarket Manipulation\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe unique characteristics of distributed ledger technology, coupled with the volatility of prices and high ownership concentration in the crypto asset markets, make these instruments particularly susceptible to manipulative practices. MiCA addresses these practices, such as distorting demand and supply signals or disseminating false or misleading information about crypto assets. This includes activities like \u0026ldquo;pump and dump\u0026rdquo; schemes and unfair trading techniques.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eImpacts on firms\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eTrading firms involved in crypto asset activities will need to adapt their practices and implement measures to comply with MiCA\u0026rsquo;s market abuse rules, as non-compliance can lead to significant sanctions. These include orders for restitution, suspension or withdrawal of crypto asset service providers’ (CASPs\u0026rsquo;) authorisations, bans on responsible individuals, and substantial administrative sanctions.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSystems and Controls\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFirms will need to establish robust systems and controls to detect and prevent market abuse. Given the evolving nature of the crypto market and the innovative techniques employed by bad actors, these systems may need to be sophisticated and adaptable. They should be capable of monitoring and analysing a wide range of market data to identify any suspicious activities or patterns that may indicate market manipulation or insider trading.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSuspicious Transactions Reporting\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eMiCA also imposes reporting obligations on CASPs. They are required to report any suspicious transactions or orders to the relevant authorities. This reporting requirement aims to enhance market surveillance and facilitate early detection of potential market abuse.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eRecord keeping\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eIn addition to reporting, MiCA emphasises the importance of comprehensive record-keeping. Firms must maintain accurate and complete records of all orders, transactions, and communications related to their crypto asset activities. This includes records of client interactions, trade details, and relevant market data. Firms should implement secure and accessible systems for organising and retrieving these records, ensuring they are readily available upon request.\u003c/p\u003e\n\u003ch2 id=\"the-future-of-crypto-regulation\"\u003eThe future of crypto regulation\u003c/h2\u003e\n\u003cp\u003eMiCA introduces a harmonised digital asset regulatory framework to the European Union, representing a huge step forward compared to the current fragmented regulatory landscape across member states. In terms of what this means for the future, as well as the rest of the world, that’s difficult to say, but a clear appetite from regulators across the globe to stifle market abuse is clear to see, and in a broader sense, crypto regulation supports regulators mission to crackdown on market abuse - highlighted by the FCA’s recent \u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-73\"\u003eMarket Watch 73\u003c/a\u003e and past enforcement trends illustrating an increasing regulatory focus on market abuse globally.\u003c/p\u003e\n\u003cp\u003eWith that in mind, it is likely that other jurisdictions will follow the EU’s lead and attempt to establish more uniform rules for the digital asset industry. It is therefore essential for any firm offering digital asset services to future proof their operations in preparation for more stringent regulatory oversight. Practically speaking, this involves employing the right blend of people, processes and technology to ensure proactive risk mitigation in the face of regulatory headwinds.\u003c/p\u003e\n","date_published":"2023-20-11T12:00:00+0000"},{"title":"Market Watch 75: The market soundings procedure","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/market-watch-75-the-market-soundings-procedure/","summary":"\u003ch2 id=\"fca-releases-market-watch-75\"\u003e\u003cstrong\u003eFCA Releases Market Watch 75\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe FCA’s \u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-75\"\u003elatest Market Watch Newsletter\u003c/a\u003e puts the spotlight on the market soundings procedure. The regulator shares its observations about developments around market soundings since the publication of Market Watch \u003ca href=\"https://www.fca.org.uk/publication/newsletters/marketwatch-51.pdf\"\u003e51\u003c/a\u003e and \u003ca href=\"https://www.fca.org.uk/publication/newsletters/market-watch-58.pdf\"\u003e58\u003c/a\u003e, and highlights the need for firms to adhere to regulations around the disclosure of inside information under the UK Market Abuse Regulation’s Market Soundings Regime \u003c/p\u003e\n\u003ch2 id=\"understanding-the-market-soundings-procedurenbsp\"\u003e\u003cstrong\u003eUnderstanding the market soundings procedure\u003c/strong\u003e \u003c/h2\u003e\n\u003cp\u003eMarket soundings are a vital part of the pre-deal research process. They provide a structured way for issuers, investment banks, and other authorised parties to gauge investor interest in a potential transaction, such as a new issuance of securities or a corporate takeover. Market soundings allow market participants to assess market conditions, demand, and investor sentiment, contributing to the optimisation of pricing and risk management.\u003c/p\u003e\n\u003cp\u003eThe UK Market Abuse Regulation (UK MAR), which lays down the regulatory framework for preventing market abuse and insider dealing, contains provisions specifically related to market soundings. These provisions - referred to as the UK MAR Market Soundings Regime - are designed to facilitate the legitimate disclosure of inside information by Disclosing Market Participants (DMPs).\u003c/p\u003e\n\u003ch3 id=\"impact-on-inside-information-disclosure\"\u003e\u003cstrong\u003eImpact on inside information disclosure\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe UK MAR Market Soundings Regime lays out a series of requirements which DMPs must follow in order to legitimately disclose inside information as part of the market sounding process, including: \u003c/p\u003e\n\u003col\u003e\n\u003cli\u003eAssessing and recording whether a market sounding will involve disclosing inside information \u003c/li\u003e\n\u003cli\u003eProducing standardised procedures and scripts for communications with Market Sounding Recipients (MSRs) during market soundings \u003c/li\u003e\n\u003cli\u003eGetting MSRs’ consent to receive a market sounding and inside information \u003c/li\u003e\n\u003cli\u003eInforming MSRs that they are prohibited from using the information to trade or attempt to trade relevant instruments \u003c/li\u003e\n\u003cli\u003eMaking and maintaining a record of all the communications with, and all the information given to, MSRs \u003c/li\u003e\n\u003c/ol\u003e\n\u003ch3 id=\"independent-assessment-of-inside-information-by-msrs\"\u003e\u003cstrong\u003eIndependent assessment of inside information by MSRs\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe regulator also makes the point that MSRs must independently assess if they possess inside information from the market sounding which would prohibit them from trading. To help MSRs in reaching this conclusion, the FCA has directed firms  towards the ESMA’s \u003ca href=\"https://www.handbook.fca.org.uk/L3G/SR/2016-1477_mar_guidelines_-_market_soundings.pdf\"\u003eMarket Sounding Guidelines\u003c/a\u003e which provide further insights into the arrangements by which Market Sounding Recipients (MSRs) should receive, protect, and handle inside information. These include:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003e\u003cstrong\u003eIndependent Assessment\u003c/strong\u003e: MSRs must independently assess whether they possess inside information, taking into account both the DMP’s assessment and any other information available to the MSR.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eRecording of market soundings\u003c/strong\u003e: MSRs must record the market soundings they receive as well as their inside information assessments\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eNeed-to-Know Basis\u003c/strong\u003e: MSRs should only disseminate information on a \u0026ldquo;need-to-know\u0026rdquo; basis, meaning they should receive only the information necessary for their legitimate business purposes.\u003c/li\u003e\n\u003c/ol\u003e\n\u003ch2 id=\"minimising-the-risks-of-insider-dealing-and-unlawful-disclosure\"\u003e\u003cstrong\u003eMinimising the risks of insider dealing and unlawful disclosure\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe regulator claims that there have been many observed cases where MSRs have traded the relevant financial instruments after the DMP has initially sought their consent to receive inside information, but before the DMP has disclosed the inside information. In these instances, it is possible that MSRs would be able to identify the financial instruments referred to before they consent to receiving and protecting the inside information contained in the market soundings, allowing them to trade said instruments with an unfair advantage. \u003c/p\u003e\n\u003cp\u003eIn these cases, it is especially important that MSRs follow the above steps to independently assess whether or not they possess inside information before trading. \u003c/p\u003e\n\u003cp\u003eTo minimise the risk of insider dealing and unlawful disclosure, the FCA argues that DMPs should take particular care when making soundings on financial instruments that have few actors and where potential external information could reasonably be used to identify the relevant financial instrument. They should also attempt to limit the information shared with MSRs during the sounding process or tailor the information they plan to give so that they do not inadvertently disclose inside information.\u003c/p\u003e\n\u003cp\u003eTo help maintain oversight of the risk of unlawful disclosure and insider trading, a trade surveillance system with a watch list functionality is next to essential. \u003ca href=\"/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003eTZ Trade Surveillance\u003c/a\u003e provides users with watch list functionality which allows users to monitor all staff members with access to inside information. This feature also identifies instruments to which this inside information relates.  \u003c/p\u003e\n\u003cp\u003eAny trading undertaken in these instruments by persons on this list will be flagged for further review, allowing you to ensure that the risk of insider dealing is minimised. \u003c/p\u003e\n\u003cp\u003eFor more information on our watch list and insider list functionality, \u003ca href=\"https://eflowglobal.com/contact-us/\" target=\"_blank\" rel=\"noopener\"\u003eget in touch\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2023-08-11T00:00:00+0000"},{"title":"Compliance 4.0: Migrating from legacy to Regtech systems","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/migrating-from-legacy-to-regtech-systems/","summary":"\u003ch1 id=\"making-the-regtech-switch\"\u003eMaking the Regtech switch\u003c/h1\u003e\n\u003cp\u003eLooking back, what became known as \u0026ldquo;Big Bang\u0026rdquo; lit the blue touch paper to historic changes in share trading in London. There were similar seismic shifts in mainland Europe, the US, the Far East and further afield. Gone were the days of the old pit-style trading floor, replaced by vast computerised trading systems which brought investment to the masses. While these were monumental changes, we have since seen global stock markets and regulatory frameworks develop into structures which are unrecognisable today.\u003c/p\u003e\n\u003cp\u003eThis has created several challenges for financial institutions providing investment services across a growing number of markets and traded instruments. \u003c/p\u003e\n\u003ch2 id=\"regulatory-reporting-solutions\"\u003e\u003cstrong\u003eRegulatory reporting solutions\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eGone are the days of light-touch regulation and the effective self-policing of the financial services industry. These have been replaced by an ever-expanding regulatory system, with new regulations emerging on a regular basis that have to cope with lightning fast innovation and evolving customer demands. As competition continues to increase, this puts enormous pressure on the resources of financial service institutions. \u003c/p\u003e\n\u003ch2 id=\"external-drivers-of-increased-compliance-costs\"\u003e\u003cstrong\u003eExternal drivers of increased compliance costs\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eA recent report by LexisNexis cast an interesting light on the ever-increasing cost of compliance, prompting many to look towards new and innovative regulatory compliance solutions. In order of importance, the external drivers include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eIncreasing financial crime regulation/regulatory expectations\u003c/li\u003e\n\u003cli\u003eEvolving criminal threat\u003c/li\u003e\n\u003cli\u003eOverall cost of doing business\u003c/li\u003e\n\u003cli\u003eIncrease in data privacy requirements\u003c/li\u003e\n\u003cli\u003eCustomer demand\u003c/li\u003e\n\u003cli\u003eImpact of geo-political and socio-economic events\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eExpanding regulatory expectations and the fundamental requirement of operational efficiency in preserving suppressed profit margins are fuelling the need to continue upgrading and adapting legacy compliance systems.\u003c/p\u003e\n\u003ch2 id=\"regtech-revolution\"\u003e\u003cstrong\u003eRegtech revolution\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThe global Regulatory Technology market is forecast to be worth $28.83 billion by 2029, growing at a rate of 17.55% CAGR between 2023 and 2029. This is revolutionising how we monitor regulations and adhere to compliance in the investment world. Demand for cutting-edge regulatory compliance solutions has been influenced by the following:\u003c/p\u003e\n\u003ch3 id=\"impact-of-the-2008-global-financial-crisis\"\u003e\u003cstrong\u003eImpact of the 2008 global financial crisis\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe 2008 global financial crisis exposed a lack of joined-up regulatory control, a need for real time monitoring across multiple markets, tighter risk controls as a global industry and the requirement for innovative, automated technology to facilitate this. \u003c/p\u003e\n\u003ch3 id=\"technological-advances-and-consumer-demand\"\u003e\u003cstrong\u003eTechnological advances and consumer demand\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eIntegrating AI and machine learning into RegTech has led to compliance systems that can identify potential issues, learn for themselves, and adapt to new challenges.  However, alongside these advancements, there is a critical need to address the \u0026lsquo;black box\u0026rsquo; nature of AI/ML systems to satisfy explainability requirements set forth by regulators. \u003c/p\u003e\n\u003cp\u003eConsumers - and regulators on their behalf - are not only demanding greater transparency and protection but also require that the decision-making processes of AI systems be understandable and accountable. This ensures that compliance systems are not only effective but also aligned with regulatory standards that mandate clarity over the algorithms\u0026rsquo; inner workings.\u003c/p\u003e\n\u003ch3 id=\"lack-of-collaboration-and-fragmented-regulation\"\u003e\u003cstrong\u003eLack of collaboration and fragmented regulation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eHistorically, stock markets were fragmented, but now we have a global investment market open for business 24/7. Unfortunately, global integration has not yet occurred in the areas of regulation and compliance, creating jurisdictional complexities. This has increased the cost of reporting and compliance systems for companies with international operations, many operating several country-specific legacy systems to fulfil the same function. \u003c/p\u003e\n\u003ch3 id=\"ineffectiveness-of-traditional-compliance-management-systems\"\u003e\u003cstrong\u003eIneffectiveness of traditional compliance management systems\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eSuch is the fast-moving pace of regulatory technology that traditional compliance management systems of years gone by now need to be updated. This not only reduces their effectiveness but is also having an impact on client confidence.\u003c/p\u003e\n\u003ch3 id=\"growing-importance-of-adaptive-flexible-compliance-management-systems\"\u003e\u003cstrong\u003eGrowing importance of adaptive, flexible compliance management systems\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eCompliance management systems are one of the critical defences against fraud and market abuse. People are another, of course, but they must be adequately supported by the tech stack. This will, of course, be no surprise but as a consequence, companies failing to adhere to the latest regulatory changes face potentially huge fines and penalties. Tackling evolving, shifting problems with static solutions exposes a business to undue risk.\u003c/p\u003e\n\u003ch2 id=\"legacy-compliance-systems-a-modern-day-millstone\"\u003e\u003cstrong\u003eLegacy compliance systems: A modern-day millstone\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eLegacy compliance systems have become a modern-day millstone around the neck of many financial institutions. Firms often underestimate the costs of maintaining legacy systems, and overestimate the disruption and cost of migration to new more flexible, intelligent solutions.\u003c/p\u003e\n\u003cp\u003eBut what could motivate a transition?\u003c/p\u003e\n\u003ch3 id=\"rising-compliance-costs-and-challenges\"\u003e\u003cstrong\u003eRising compliance costs and challenges\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eGlobal financial services companies are experiencing an annual increase of 7% in compliance costs. In an ultra-competitive market, where it can be challenging to redirect resources, this places enormous pressure on staff, productivity and margin.\u003c/p\u003e\n\u003ch3 id=\"resource-intensive-approach\"\u003e\u003cstrong\u003eResource intensive approach\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eMany companies using legacy compliance systems have no choice but to increase their staff count while also looking to outside consultants to provide an independent audit. A highly labour-intensive approach, this is costly and ultimately unviable going forward. It is estimated that the \u003ca href=\"https://accountingservicesforbusiness.co.uk/true-cost-of-an-employee-calculator/\"\u003etrue cost of employment\u003c/a\u003e is upwards of 1.7 times a person’s annual basic salary. This has prompted a significant increase in those searching for innovative regulatory reporting solutions.\u003c/p\u003e\n\u003ch3 id=\"inefficient-processes\"\u003e\u003cstrong\u003eInefficient processes\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe wide-ranging use of electronic scanners to gather information from physical documents and electronic files has replaced many of the manual actions associated with legacy compliance processes. While dependence on manual processes is much lower today, this approach is prone to human error, which can be costly.\u003c/p\u003e\n\u003ch3 id=\"manual-processing-and-analysis-of-regulatory-documents\"\u003e\u003cstrong\u003eManual processing and analysis of regulatory documents\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThere’s wide variation in the application of man versus machine when processing trade surveillance documentation across Tier Two institutions. Manual processing is inefficient enough for domestic only firms. For globally-focussed institutions, where the inefficiencies of manual analysis are compounded, this approach just isn’t serving the business effectively. \u003c/p\u003e\n\u003ch3 id=\"uncertainty-and-surveillance-gaps\"\u003e\u003cstrong\u003eUncertainty and surveillance gaps\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe greater the size and the more disparate the team involved in the compliance chain, the more potential there is for human error, which creates uncertainty and potential compliance gaps. This can also impact skilled staff, who are often overworked and under constant pressure. Indeed, an automated monitoring system by its very nature will systematically identify and close gaps. \u003c/p\u003e\n\u003ch3 id=\"audit-and-regulatory-findings\"\u003e\u003cstrong\u003eAudit and regulatory findings\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eData shows that those who rely on manual compliance processes are more at risk of audit and exam findings, supervisory rulings and enforcement actions. It is not only the pressure on finances which can impact the company, but perhaps more importantly, the reputational damage can be difficult to rectify.\u003c/p\u003e\n\u003ch2 id=\"challenges-with-legacy-compliance-software\"\u003e\u003cstrong\u003eChallenges with legacy compliance software\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eThose who are persevering with legacy compliance software will face many challenges in the future regarding reliability, compatibility and the ever-growing cost of IT additions. If your systems are optimised for today\u0026rsquo;s digital, cloud computing environment, it will become easier to keep up-to-date.\u003c/p\u003e\n\u003ch3 id=\"lack-of-specialisation\"\u003e\u003cstrong\u003eLack of specialisation\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eMany older compliance packages in use today were created for multiple industries and are bereft of specialist knowledge. This one size fits all approach is incompatible with the modern-day financial industry compliance/regulatory structure. \u003c/p\u003e\n\u003cp\u003eIn today\u0026rsquo;s regulatory environment, the question has evolved beyond \u0026lsquo;do you have a system in place?\u0026rsquo; to \u0026lsquo;how effective is that system in relation to your specific trading activity and style?\u0026rsquo; The effectiveness of compliance solutions is now under greater scrutiny, with a focus on their adaptability to the unique operational needs and the intricacies of individual trading strategies.\u003c/p\u003e\n\u003ch3 id=\"retrofitting-challenges\"\u003e\u003cstrong\u003eRetrofitting challenges\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eWhile some of the traditional GRC systems have undertaken retrofitting to address modern-day challenges, it isn\u0026rsquo;t easy to retain optimisation and efficiency going forward. Many older systems are incompatible with automatic updates and cloud-based functionality, removing much of their value to companies and providing a drag on resources. \u003c/p\u003e\n\u003cp\u003eFurthermore, even cloud-based solutions that are built from scratch can fall by the wayside. As the regulatory landscape evolves, these systems often require updates or reconfigurations, leading to a situation where all clients are queued behind each other, waiting for critical changes. This delay can result in compliance solutions that are outdated by the time they are implemented, failing to keep pace with the rapid evolution of regulatory requirements.\u003c/p\u003e\n\u003ch2 id=\"what-are-the-opportunities\"\u003e\u003cstrong\u003eWhat are the opportunities?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eAs compliance and regulatory obligations continue to increase, the remit of inhouse compliance teams looks set to both grow and take on ever greater operational relevance. Consequently, utilising cutting-edge technology to streamline and reduce the cost of compliance has many benefits. These include:-\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eLess capex and lower running costs \u003c/li\u003e\n\u003cli\u003eReduced IT costs as you’re not layering additional processes onto legacy systems\u003c/li\u003e\n\u003cli\u003eSignificant reduction in manual work\u003c/li\u003e\n\u003cli\u003eEnhanced monitoring and reporting will improve compliance efficiency\u003c/li\u003e\n\u003cli\u003eLess time spent hiring and training staff\u003c/li\u003e\n\u003cli\u003eAutomated regulatory/compliance updates\u003c/li\u003e\n\u003cli\u003eEnhanced flexibility and options to personalise overall packages\u003c/li\u003e\n\u003cli\u003eMaintained and improved compliance record\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eAs a natural consequence, the enhancement of your company\u0026rsquo;s reputation due to improved compliance will directly feed into commercial benefit.\u003c/p\u003e\n\u003ch2 id=\"what-types-of-solutions-are-available\"\u003e\u003cstrong\u003eWhat types of solutions are available?\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eRegulatory technology solutions develop at a rapid pace in response to emerging challenges. An area that has attracted significant attention is transaction reporting and trade surveillance and is, of course, our specialism. In theory, the solutions are relatively straightforward, but in practice, they incorporate detailed analysis and testing against similar trading environments. The eflow suite of services includes several elements, such as:\u003c/p\u003e\n\u003ch3 id=\"trade-surveillance-for-market-abuse\"\u003e\u003cstrong\u003eTrade surveillance for market abuse\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThis package is not only compatible with regulations across the globe, from the FCA, SEC, FINRA, MAS, regulators under ESMA, to the AMF, but it is also designed with adaptability in mind to accommodate the ever-changing landscape of global compliance requirements. \u003c/p\u003e\n\u003cp\u003eIt processes trading on and off exchange data from over 250 global exchanges and many other sources. Our solution rigorously tests this data against 40 different forms of market abuse, ensuring a comprehensive surveillance scope. Upon detection, suspicious trades are flagged, facilitating a swift review process. The system\u0026rsquo;s advanced analytics and reporting capabilities allow for efficient processing and reporting of these activities as required by the relevant authorities. \u003c/p\u003e\n\u003ch3 id=\"best-execution-and-transaction-cost-analysis\"\u003e\u003cstrong\u003eBest execution and transaction cost analysis\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eAgain compliant with global regulations, this service is a cornerstone for any compliance department. It enriches uploaded trade data with insights from numerous exchanges and compares it against industry benchmarks. Should a trade deviate from expected parameters, it is flagged for further analysis, enabling the production of detailed TCA reports that highlight areas requiring attention.\u003c/p\u003e\n\u003ch3 id=\"transaction-reporting\"\u003e\u003cstrong\u003eTransaction reporting\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eeflow\u0026rsquo;s transaction reporting solution elevates a firm’s regulatory processes by offering in-built exception management and full reconciliation capabilities within its user interface. This approach streamlines the correction process, allowing firms to directly amend and reconcile trades, which subsequently enhances operational efficiency. The system ensures accuracy and provides a complete audit trail for every action taken, simplifying compliance and reducing the risk of reporting errors. With eflow, firms receive a comprehensive package that not only identifies discrepancies but also facilitates their immediate resolution, all within a single, efficient platform.\u003c/p\u003e\n\u003ch3 id=\"ecomms-surveillance\"\u003e\u003cstrong\u003eeComms surveillance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eeflow’s \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eeComms surveillance system\u003c/a\u003e is highly adept at sifting through the complexities of both structured and unstructured data, providing a comprehensive view of various communication channels and enabling informed decision-making. \u003c/p\u003e\n\u003cp\u003eBy capturing the full spectrum of electronic interactions, including those between clients, advisers and staff, the platform highlights not just the content, but also the intent and context surrounding each trade. This deep analysis extends beyond simple keyword triggers, employing advanced algorithms to detect anomalies and patterns that are indicative of suspicious behaviour.\u003c/p\u003e\n\u003cp\u003eThe system\u0026rsquo;s robust linkage capabilities draw meaningful connections between communication data and trade activity, painting a clear picture of each transaction\u0026rsquo;s background. This holistic approach is crucial for identifying and documenting potential compliance issues, ensuring that firms can act on the most accurate and complete information available.\u003c/p\u003e\n\u003cp\u003eRecord-keeping is an integral part of this surveillance service, with the platform maintaining detailed logs of all communications and actions taken. This not only aids in immediate issue resolution but also ensures long-term compliance with regulatory record-keeping requirements.\u003c/p\u003e\n\u003cp\u003eeflow\u0026rsquo;s regulatory compliance platform has been engineered with scalability and adaptability at its core. It has been built on a robust operating system that offers scalable solutions that meet the diverse needs of our clients, while its cloud-based infrastructure is designed for agility. \u003c/p\u003e\n\u003cp\u003eThis approach ensures that as regulatory requirements evolve, updates can be deployed rapidly and seamlessly across the platform. In doing so, the platform enables firms to continuously align themselves with current regulations, eliminating the need for costly and time-consuming custom software developments. With eflow, clients benefit from a compliance system that is comprehensive, up-to-date, and scalable, ensuring they can efficiently adapt to the ever-changing regulatory environment.\u003c/p\u003e\n\u003ch2 id=\"bridging-the-gap\"\u003e\u003cstrong\u003eBridging the gap\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eFor many institutions, the theoretical benefits of modern-day regulatory compliance solutions can be overshadowed somewhat by concerns about the transition to a new system. This is a short-term outlook to long-term changes in the regulatory and compliance of financial services. \u003c/p\u003e\n\u003cp\u003eThere are many issues to take into consideration when looking at a switch from legacy systems to a sophisticated tech-driven approach:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eAudit and risk assessment\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe first step in transitioning to a new system is to audit and risk assess your current compliance tech stack and processes. This will give you the opportunity to compare and contrast against new tech-based regulatory platforms with less manual operations.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eCost of maintaining and updating\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eTo put this into context, in 2020 global financial services companies spent an estimated $180 billion on compliance operations. The average global split of compliance costs was 57% labour, 40% technology and 3% “other” factors. This highly labour intensive approach saw global financial institutions spend nearly $321 billion extra on compliance enforcement actions between 2008 and 2016.\u003c/p\u003e\n\u003cp\u003eThe outcome of this analysis as it relates to your firm would make it worth the time investment alone. \u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eIdentifying gaps\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eOne serious issue with legacy compliance and regulatory systems is the fact that many were built to work on a stand-alone silo basis. Separate from other departments it has proven difficult to align these legacy systems with regulatory demands, in order to address institutional reporting obligations. Consequently, many gaps have emerged over the years which have increased compliance risks and proved expensive to address.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eResearch new solutions\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eRegardless of the priorities which emerge from your audit, there will be a ready made solution amongst the plethora of options. The ability to centrally update systems for future regulatory and compliance changes ensures that all financial institutions are immediately working under their new obligations. The transition process is now a well-worn path, straightforward with flexible data transfer and back testing to confirm accuracy.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003ePlan the switch over\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eRegardless of the complexity of the transition, the ease with which a migration - phased or otherwise - is able to be completed will surprise most. The incoming provider will be pivotal in taking the strain off your internal resource.\u003c/p\u003e\n\u003ch2 id=\"summary\"\u003e\u003cstrong\u003eSummary\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eWhen looking at the latest regulatory compliance solutions, it is essential to appreciate what they offer today and what they can provide tomorrow. The element of flexibility with these new systems is groundbreaking; the ability to extract and manipulate data is priceless, as is the ability to identify and report trades of interest.\u003c/p\u003e\n\u003cp\u003eWe know that legacy systems cost the industry hundreds of millions of pounds a year, diverting time and resources to areas which have moved onto a new, more efficient platform. Creating add-ons and sticky plasters to extend the life of legacy systems is counterproductive and more costly in the long term.\u003c/p\u003e\n\u003cp\u003eThe practical and financial benefits of migrating from a legacy compliance system to a cutting-edge service are well-documented. If you are considering updating your compliance system, get in touch to \u003ca href=\"https://eflowglobal.com/book-a-demo/\"\u003ediscuss the options\u003c/a\u003e available.\u003c/p\u003e\n","date_published":"2023-07-11T08:00:00+0000"},{"title":"Market conduct in the US: An evolving regulatory landscape","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/market-conduct-in-the-us-an-evolving-regulatory-landscape/","summary":"\u003ch1 id=\"regulatory-change-in-the-us\"\u003e\u003cstrong\u003eRegulatory change in the US\u003c/strong\u003e\u003c/h1\u003e\n\u003ch2 id=\"background\"\u003e\u003cstrong\u003eBackground\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eOver the past few decades, the US financial sector has witnessed unprecedented growth, diversification, and complexity. As markets expanded, so too did the challenges associated with ensuring transparency, fairness, and investor protection. Historically, while regulations played a crucial role in maintaining market integrity, certain gaps and grey areas increased the potential for abuse and manipulation. \u003c/p\u003e\n\u003cp\u003eThe Trump era witnessed a push for deregulation in many sectors, including finance. However, the winds of change have been blowing hard since Gary Gensler took over the helm at the SEC. Gensler\u0026rsquo;s tenure has seen a \u003ca href=\"https://www.ft.com/content/413408f9-8c57-4420-ae44-19ccd06df0d0\"\u003eregulatory blitz\u003c/a\u003e, reminiscent of the agency\u0026rsquo;s response to the 2008 global financial crisis. With a whopping 47 rule proposals impacting market participants, many of which weren\u0026rsquo;t mandated by congressional legislation, Gensler’s approach signals a paradigm shift\u003c/p\u003e\n\u003cp\u003eThese changes serve as a clear call for market participants. The subsequent wave beckons firms to rethink their strategies and bolster their compliance infrastructures. As the SEC adapts to modern market dynamics and challenges, the era of laissez-faire seems to be on its way out, replaced by a new age of proactive oversight and diligence.\u003c/p\u003e\n\u003cp\u003eIn this blog, we explain and assess the impact of developments by the SEC under Gensler\u0026rsquo;s leadership:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003e\u003ca href=\"https://www.sec.gov/files/rules/final/2023/34-98202.pdf\"\u003eClosing the Oversight Gap\u003c/a\u003e: The New Regulatory Mandate for Proprietary Trading Firms\u003c/li\u003e\n\u003cli\u003eProposed “\u003ca href=\"https://www.sec.gov/files/rules/proposed/2022/34-96496.pdf\"\u003eRegulation Best Execution\u003c/a\u003e”\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"https://www.sec.gov/files/rules/final/2023/34-97656.pdf\"\u003eSecurity-Based Swap Rules\u003c/a\u003e\u003cbr\u003e\u003c/li\u003e\n\u003c/ol\u003e\n\u003ch2 id=\"three-key-developments\"\u003e\u003cstrong\u003eThree key developments\u003c/strong\u003e\u003c/h2\u003e\n\u003ch3 id=\"closing-the-oversight-gap-the-secs-new-regulatory-mandate-for-proprietary-trading-firms\"\u003e\u003cstrong\u003eClosing the oversight gap: The SEC\u0026rsquo;s new regulatory mandate for proprietary trading firms\u003c/strong\u003e\u003c/h3\u003e\n\u003ch4 id=\"overview\"\u003e\u003cstrong\u003eOverview\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eIn a significant move to strengthen market transparency and fairness, the US Securities and Exchange Commission (SEC) has broadened the oversight scope of the Financial Industry Regulatory Authority (FINRA). Historically, proprietary trading firms (PTFs) that conducted their trading activities solely on exchanges were exempt from the oversight of FINRA. This exemption was based on the understanding that these firms were trading exclusively on centralised exchanges where there was already a certain level of transparency and oversight. However, an evolution in trading behaviour has led to a situation where, despite participating in off-exchange activities, some PTFs are still operating under the original exemption - constituting a “regulatory gap”.\u003c/p\u003e\n\u003cp\u003eThe SEC’s amendments are set to remove this exemption, and thereby close the gap, compelling these firms to now register under the new regulations. The objective is clear: to bring previously unmonitored trading activities into the light, levelling the playing field across firms.\u003c/p\u003e\n\u003cp\u003eSEC Chair Gary Gensler underscored the importance of this measure, remarking, “Today [23 August 2023], a significant portion of broker-dealers participate in cross-exchange or off-exchange trading. Yet, they lean on an exemption from national securities association registration that pre-dates the cell phone era. This has carved out a regulatory void, where firms with monthly trading volumes amounting to hundreds of billions stand outside the national securities association oversight.”\u003c/p\u003e\n\u003ch4 id=\"what-does-this-mean-for-firms\"\u003e\u003cstrong\u003eWhat does this mean for firms?\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eAs PTFs transition from being registered solely with exchanges to falling under the purview of FINRA, several new requirements and responsibilities come into play. The most significant of these include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eCapital adequacy requirements:\u003c/strong\u003e FINRA has specific rules ensuring firms maintain sufficient capital. \u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eBest execution obligations:\u003c/strong\u003e FINRA mandates that broker-dealers ensure they provide the best execution for their customers\u0026rsquo; orders, even if it means routing them to different venues.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eComprehensive reporting and record-keeping:\u003c/strong\u003e Beyond just trading data, FINRA requires detailed reporting related to firm operations, sales practices, and customer interactions.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"secs-proposed-regulation-best-execution\"\u003e\u003cstrong\u003eSEC’s proposed “Regulation Best Execution”\u003c/strong\u003e\u003c/h3\u003e\n\u003ch4 id=\"overview-1\"\u003e\u003cstrong\u003eOverview\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eThe landscape of regulatory requirements for broker-dealers is on the cusp of transformation. The SEC has recently unveiled its proposed \u0026ldquo;Regulation Best Execution.\u0026rdquo; While best execution as a principle is not novel, the depth and breadth of this proposed regulation marks a significant shift. Here\u0026rsquo;s a closer look at what\u0026rsquo;s on the horizon:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eElevated due diligence\u003c/strong\u003e: Broker-dealers will be obligated to construct policies and procedures addressing best execution. This encompasses a meticulous assessment of market data, the characteristics of orders, and the balance between enhancing price and managing execution risk.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eStandardisation across security types\u003c/strong\u003e: The proposal institutes a cohesive best execution framework across diverse security types. \u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eRegular reviews and documentation:\u003c/strong\u003e Firms will be mandated to perform quarterly reviews of execution quality compared to other markets as well as an annual introspection of policies, presented to the governing body of the broker-dealer.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eExpanded recordkeeping:\u003c/strong\u003e Rule 17a-4 will now encompass additional record keeping obligations, ensuring firms maintain detailed records stretching back for a minimum of three years, including documentation of compliance with the best execution standard, especially for conflicted transactions.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch4 id=\"what-does-this-mean-for-firms-1\"\u003e\u003cstrong\u003eWhat does this mean for firms?\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eThe proposed regulation is consistent with existing FINRA and Municipal Securities Rulemaking Board (MSRB) best execution rules in some ways, but goes beyond them in imposing additional/more specific requirements in certain areas. This means even firms with best execution policies in place will need to ramp up their efforts to ensure compliance. \u003c/p\u003e\n\u003cp\u003eIn light of past enforcement issues surrounding best execution, including hefty fines and thematic review findings, this proposed regulation serves as both a reminder and a warning. Broker-dealers should proactively gauge the impact of the proposed regulation, refining existing policies and bracing for the incorporation of newer, more rigorous standards. \u003c/p\u003e\n\u003ch2 id=\"security-based-swap-rules\"\u003e\u003cstrong\u003eSecurity-based swap rules\u003c/strong\u003e\u003c/h2\u003e\n\u003ch4 id=\"overview-2\"\u003e\u003cstrong\u003eOverview\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eOn June 7 2023, the SEC adopted rules to prevent fraud in security-based swaps (SBS) and protect the autonomy of chief compliance officers (CCOs) for certain SBS entities. Rule 9j-1 targets fraud, manipulation, and insider trading linked to SBS, adding specificity to existing securities prohibitions. Key changes:\u003c/p\u003e\n\u003ch5 id=\"rule-9j-1\"\u003e\u003cstrong\u003eRule 9j-1\u003c/strong\u003e\u003c/h5\u003e\n\u003cul\u003e\n\u003cli\u003eClarifies misconduct related to SBS transactions.\u003c/li\u003e\n\u003cli\u003eDefines \u0026ldquo;purchases\u0026rdquo; and \u0026ldquo;sales\u0026rdquo; of SBS with added specificities.\u003c/li\u003e\n\u003cli\u003eExplicitly bars trading in an SBS with knowledge of material nonpublic information about the underlying security.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eAdditionally, Rule 15fh-4(c) safeguards the independence of CCOs at SBS entities by forbidding coercion or manipulation by entity personnel.\u003c/p\u003e\n\u003ch4 id=\"what-does-this-mean-for-firms-2\"\u003e\u003cstrong\u003eWhat does this mean for firms?\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eThese rules underscore the SEC\u0026rsquo;s objective to refine the securities-based swap (SBS) market\u0026rsquo;s integrity. Given its comprehensive coverage, firms must be proactive to ensure they remain compliant:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003ePolicies review\u003c/strong\u003e: Firms should revise their procedures and test their systems to ensure they prohibit and detect actions that appear manipulative, like hedging activities that might seem deceptive in SBS transactions.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eInformation barriers\u003c/strong\u003e: Establish stringent barriers between operational groups, such as lending and SBS trading teams, to deter potential manipulations.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eCCO role \u0026amp; resources\u003c/strong\u003e: Ensure Chief Compliance Officers (CCOs) are sufficiently resourced and their roles clearly defined to avoid potential conflicts and ensure effective compliance oversight.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"the-road-ahead\"\u003e\u003cstrong\u003eThe road ahead\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eUnder Gensler\u0026rsquo;s proactive leadership at the SEC, the US regulatory framework is rapidly evolving. This shift underscores the need for firms to leverage advanced technology. Firms must adopt technology that meticulously addresses specific market concerns like best execution while also being versatile enough to adapt to wider regulatory shifts, especially as transparency demands influence a wide range of areas such as record-keeping, periodic reviews, and reporting.\u003c/p\u003e\n","date_published":"2023-31-10T08:00:00+0000"},{"title":"EMIR reporting explained – what you need to know","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/emir-reporting-explained-what-you-need-to-know/","summary":"\u003ch1 id=\"an-overview-of-transaction-reporting-under-emir\"\u003eAn overview of transaction reporting under EMIR\u003c/h1\u003e\n\u003cp\u003eThe European Market Infrastructure Regulation (\u003cstrong\u003eEMIR\u003c/strong\u003e) requires firms that trade in financial derivative contracts to file detailed reports via a Trade Repository. This important regulatory framework was introduced in the wake of the 2007-2008 financial crisis to improve market transparency and control risk, but its complex provisions and technical language often make it hard for firms to fully understand their legal obligations.\u003c/p\u003e\n\u003cp\u003eThis guide provides a simple overview of EMIR and explains how firms can comply with its reporting requirements.\u003c/p\u003e\n\u003ch2 id=\"what-is-emir-reporting\"\u003eWhat is EMIR reporting?\u003c/h2\u003e\n\u003cp\u003eEMIR requires anyone involved in the trading of derivative contracts to report on the details of each trade. Reports are filed with Trade Repositories that collate the data and provide it to financial regulators who use it to monitor for systemic risks within the market.\u003c/p\u003e\n\u003ch3 id=\"what-counts-as-a-derivative-for-emir\"\u003eWhat counts as a derivative for EMIR?\u003c/h3\u003e\n\u003cp\u003eA derivative is a financial contract that is linked to the changing price of an underlying asset or a collection (basket) of several assets. This includes both exchanged-traded and over the counter (OTC) derivative transactions. Examples include futures contracts, credit default swaps, options contracts, and many contracts concerning commodities and foreign currency exchange (Forex or FX).\u003c/p\u003e\n\u003cp\u003eFor the purposes of EMIR, derivative contracts include:\u003c/p\u003e\n\u003cp\u003e· Financial derivatives that are settled either physically or in cash;\u003c/p\u003e\n\u003cp\u003e· Commodities derivatives that are traded on a regulated market and settled physically;\u003c/p\u003e\n\u003cp\u003e· Commodities derivatives that are settled in cash; and\u003c/p\u003e\n\u003cp\u003e· Commodities derivatives that are settled physically and share characteristics with other derivative financial instruments.\u003c/p\u003e\n\u003ch3 id=\"what-is-a-trade-repository\"\u003eWhat is a trade repository?\u003c/h3\u003e\n\u003cp\u003eA Trade Repository is an entity that collects and maintains central records of OTC derivatives. EMIR-compliant reports can only be made to repositories that are registered and approved by a national competent authority such as the UK’s Financial Conduct Authority (FCA). A list of the registered trade repositories that are permitted to operate under UK EMIR can be found on the \u003ca href=\"https://www.fca.org.uk/firms/trade-repositories\"\u003eFCA’s trade repository page\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/emir-graphic.jpg\" alt=\"Graphic giving overview of EMIR reporting\" title=\"EMIR Reporting Overview\"\u003e\u003c/p\u003e\n\u003ch2 id=\"who-has-to-submit-emir-reports\"\u003eWho has to submit EMIR reports?\u003c/h2\u003e\n\u003cp\u003eEMIR applies to all entities established in the EU or UK that enter into, modify, or terminate a derivative transaction. Counterparties from outside the EU may also be indirectly affected when trading with an EU entity. The Regulation identifies two key types of counterparties to a derivatives contract:\u003c/p\u003e\n\u003cp\u003e· \u003cstrong\u003eFinancial counterparties\u003c/strong\u003e – including banks, investment firms, insurers, and fund managers.\u003c/p\u003e\n\u003cp\u003e· \u003cstrong\u003eNon-financial counterparties\u003c/strong\u003e – all entities that do not provide financial services.\u003c/p\u003e\n\u003cp\u003eAny firm involved in the trading of derivative contracts may be required to submit reports in line with EMIR. In most cases, both counterparties (both the ‘buyer’ and the ‘seller’) must file a report for each trade. Notable exceptions to this rule include when:\u003c/p\u003e\n\u003cp\u003e· the parties have agreed for one to report on behalf of them both;\u003c/p\u003e\n\u003cp\u003e· either counterparty has delegated their reporting duties to a third party; or\u003c/p\u003e\n\u003cp\u003e· a trade is between a financial counterparty and a non-financial counterparty. In these cases, the financial counterparty is legally responsible to report on behalf of itself and the non-financial counterparty.\u003c/p\u003e\n\u003ch2 id=\"what-is-included-in-an-emir-report\"\u003eWhat is included in an EMIR report?\u003c/h2\u003e\n\u003cp\u003eEMIR reports typically contain 26 fields of counterparty data and 59 fields of additional data. The following data should be supplied at minimum for an EMIR transaction report to be compliant:\u003c/p\u003e\n\u003cp\u003e· \u003cstrong\u003eCounterparty data\u003c/strong\u003e – including their name, country of incorporation or domicile, and unique identifiers.\u003c/p\u003e\n\u003cp\u003e· \u003cstrong\u003eCommon data\u003c/strong\u003e – including the type of contract entered, its notional value, quantity traded, settlement date and time.\u003c/p\u003e\n\u003cp\u003eAt a more advanced level, \u003ca href=\"https://eflowglobal.com/tztr-emir-reporting/\"\u003eEMIR reporting\u003c/a\u003e also requires counterparties to report on the clearing of eligible OTC derivatives. It’s also necessary for entities to confirm any measures they have taken to reduce counterparty operational risks and credit risks.\u003c/p\u003e\n\u003ch2 id=\"what-are-my-emir-reporting-obligations\"\u003eWhat are my EMIR reporting obligations?\u003c/h2\u003e\n\u003cp\u003eAny entity involved in a derivative transaction must file a report by the deadline. Since 12 February 2014, this has been T+1 – which in plain terms means the day after the transaction was executed. It is also possible to report back-dated transactions (in a process known as back-loading) and these must be filed within 90 days after the reporting obligation first arises.\u003c/p\u003e\n\u003cp\u003eThere are three main ways to comply with EMIR reporting obligations:\u003c/p\u003e\n\u003cp\u003e· \u003cstrong\u003eReporting directly to a Trade Repository\u003c/strong\u003e - counterparties can monitor and report their own derivative transactions. Firms that choose this approach will generally need to develop robust internal controls and procedures to ensure they remain compliant with all relevant provisions of EMIR.\u003c/p\u003e\n\u003cp\u003e· \u003cstrong\u003eDelegating reporting to a counterparty\u003c/strong\u003e – agreements can be reached between counterparties for one to report on behalf of another.\u003c/p\u003e\n\u003cp\u003e· \u003cstrong\u003eDelegating reporting to a third-party\u003c/strong\u003e – EMIR allows firms to delegate reporting obligations to a third-party reporting solution such as \u003ca href=\"https://eflowglobal.com/tztr-regulatory-reporting/\"\u003eeflow’s TZTR software\u003c/a\u003e. Taking this approach can save on costs and internal resources while guaranteeing a consistently compliant approach to transaction reporting.\u003c/p\u003e\n\u003ch2 id=\"am-i-exempt-from-emir-reporting\"\u003eAm I exempt from EMIR reporting?\u003c/h2\u003e\n\u003cp\u003eIt is difficult to advise whether any one entity is exempt from EMIR reporting. In most cases, detailed legal guidance should be sought to determine whether you are required to file derivative transaction reports.\u003c/p\u003e\n\u003cp\u003eWhile a number of exemptions do exist, firms that deal in exempt transactions should continue to monitor trades and inform regulators if they become subject to reporting requirements.\u003c/p\u003e\n\u003ch3 id=\"intragroup-exemptions\"\u003eIntragroup exemptions\u003c/h3\u003e\n\u003cp\u003eEMIR Refit introduced an exemption from the reporting obligation for derivative contracts made between members of the same corporate group where at least one of the counterparties is a non-financial counterparty.\u003c/p\u003e\n\u003cp\u003eFor this exemption to be valid, both counterparties must be part of the same consolidated group and be subject to appropriate risk evaluation and control measures.\u003c/p\u003e\n\u003ch3 id=\"small-financial-counterparties\"\u003eSmall financial counterparties\u003c/h3\u003e\n\u003cp\u003eThe REFIT regulation also introduced a new class of entity – Small Financial Counterparties (SFCs). SFCs are potentially exempt from certain reporting requirements and not subject to clearing obligations. To qualify as a Small Financial Counterparty, firms must show that their annual aggregate month-end position across each asset class does not exceed the relevant clearing threshold.\u003c/p\u003e\n\u003cp\u003eFor more information about clearing thresholds, visit the \u003ca href=\"https://www.esma.europa.eu/policy-activities/post-trading/clearing-thresholds\"\u003eEuropean Securities and Markets Authority’s dedicated page\u003c/a\u003e.\u003c/p\u003e\n\u003ch3 id=\"individual-exemptions\"\u003eIndividual exemptions\u003c/h3\u003e\n\u003cp\u003eIndividuals are not required to report their derivative transactions or trades. In most cases, however, a financial counterparty will be involved in a transaction with an individual and so the legal responsibility for filing an EMIR report will fall to them.\u003c/p\u003e\n\u003ch2 id=\"what-are-the-penalties-for-emir-reporting\"\u003eWhat are the penalties for EMIR reporting?\u003c/h2\u003e\n\u003cp\u003eArticle 12 of EMIR provides for member states to apply penalties for infringements of reporting rules. These penalties are overseen by the national competent authority (NCA) of each country. The NCA in the UK is the Financial Conduct Authority (FCA) which has far-reaching powers to impose penalties without a maximum limit on fines.\u003c/p\u003e\n\u003cp\u003eIn 2017, the FCA fined investment management firm Merrill Lynch \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-fines-merrill-lynch-failing-report-transactions\"\u003emore than £34 million\u003c/a\u003e for reporting failures, showing just how high the stakes can be.\u003c/p\u003e\n\u003ch2 id=\"what-is-emir-refit\"\u003eWhat is EMIR Refit?\u003c/h2\u003e\n\u003cp\u003eEMIR REFIT refers to the European Commission’s Regulatory Fitness and Performance Programme (REFIT). This system is regularly used to review European legislation and to identify areas for improvement. The review process for EMIR began in 2015 and resulted in the passing of Regulation (EU) 2019/834 – also known as EMIR II or the REFIT Regulation.\u003c/p\u003e\n\u003cp\u003eMost of the new regulation’s provisions came into force on 17 June 2019, imposing reporting requirements on a wider class of counterparties including Alternative Investment Funds (AIFs) and Central Securities Depositories. The REFIT Regulation also clarified the status of smaller financial counterparties and introduced new Fair, Reasonable, Non-Discriminatory, and Transparent (FRANDT) requirements.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/emir-refit-flagship-reporting-regulation-after-brexit/\"\u003eRead our overview of the EMIR Refit Regulation to learn more.\u003c/a\u003e\u003c/p\u003e\n\u003ch2 id=\"does-emir-apply-after-brexit\"\u003eDoes EMIR apply after Brexit?\u003c/h2\u003e\n\u003cp\u003eAlthough the UK has now left the European Union, it did not officially do so until 31 January 2020. The EMIR Refit Regulation came into force on 17 June 2019, and so most of its provisions were transferred into UK domestic law by the \u003ca href=\"https://www.legislation.gov.uk/ukpga/2018/16/contents\"\u003eEuropean Union (Withdrawal) Act 2018\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eThis means that reporting requirements continue to apply even after Brexit. UK EMIR closely mirrors its European counterpart, but there are some changes that UK firms should know about. For one thing, firms established in the UK must now report all qualifying derivative transactions from after 1 January 2021 to a UK EMIR registered trade repository. Firms can no longer rely on their relationship with a sister company or group entity in the EEA to satisfy their reporting requirements, meaning they must develop their own transaction reporting capabilities.\u003c/p\u003e\n\u003ch2 id=\"simplified-transaction-reporting-and-emir-compliance\"\u003eSimplified transaction reporting and EMIR compliance\u003c/h2\u003e\n\u003cp\u003eEMIR reporting is complex and it can be difficult to remain compliant. Fortunately, the regulation allows for the appointment of third-party suppliers that can simplify the process and allow firms to stay on the right side of the regulators.\u003c/p\u003e\n\u003cp\u003eeflow’s TZTR software reduces the compliance burden of EMIR transaction reporting and could help you to avoid sizeable financial penalties. For more information, book a demo or \u003ca href=\"https://eflowglobal.com/contact-us\"\u003econtact eflow\u003c/a\u003e today.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e*Want more information on EMIR refit?\u003c/em\u003e \u003ca href=\"https://eflowglobal.com/emir-refit-what-you-need-to-know-and-what-you-need-to-do/\"\u003e\u003cem\u003eRead our latest blog post on the regulation here.\u003c/em\u003e\u003c/a\u003e\u003c/p\u003e\n","date_published":"2023-13-10T12:00:00+0000"},{"title":"TS Imagine announces strategic partnership with eflow, bolstering regulatory compliance capabilities","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/ts-imagine-announces-strategic-partnership-with-eflow-bolstering-regulatory-compliance-capabilities/","summary":"\u003ch1 id=\"ts-imagine-announces-strategic-partnership-with-eflow\"\u003eTS Imagine announces strategic partnership with eflow\u003c/h1\u003e\n\u003cp\u003e[13 September 2023] \u003c/p\u003e\n\u003cp\u003eTS Imagine, a leading global cross-asset provider of trading, portfolio, and risk management solutions for financial services organizations, is excited to unveil a strategic partnership with eflow, a prominent provider of regulatory compliance solutions for the industry.\u003c/p\u003e\n\u003cp\u003eThe partnership represents a significant step forward in TS Imagine\u0026rsquo;s commitment to enhancing its offerings for clients, bringing trade surveillance capabilities into its existing suite of execution, order, and portfolio management solutions. The strategic collaboration will allow mutual clients of TS Imagine and eflow to not only meet regulatory requirements, but also proactively safeguard against market abuse and effectively monitor communications.\u003c/p\u003e\n\u003cp\u003eTS Imagine\u0026rsquo;s TradeSmart OEMS product will highly benefit from the partnership, enabling seamless integration with eflow\u0026rsquo;s solutions across all asset classes, resulting in a comprehensive and streamlined workflow.  \u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eAlex Carteau, head of corporate development\u003c/strong\u003e at TS Imagine, says, \u0026ldquo;eflow\u0026rsquo;s reputation for innovation aligns with TS Imagine\u0026rsquo;s commitment to delivering cutting-edge technology and solutions to our clients. This partnership bolsters our ability to provide a wide range of surveillance and market abuse tools, enabling clients to monitor their trading behaviour throughout the day”.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eBen Parker, CEO and founder of\u003c/strong\u003e eflow says “In today\u0026rsquo;s fast-paced world, with constantly evolving regulatory landscapes and shifting customer demands, investing in compliance and regulatory technology is essential for financial services organizations. We at eflow look forward to working with TS Imagine as they continue to fulfill their commitment to clients”.  \u003c/p\u003e\n\u003cp\u003eRecently, eflow\u0026rsquo;s position in the market has been elevated, with recognition as one of the top 100 Most Innovative Companies in the field by Reg Tech 100.\u003c/p\u003e\n\u003cp\u003eTS Imagine\u0026rsquo;s TradeSmart platform is recognized for its comprehensive connectivity, featuring pre-certified connections to over 250 listed brokers and venues, in addition to broker algos. This robust network provides significant value for clients, enabling them to access a broad spectrum of trading opportunities and liquidity sources.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eENDS\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eAbout TS Imagine\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eTS Imagine delivers a best-in-class SaaS platform for integrated electronic front-office trading, portfolio management, and financial risk management tools to the buy-side and sell-side. Formed following the merger of TradingScreen and Imagine Software in 2021, TS Imagine innovates by drawing on nearly thirty years’ experience serving the world’s most sophisticated financial services firms through changing markets and a shifting regulatory landscape.\u003c/p\u003e\n\u003cp\u003eThe TS Imagine team is focused on developing technology that empowers its clients to succeed every day, in every asset class. TS Imagine employs the best technology talent, alongside former senior traders who understand first-hand their client’s pressure points and how to address them. This complementary expertise, unique to the industry, enables TS Imagine to dive deep in areas such as data science, automation, and development. As a result, clients can focus on what they do best: generating and protecting alpha within fast evolving markets.\u003c/p\u003e\n\u003cp\u003eBy offering a range of purpose-built solutions developed from the ground-up, TS Imagine technology has become an essential tool for the modern investor, working seamlessly across asset classes and geographies. With greater transparency, better efficiency, and infinite scalability, TS Imagine clients are empowered to circumvent distractions and avoid unnecessary tasks so they can maintain their focus on driving returns.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://www.tsimagine.com\"\u003ewww.tsimagine.com\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eAbout eflow\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFor over 20 years, eflow has been providing regulatory compliance solutions to the financial services industry. They currently service over 100 clients across 5 continents, providing both buy-side and sell-side firms with fast, efficient software designed to keep them compliant and competitive. Their offerings include \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance\u003c/a\u003e for market abuse, best execution and transaction cost analysis, transaction reporting and \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eeComms surveillance\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eeflow’s solutions are built with a promise of continued support and compliance. As regulations change, eflow’s regulatory compliance suite continuously updates with no disruption to existing client systems, ensuring compliance no matter what.\u003c/p\u003e\n\u003cp\u003eBoasting sophisticated data management and archiving, case management tools, cross-module integrations and dynamic testing powered by machine learning, the eflow compliance suite is a must-have for firms looking to reduce compliance risk.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://www.eflowglobal.com\"\u003ewww.eflowglobal.com\u003c/a\u003e \u003c/p\u003e\n","date_published":"2023-13-09T08:00:00+0000"},{"title":"Market Watch 74: An in-depth explanation","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/market-watch-74-an-in-depth-look/","summary":"\u003ch2 id=\"market-conduct-and-transaction-reporting-issues\"\u003eMarket conduct and transaction reporting issues\u003c/h2\u003e\n\u003cp\u003eThe UK’s Financial Conduct Authority (FCA) recently published their latest Market Watch 74. This particular newsletter describes the regulators recent supervisory observations regarding investment firms’ transaction reports. More specifically, this edition covers Regulatory Technical standards (RTS) \u003ca href=\"https://www.handbook.fca.org.uk/techstandards/MIFID-MIFIR/2017/reg_del_2017_590_oj/?view=chapter\"\u003e22\u003c/a\u003e and \u003ca href=\"https://www.handbook.fca.org.uk/techstandards/MIFID-MIFIR/2017/reg_del_2017_585_oj/?view=chapter\"\u003e23\u003c/a\u003e.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eRTS 22 refers to the Regulatory Technical Standards for the reporting of transactions to competent authorities (the FCA in this instance)\u003c/li\u003e\n\u003cli\u003eRTS 23 refers to the supply of financial instruments reference data - trading venues have to provide competent authorities with this financial instruments reference data for the purpose of transaction reporting.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eTransaction reports are critical in enabling the FCA to conduct effective market oversight. Within this Market Watch edition, the FCA recognises persisting issues relating to the completion of accurate and timely reports on the part of some firms.\u003c/p\u003e\n\u003ch3 id=\"reconciliations-and-breach-notifications\"\u003eReconciliations and breach notifications\u003c/h3\u003e\n\u003cp\u003eThe FCA is concerned that of the ~3,600 investment firms authorised under MiFID, only 745 accessed the FCA’s Market Data Processor (MDP) Entity Portal in 2022 and even fewer (345) submitted Error and Omission (E\u0026amp;O) forms. The FCA found that some firms were not aware of the MDP Entity Portal altogether, while others were relying on data extracts provided by approved reporting mechanisms (ARMs) to conduct their reconciliations. Firms are required to reconcile front-office records with data samples provided by the FCA under Article 15(3) of RTS 22. \u003c/p\u003e\n\u003cp\u003eIn the case of E\u0026amp;Os, Article 26(7) of UK MiFIR requires the reporting firm to void any incorrect reports and provide a corrected one. The FCA also reminds firms of Validation Rule 269 which automatically rejects transaction reports submitted over 5 years after the date of the trade. However, E\u0026amp;Os must still include details of when the issue first occurred and the number of affected transaction reports, even if this extends beyond 5 years.\u003c/p\u003e\n\u003ch3 id=\"identification-of-investment-and-execution-decision-makers\"\u003eIdentification of investment and execution decision makers\u003c/h3\u003e\n\u003cp\u003eArticle 8(2) and Article 9(4) of RTS 22 require firms to assign primary responsibility for investment or execution decision making to a particular individual, especially in cases where multiple people and/or algorithms are involved.\u003c/p\u003e\n\u003cp\u003eThe FCAs primary concern relates to firms’ which choose to delegate a member of senior management as the responsible party for executing decisions. Firms are encouraged to reconsider whether it is appropriate to assign responsibility to senior management who often have very limited practical involvement in investment or execution  decisions at a transactional level.\u003c/p\u003e\n\u003ch3 id=\"data-quality-issues\"\u003eData quality issues\u003c/h3\u003e\n\u003ch4 id=\"complex-trades\"\u003eComplex trades\u003c/h4\u003e\n\u003cp\u003eThe FCA have identified instances in which firms have submitted transaction reports for spread trades which do not conform to the \u003ca href=\"https://www.handbook.fca.org.uk/L3G/MIFID/2016-1452_guidelines_mifid_ii_transaction_reporting.pdf\"\u003eESMA transaction reporting guidelines\u003c/a\u003e as a complex trade.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e“Example 117 in the guidelines shows that a single price must be populated in field 33 for a complex trade, and that individual transaction reports submitted for each leg of the complex trade should be linked by the same complex trade component ID in field 40.”\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eSuch misreporting can hinder the FCA’s ability to effectively monitor for market abuse, and competent authorities are often particularly unforgiving if firms are found to be submitting incomplete or inaccurate information.\u003ca href=\"#_ftn1\"\u003e[1]\u003c/a\u003e The FCA makes clear its expectations for market participants to continue to apply ESMA guidelines and recommendations where relevant.\u003c/p\u003e\n\u003ch4 id=\"inconsistent-price-and-quantity-notations\"\u003eInconsistent price and quantity notations\u003c/h4\u003e\n\u003cp\u003eThe FCA has identified inconsistencies in the price and quantity \u003ca href=\"https://www.handbook.fca.org.uk/handbook/SUP/17/Annex1.pdf\"\u003enotations\u003c/a\u003e for some traded instruments.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003ePrice notations\u003c/strong\u003e - The currency in which the price is expressed. If, in the case of a bond or other form of securitised debt, the price is expressed as a percentage, that percentage shall be included\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eQuantity notation\u003c/strong\u003e -  An indication as to whether the quantity is the number of units of financial instruments, the nominal value of bonds, or the number of derivative contracts.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe FCA have highlighted some cases in which the same transaction is being reported using different price or quantity notifications by counterparty firms - for example, one side using a monetary price and the other using a basis point price. Firms are urged to follow Market Conventions - the consensus view of the market as to current accepted practices - when determining which notations to use.\u003c/p\u003e\n\u003ch3 id=\"timely-reporting\"\u003eTimely reporting\u003c/h3\u003e\n\u003cp\u003eInstrument reference data \u003cem\u003emust\u003c/em\u003e be submitted by 21.00 CET on each day they are open for trading for all financial instruments admitted to trading or that are traded on their platforms before 18.00 CET on that day (Article 2, RTS 23). The FCA expects trading venues to have adequate systems and controls in place to detect late reporting to ensure they promptly submit instrument reference data errors and omissions notifications.\u003c/p\u003e\n\u003ch3 id=\"transmission-agreements\"\u003eTransmission agreements\u003c/h3\u003e\n\u003cp\u003eUnder UK MiFIR Article 26(4) and RTS 22 Article 4(1)(c), a transmitting firm can be exempt from submitting a transaction report if specific conditions, including an agreement between the transmitting and receiving firms, are met.\u003c/p\u003e\n\u003cp\u003eThe FCA have identified instances of miscommunication between transmitting and receiving firms, leading to some investment firms not submitting transaction reports. Some firms responded to FCA enquiries stating they were transmitting firms and that reporting was handled by receiving firms, however upon contacting the receiving firm, the FCA were made aware that no transmission agreement was in place. Transmitting \u003cem\u003eand\u003c/em\u003e receiving firms are encouraged to review existing transmission arrangements to ensure all relevant conditions outlined in Article 4 of RTS 22 are being met and the agreements can be evidenced.\u003c/p\u003e\n\u003ch3 id=\"whats-next\"\u003eWhat’s next?\u003c/h3\u003e\n\u003cp\u003eThe FCA have made clear their intentions to conduct follow-up research in the areas covered in this latest Market Watch - and all editions for that matter. The regulator intends to ensure appropriate remedial actions are undertaken and encourages firms to continue to submit errors and omissions notifications for any issues of which they become aware.  \u003c/p\u003e\n\u003cp\u003e\u003ca href=\"#_ftnref1\"\u003e[1]\u003c/a\u003e \u003ca href=\"https://www.fca.org.uk/markets/transaction-reporting/transaction-reporting-fines\"\u003ehttps://www.fca.org.uk/markets/transaction-reporting/transaction-reporting-fines\u003c/a\u003e\u003c/p\u003e\n","date_published":"2023-21-08T00:00:00+0000"},{"title":"Market Watch 74 - Our Approach to Ensuring Compliance","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/market-watch-74-our-approach-to-ensuring-compliance/","summary":"\u003ch2 id=\"eflow-globals-response-to-market-watch-74\"\u003eeflow Global\u0026rsquo;s Response to Market Watch 74\u003c/h2\u003e\n\u003cp\u003eIn their latest Market Watch newsletter, the FCA highlighted the biggest challenges facing financial firms when submitting transaction reports. With the complexity of current regulations, reporting errors and omissions continue to plague firms. \u003c/p\u003e\n\u003cp\u003eIn this article, we’ll take a closer look at the key difficulties highlighted in Market Watch 74 and show how eflow Global’s transaction reporting tool offers solutions for them all. \u003c/p\u003e\n\u003ch2 id=\"reconciliationnbsp\"\u003e\u003cstrong\u003eReconciliation\u003c/strong\u003e \u003c/h2\u003e\n\u003cp\u003e\u003cstrong\u003eThe Problem:\u003c/strong\u003e firms not performing adequate reconciliation to ensure data accuracy.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eThe FCA\u0026rsquo;s Take:\u003c/strong\u003e\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cem\u003eWe recently identified and contacted certain firms who have not been making regular data extract requests. [\u0026hellip;] Firms are required to reconcile front-office records with data samples provided by the FCA under Article 15(3) of RTS 22.\u003c/em\u003e\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003e\u003cstrong\u003eThe Solution\u003c/strong\u003e: Our Transaction Reporting solution offers semi-automatic three-way reconciliation on all your trade data ensuring accuracy from source (trading system) to intermediary (ARM/TR) to NCA. \u003c/p\u003e\n\u003ch2 id=\"breach-notifications\"\u003e\u003cstrong\u003eBreach Notifications\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003e\u003cstrong\u003eThe problems:\u003c/strong\u003e inadequate handling of errors and omissions including: \u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eresubmitting correct reports, \u003c/li\u003e\n\u003cli\u003enot cancelling the first report which contains errors and then resubmitting correct report\u003c/li\u003e\n\u003cli\u003enot maintaining an audit trail of errors, fixes \u0026amp; resubmissions.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e\u003cstrong\u003eThe FCA\u0026rsquo;s Take:\u003c/strong\u003e \u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cem\u003eUnder Article 26(7) of UK MiFIR, where errors or omissions are identified in transaction reports, the firm reporting the transaction must cancel the report and submit a new corrected report to us. [\u0026hellip;] Errors and omissions notifications should still contain details of when an issue first occurred and the number of transaction reports affected, even if this extends beyond 5 years.\u003c/em\u003e \u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003e\u003cstrong\u003eThe Solutions:\u003c/strong\u003e  \u003c/p\u003e\n\u003cp\u003eField-by-field error handling - Our transaction reporting solution ingests response files from ARMs, TRs and regulators which highlight erroneous fields. These fields can then be edited before resubmitting. \u003c/p\u003e\n\u003cp\u003eAutomatic report ordering - When edits are made to a report, the original report containing the error will automatically be cancelled prior to resubmitting the edited version. \u003c/p\u003e\n\u003cp\u003eNote Taking Functionality - We offer note taking functionality to provide the essential audit trail of errors, omissions, when errors occurred, who handled them and whether they were solved to ensure compliance. \u003c/p\u003e\n\u003ch2 id=\"identification-of-investment-and-execution-decision-makersnbsp\"\u003e\u003cstrong\u003eIdentification of Investment and Execution Decision Makers\u003c/strong\u003e \u003c/h2\u003e\n\u003cp\u003e\u003cstrong\u003eThe Problem:\u003c/strong\u003e Where more than one person or algorithm is involved in an investment or execution decision, the person or algorithm taking primary responsibility for the decision should be identified in the transaction report. Article 8(2) and Article 9(4) of RTS 22 require firms to establish pre-determined criteria for determining who is primarily responsible for making investment and execution decisions.’\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eThe Solution:\u003c/strong\u003e Extensive business analysis during the onboarding process. As part of onboarding, all eflow clients are provided with a team of data and business analysts. the client with a business and data analyst from the eflow team. These analysts will create a tradeflow  based on your trading activity and create a tailored data requirements template for you. The use of both the tradeflow and data requirements template allows clients to easily identify the relevant execution decision maker in the transaction report.\u003c/p\u003e\n\u003ch2 id=\"inaccurate-reporting-of-complex-tradesnbsp\"\u003e\u003cstrong\u003eInaccurate reporting of Complex trades\u003c/strong\u003e \u003c/h2\u003e\n\u003cp\u003e\u003cstrong\u003eThe Problem:\u003c/strong\u003e Inaccurate reporting of Complex trades including a simultaneous buy and sell of 2 or more instruments quoted at a single price.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eThe FCA\u0026rsquo;s Take:\u003c/strong\u003e \u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cem\u003eWe have identified transaction reports submitted for spread trades which do not conform to the ESMA transaction reporting guidelines as a complex trade [\u0026hellip;] Example 117 in the guidelines shows that a single price must be populated in field 33 for a complex trade, and that individual transaction reports submitted for each leg of the complex trade should be linked by the same complex trade component ID in field 40.\u003c/em\u003e \u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003e\u003cstrong\u003eThe Solution:\u003c/strong\u003e A detailed, extensive onboarding process. As part of the onboarding and analysis process, our team of analysts will help you to understand what is reportable on each leg of any complex trades you may execute.  \u003c/p\u003e\n\u003ch2 id=\"inconsistent-price-and-quantity-notationsnbsp\"\u003e\u003cstrong\u003eInconsistent Price and Quantity Notations\u003c/strong\u003e \u003c/h2\u003e\n\u003cp\u003e\u003cstrong\u003eThe Problem\u003c/strong\u003e: Inconsistent notation of price and quantity fields.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eThe FCA\u0026rsquo;s Take:\u003c/strong\u003e\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cem\u003eWe have identified inconsistencies in the notations reported by investment firms for the price and quantity fields. In cases other than where a specific price or quantity type is required for the instrument traded (for example, credit default swaps (CDS) - price in basis points; equity - quantity in units), firms may determine the most appropriate notations to report. We urge firms to follow market convention when determining which notation to use. Where possible, firms should ensure that the notations selected are consistent with those reported by their counterparties.\u003c/em\u003e \u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003e\u003cstrong\u003eThe Solution\u003c/strong\u003e: Integrated market data and thorough project scoping. During the scoping of each client’s requirements, we identify the correct input for price and quantity files to ensure a valid transaction report. In the case of EMIR reporting, integrated market data is used to benchmark price and quantity fields accurately. \u003c/p\u003e\n\u003ch2 id=\"reporting-instrument-detailsnbsp\"\u003e\u003cstrong\u003eReporting Instrument Details\u003c/strong\u003e \u003c/h2\u003e\n\u003cp\u003e\u003cstrong\u003eThe Problem:\u003c/strong\u003e Consistent data quality issues including unreported expiry dates, inconsistent CFI codes and inaccurate price multipliers.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eThe FCA\u0026rsquo;s Take:\u003c/strong\u003e \u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cem\u003eFor transactions in financial instruments where instrument details must be populated in fields 42-56, we have seen variable data quality issues. [\u0026hellip;]Firms must make sure these fields are complete and accurate as we rely on them to identify the nature and attributes of the instrument traded.\u003c/em\u003e\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003e\u003cstrong\u003eThe Solution\u003c/strong\u003e: Integrated market data and FIRDs register. For \u003ca href=\"https://eflowglobal.com/tztr-mifir-reporting/\"\u003eMiFIR reporting\u003c/a\u003e, we will automatically cross reference all records received against the FIRDS register to ensure eligibility. For EMIR, market data will be integrated to benchmark price and quantity fields accurately.\u003c/p\u003e\n\u003ch2 id=\"late-reporting\"\u003e\u003cstrong\u003eLate Reporting\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003e\u003cstrong\u003eThe Problem:\u003c/strong\u003e Transaction reports not being submitted within an acceptable timeframe.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eThe FCA\u0026rsquo;s Take:\u003c/strong\u003e \u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cem\u003eUnder Article 2 of RTS 23, trading venues and SIs must submit instrument reference data to us by 21.00 CET on each day they are open for trading for all financial instruments admitted to trading or that are traded on their platforms before 18.00 CET on that day.  [\u0026hellip;] Trading venues and SIs should have adequate systems and controls in place to detect late reporting.\u003c/em\u003e \u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003e\u003cstrong\u003eSolution:\u003c/strong\u003e Automatic submission. Our transaction reporting solution allows users to automatically submit reports for relevant regulations with no need for manual intervention to ensure timely reporting and compliance. \u003c/p\u003e\n","date_published":"2023-28-07T00:00:00+0000"},{"title":"eflow secures £7 million in series A funding","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-global-secures-7-million-in-series-a-funding/","summary":"\u003cp\u003e**London, UK: **UK-based RegTech (Regulatory Technology) scaleup \u003ca href=\"https://eflowglobal.com/\" target=\"_blank\" rel=\"noopener\"\u003eeflow \u003c/a\u003ehas raised £7 million in capital through a Series A funding round.\u003c/p\u003e\n\u003cp\u003eLed by \u003ca href=\"https://finchcapital.com/\" target=\"_blank\" rel=\"noopener\"\u003eFinch Capital\u003c/a\u003e and supported by \u003ca href=\"https://www.atempogrowth.com/\" target=\"_blank\" rel=\"noopener\"\u003eAtempo\u003c/a\u003e and \u003ca href=\"https://scaleupgroup.co/\" target=\"_blank\" rel=\"noopener\"\u003eScaleUp Group\u003c/a\u003e partners, this funding round will help to accelerate eflow’s growth with a particular emphasis on strengthening footholds in North America and Asia-Pacific.\u003c/p\u003e\n\u003cp\u003eFounded in 2004, eflow provides financial firms with software solutions to help them comply with their regulatory requirements. They offer award-winning solutions for market abuse surveillance, transaction-cost analysis, transaction reporting and \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eeComms surveillance\u003c/a\u003e. \u003c/p\u003e\n\u003cp\u003eThe company’s emphasis on simplifying compliance procedures while retaining robust security has granted them a reputation as one of the world’s leading RegTech providers. Its solutions are currently used by over 100 financial institutions worldwide including Aegon Asset Management and Plus500. \u003c/p\u003e\n\u003cp\u003eDespite the company’s long history, eflow has recently committed to a revitalised growth strategy. After migrating to a 100% cloud-based SaaS model in 2021, eflow\u0026rsquo; executive team led a successful MBO in 2022, sparking this most recent period of expansion. \u003c/p\u003e\n\u003cp\u003eThis most recent injection of capital will fuel an exhaustive period of research and development with the company hoping to release a range of new products and enhanced solutions over the coming two years.  \u003c/p\u003e\n\u003cp\u003eBen Parker, CEO and Founder of eflow, commented that: “Increasing scrutiny from global regulators has made it imperative for investment firms to automate costly and time-consuming regulatory obligations. With a recent move to a 100% cloud model, we felt the time was right for us to take additional investment to accelerate growth and product development plans.”\u003c/p\u003e\n\u003cp\u003eAman Ghei, Partner at Finch Capital added: “We are very excited to be partnering with Ben and the team at eflow. There aren’t many profitable and high growth businesses in regulation technology and that is a testament to how well the team has done to deliver best in class SaaS solutions to marquee customers. With our investment, the team will further be able to invest in technology and product development to enable their customers to stay on top of the ever-changing regulatory environment.”\u003c/p\u003e\n\u003ch3 id=\"about-the-parties\"\u003eAbout the parties\u003c/h3\u003e\n\u003cp\u003e\u003cstrong\u003eAbout eflow\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFor over 20 years, eflow has been providing regulatory compliance solutions to the financial services industry. They currently service over 100 clients across 5 continents, providing both buy-side and sell-side firms with fast, efficient software designed to keep them compliant and competitive in this ever-changing regulatory landscape. Their offerings include \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance\u003c/a\u003e for market abuse, best execution and transaction cost analysis, custom and bespoke regulatory reporting, transaction reporting, \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eeComms surveillance\u003c/a\u003e and MiFID II record keeping. \u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eAbout Finch Capital\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFinch Capital is a growth investor in Europe\u0026rsquo;s biggest tech transitions. Founded in 2013, Finch manages over €500m in AUM and backs SaaS companies in 6 primary sectors: Regulatory and ESG software, Payments, Business Applications in Finance (Accounting, HR, Tax, Back Office), FinTech, InsureTech and Real Estate Technology. Finch has backed over 50 companies including regulatory leaders like Fourthline as well companies like Zopa, Goodlord, AccountsIQ. \u003ca href=\"https://finchcapital.com/\" target=\"_blank\" rel=\"noopener\"\u003e\u003ca href=\"https://finchcapital.com/\"\u003ehttps://finchcapital.com/\u003c/a\u003e\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eAbout ScaleUp Group\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eScaleUp Group was formed by entrepreneurs, who have successfully navigated through founding, growing, floating and selling businesses of their own, to help technology scaleups achieve their full potential through fundraising and business development and become ‘Global Champions’. This includes investment by our own investor/Partners and their post-investment support to our clients such as the monthly CEO Forum and various on-demand engagements, de-facto being a ‘virtual Advisory Board’ to help entrepreneurs achieve their goals. \u003ca href=\"https://scaleupgroup.co/\" target=\"_blank\" rel=\"noopener\"\u003e\u003ca href=\"https://scaleupgroup.co/\"\u003ehttps://scaleupgroup.co/\u003c/a\u003e\u003c/a\u003e\u003c/p\u003e\n","date_published":"2023-25-07T10:00:00+0000"},{"title":"A deep dive into FCA's Market Watch 73","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/a-deep-dive-into-fcas-market-watch-73/","summary":"\u003ch1 id=\"enhancing-market-abuse-enforcement-a-deep-dive-into-fcas-market-watch-73\"\u003eEnhancing market abuse enforcement: A deep dive into FCA\u0026rsquo;s Market Watch 73\u003c/h1\u003e\n\u003ch2 id=\"introduction\"\u003eIntroduction\u003c/h2\u003e\n\u003cp\u003eMarket abuse is a broad term referring to various unfair and manipulative practices occurring in financial markets. Such activities include insider dealing, market manipulation, false or misleading disclosures, and the misuse of private, or ‘insider’ information. These illicit practices can significantly undermine the integrity of financial markets, erode investor confidence, and compromise the fairness of market transactions by distorting prices or fostering unfair advantages for certain participants.\u003c/p\u003e\n\u003cp\u003eDetecting and preventing market abuse is crucial if we are to maintain a level playing field for investors and protect genuine actors from fraudulent practices. In order to turn the tide on bad actors, the public and private sector must leverage a combination of regulation and technology to identify and prevent manipulative practices.\u003c/p\u003e\n\u003cp\u003eThe Financial Conduct Authority (FCA) is the UK’s main regulatory authority for these issues. Their long-standing “Market Watch” series is a mechanism by which information and guidance are relayed back to the private sector. Practically speaking, this series sees the FCA share its observations and findings from various reviews, investigations and research spanning a multitude of regulatory topics, including market abuse.\u003c/p\u003e\n\u003ch2 id=\"overview-of-market-watch-73\"\u003eOverview of Market Watch 73\u003c/h2\u003e\n\u003cp\u003eMarket Watch 73 covers the FCA\u0026rsquo;s recent review of firms offering Contracts for Difference (CFDs) and spread bets, products considered increasingly vulnerable to insider dealing and consequently major contributors to Suspicious Transaction and Order Reports (STORs). The review strives to understand and elevate the standards of CFD providers\u0026rsquo; strategies to identify and report potential market abuse. The FCA undertook a comprehensive methodology, including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eQuestioning firms about their business models, market abuse risks and arrangements for detecting and reporting market abuse.\u003c/li\u003e\n\u003cli\u003eReviewing firms’ documentation including policies and procedures, risk assessments and relevant management information.\u003c/li\u003e\n\u003cli\u003eSupervisory visits to take a closer look at firms’ risks and controls.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"areas-of-improvement-for-firms\"\u003eAreas of improvement for firms\u003c/h3\u003e\n\u003cp\u003eWhile the FCA acknowledged that all firms have existing surveillance systems in place to detect insider dealing, a number of areas still require improvement and the regulator has provided practical guidance to enhance their market abuse detection capabilities.\u003c/p\u003e\n\u003ch4 id=\"market-abuse-risk\"\u003eMarket abuse risk\u003c/h4\u003e\n\u003cp\u003eThe prevalence of insider trading in single stock equities was recognized as the primary market abuse risk among firms. However, not all firms demonstrated a comprehensive consideration of all relevant market abuse risks in their business. Firms that conducted thorough risk assessments, accounting for different types of manipulation, trading platforms, and methods, were more effective in identifying applicable risks. The FCA emphasised that in order to maintain effective arrangements, systems and procedures to detect and report suspicious orders and transactions, firms need to understand how they could facilitate market abuse. If done properly, undertaking a risk assessment is an effective and efficient way of achieving this.\u003c/p\u003e\n\u003ch4 id=\"surveillance-systems\"\u003eSurveillance systems\u003c/h4\u003e\n\u003cp\u003eThe review identified that most firms use a mix of in-house and third-party solutions for insider dealing surveillance, relying on various \u0026ldquo;triggers\u0026rdquo; to prompt alerts. However, there were inconsistencies in lookback periods (ranging from 1-30 days) and monitoring of unrealised profits, which may undermine effectiveness. The FCA thus encourages firms to evaluate their surveillance coverage, particularly regarding market manipulation and non-equity asset classes.\u003c/p\u003e\n\u003ch4 id=\"narrowing-the-spread\"\u003e“Narrowing the spread”\u003c/h4\u003e\n\u003cp\u003eThe FCA highlighted \u0026ldquo;narrowing the spread,\u0026rdquo; a manipulative practice affecting spread bets or CFDs, particularly in illiquid stocks. Despite some firms recognising this, it remains absent from risk assessments and surveillance systems, emphasising the need for CFD providers to more effectively detect and report such behaviour. While trading desk detection has had some success, the implementation of surveillance alerts could ensure more consistent identification.\u003c/p\u003e\n\u003ch4 id=\"front-office-and-the-tipping-off-risk\"\u003eFront office and the tipping off risk\u003c/h4\u003e\n\u003cp\u003eThe FCA emphasises striking a balance in engaging front office staff on surveillance matters, mindful of \u0026rsquo;tipping off\u0026rsquo; concerns. Essentially, compliance departments need to confidently challenge and educate front office staff, despite reservations about revealing suspicious client behaviours. Sharing of Suspicious Transaction and Order Reports (STORs) should be on a need-to-know basis, without stifling necessary dialogue and learning.\u003c/p\u003e\n\u003ch3 id=\"what-does-this-mean-for-enforcement-activity\"\u003eWhat does this mean for enforcement activity?\u003c/h3\u003e\n\u003cp\u003eThe focus on formalisation and documentation within the FCA\u0026rsquo;s review indicates a broader push for consistency and the ability to demonstrate compliance. Firms should actively show adherence to regulatory standards, with a keen focus on comprehensive market abuse risk assessments. No longer can ignorance of risks be a fallback - proactivity in risk identification and management is crucial.\u003c/p\u003e\n\u003cp\u003eAdditionally, the FCA is urging enhancement of order and trade surveillance capabilities, warning that certain emerging behaviours may not be adequately captured by existing technologies. This call demands firms to account for all asset classes and execution methods, underlining the necessity of staying abreast with the evolving risks in the market to avoid regulatory enforcements.\u003c/p\u003e\n\u003ch2 id=\"the-fcas-increasing-scrutiny-over-market-abuse-violations\"\u003eThe FCA\u0026rsquo;s increasing scrutiny over market abuse violations\u003c/h2\u003e\n\u003cp\u003eThis edition of the FCA\u0026rsquo;s Market Watch is part of their ongoing engagement with the CFD market, demonstrating their continuous efforts to address issues and ensure market integrity. In December 2022, the FCA issued a \u0026ldquo;Dear CEO\u0026rdquo; letter that highlighted some common problematic behaviours in the industry. These included scam/churn activities, circumvention of FCA rules, and the use of affiliate marketers/introducers. Firms were explicitly warned to take action to mitigate these risks and meet regulatory requirements. The FCA emphasised their commitment to scrutinising firms\u0026rsquo; responses to the letter and any actions taken, with a clear message that swift and assertive action would be taken to protect consumers and maintain market integrity.\u003c/p\u003e\n\u003cp\u003eIn previous editions of the Market Watch\u003ca href=\"#_ftn1\"\u003e[1]\u003c/a\u003e, the FCA stressed the significance of effective order and trade surveillance that caters to different asset classes and instruments. This encompasses all-inclusive monitoring of all transactions, including modifications and cancellations, along with appropriate analysis of surveillance exception alerts, reinforcing the ongoing and growing emphasis on vigilance and comprehensive surveillance in the market landscape.\u003c/p\u003e\n\u003cp\u003eIn addition to these publications, the FCA has been actively enforcing regulations in the market. They fined Sigma Broking Limited £530,000 and imposed bans and fines on its former directors due to market abuse reporting failures\u003ca href=\"#_ftn2\"\u003e[2]\u003c/a\u003e. Furthermore, the FCA revoked UK CFD permissions for Cyprus-based CFD firms Maxiflex Ltd (trading as EuropeFX), Maxigrid Limited (trading as Dualix \u0026amp; AGM Markets), and Reliantco Investments Ltd (trading as UFX)\u003ca href=\"#_ftn3\"\u003e[3]\u003c/a\u003e. The FCA also intervened by stopping BDSwiss from offering CFDs to UK customers\u003ca href=\"#_ftn4\"\u003e[4]\u003c/a\u003e.\u003c/p\u003e\n\u003ch2 id=\"key-takeaways-for-cfd-providers\"\u003eKey takeaways for CFD providers\u003c/h2\u003e\n\u003cp\u003eIn response to the growing pressure and regulatory scrutiny faced by CFD providers, there are several key takeaways that firms should consider implementing:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eRisk Assessments: CFD providers should conduct thorough risk assessments that encompass the wide scope of threats outlined by the FCA\u0026rsquo;s recent publications. This includes considering different types of market abuse, business areas, asset classes, and trading methods.\u003c/li\u003e\n\u003cli\u003eTraining and Escalation Policies: Firms should ensure comprehensive staff training, especially for front office personnel, to bolster awareness of market abuse risks and the appropriate escalation protocols, fostering a proactive culture of vigilance.\u003c/li\u003e\n\u003cli\u003eImplement State-Of-The-Art Trade Surveillance Technology: To effectively monitor trading activities and detect suspicious behaviour, CFD providers should invest in advanced trade surveillance technology. These tools can help firms capture and analyse vast amounts of data, enabling them to identify potential market abuse more efficiently and accurately. The use of specialised technology also ensures the level and consistency of information capture and documentation, enabling firms to meet regulatory requirements and demonstrate their compliance efforts.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eBy taking these actions, CFD providers can enhance their risk management practices, strengthen their surveillance capabilities, and demonstrate their commitment to maintaining market integrity.\u003cbr\u003e\u003cbr\u003e\u003cstrong\u003eMarket Watch 74 (July 2023): Enhancing Transaction Reporting\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe FCA highlighted persistent issues in transaction reporting under RTS 22 and RTS 23, despite overall improvements since 2018. Key concerns included:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eReconciliations and Breach Notifications\u003c/strong\u003e: A notable number of firms failed to perform regular data reconciliations or submit breach notifications as required.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eIdentification of Decision Makers\u003c/strong\u003e: Firms showed varied practices in identifying investment and execution decision-makers, with some lacking clear criteria.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eTransmission Agreements\u003c/strong\u003e: Instances were found where firms relied on receiving firms for transaction reporting without formal agreements, leading to reporting gaps.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eInstrument Reference Data\u003c/strong\u003e: Issues such as inaccurate price multipliers and incorrect expiry dates were prevalent, affecting data quality.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe FCA emphasized the importance of accurate and timely transaction reporting for effective market oversight.\u003c/p\u003e\n\u003ch3 id=\"market-watch-75-october-2023-risks-in-market-soundings\"\u003e\u003cstrong\u003eMarket Watch 75 (October 2023): Risks in Market Soundings\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThis edition focused on the market sounding regime, addressing concerns about insider dealing and unlawful disclosure. Key points included:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eDesignated Market Participants (DMPs)\u003c/strong\u003e: Advised to carefully assess the information shared during soundings to avoid inadvertent disclosure of inside information.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eMarket Sounding Recipients (MSRs)\u003c/strong\u003e: Encouraged to implement \u0026lsquo;Gatekeeper\u0026rsquo; arrangements, ensuring only trained staff handle soundings, reducing the risk of misuse.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eCommunication Protocols\u003c/strong\u003e: Emphasized the need for clear and concise communication, minimizing the potential for misinterpretation or misuse of information.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe FCA reiterated that while the regime offers protections against unlawful disclosure by DMPs, it does not shield MSRs from insider dealing liabilities.\u003c/p\u003e\n\u003ch3 id=\"market-watch-78-april-2024-instrument-reference-data-quality\"\u003e\u003cstrong\u003eMarket Watch 78 (April 2024): Instrument Reference Data Quality\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe FCA addressed the completeness and accuracy of instrument reference data (IRD) under RTS 23. Findings included:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eCommon Rejection Reasons\u003c/strong\u003e: Frequent issues such as invalid Legal Entity Identifiers (LEIs), duplicate records, and inconsistent maturity dates were identified.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eData Quality Processes\u003c/strong\u003e: Firms were reminded to establish robust methods for identifying and correcting incomplete or inaccurate data promptly.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe FCA stressed that high-quality IRD is crucial for effective market oversight and transparency.\u003c/p\u003e\n\u003ch3 id=\"market-watch-79-may-2024-surveillance-failures-and-model-testing\"\u003e\u003cstrong\u003eMarket Watch 79 (May 2024): Surveillance Failures and Model Testing\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThis issue highlighted failures in market abuse surveillance systems, often due to:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eData and Alert Logic Issues\u003c/strong\u003e: Problems with data inputs and alert configurations led to ineffective surveillance.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eInadequate Testing\u003c/strong\u003e: Lack of thorough testing of surveillance models resulted in undetected issues.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eGovernance Shortcomings\u003c/strong\u003e: Weak oversight and resource allocation contributed to persistent surveillance failures.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe FCA recommended that firms enhance their surveillance systems, ensuring they are appropriately designed, tested, and governed.\u003c/p\u003e\n\u003ch3 id=\"market-watch-81-november-2024-transaction-reporting-governance\"\u003e\u003cstrong\u003eMarket Watch 81 (November 2024): Transaction Reporting Governance\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eBuilding on previous insights, the FCA discussed findings from skilled person reviews, identifying root causes of transaction reporting issues:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eChange Management\u003c/strong\u003e: Poor handling of system and process changes led to data quality problems.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eProcess Design\u003c/strong\u003e: Flawed reporting logic and inadequate testing compromised report accuracy.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eData Governance\u003c/strong\u003e: Lack of clear ownership and oversight resulted in inconsistent data management.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eFirms were urged to strengthen their governance frameworks, ensuring accountability and effective oversight of transaction reporting processes.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"#_ftnref1\"\u003e[1]\u003c/a\u003e \u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-69\"\u003ehttps://www.fca.org.uk/publications/newsletters/market-watch-69\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"#_ftnref2\"\u003e[2]\u003c/a\u003e \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-fines-sigma-broking-limited-530000-and-bans-and-fines-its-former-directors#:~:text=Sigma%20Broking%20Limited%20(Sigma)%20has,whom%20have%20also%20been%20prohibited\"\u003ehttps://www.fca.org.uk/news/press-releases/fca-fines-sigma-broking-limited-530000-and-bans-and-fines-its-former-directors#:~:text=Sigma%20Broking%20Limited%20(Sigma)%20has,whom%20have%20also%20been%20prohibited\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"#_ftnref3\"\u003e[3]\u003c/a\u003e \u003ca href=\"https://www.fca.org.uk/news/statements/cyprus-cfd-firms-maxiflex-ltd-trading-europefx-maxigrid-limited-trading-dualix-agm-markets\"\u003ehttps://www.fca.org.uk/news/statements/cyprus-cfd-firms-maxiflex-ltd-trading-europefx-maxigrid-limited-trading-dualix-agm-markets\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"#_ftnref4\"\u003e[4]\u003c/a\u003e \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-stops-bdswiss-offering-cfds-uk-customers\"\u003ehttps://www.fca.org.uk/news/press-releases/fca-stops-bdswiss-offering-cfds-uk-customers\u003c/a\u003e\u003c/p\u003e\n","date_published":"2023-30-05T08:00:00+0000"},{"title":"Market abuse enforcements: Where are regulators focusing, and what will they do next?","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/market-abuse-enforcements/","summary":"\u003ch1 id=\"the-current-state-of-market-abuse-enforcement\"\u003eThe current state of market abuse enforcement\u003c/h1\u003e\n\u003cp\u003eMarket abuse is a term that encompasses a wide range of illicit activities in the financial markets. These activities distort the market\u0026rsquo;s integrity, undermine investor confidence, and ultimately, negatively impact the economy as a whole. Market abuse can be broadly categorised into two main types: insider trading and market manipulation.\u003c/p\u003e\n\u003cp\u003eInsider trading refers to the use of non-public, material information to make informed investment decisions, giving the individual an unfair advantage over other market participants. Market manipulation, on the other hand, covers an array of tactics aimed at artificially influencing the price or trading volume of a security. Among many others, these tactics include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003e\u0026ldquo;Naked\u0026rdquo; short selling\u003c/strong\u003e: Selling shares without borrowing them first, leading to a failure to deliver and artificially increasing the supply in the market.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eSpoofing\u003c/strong\u003e: Placing large fake orders to create false market signals, manipulating the security\u0026rsquo;s price or trading volume.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eRamping\u003c/strong\u003e: Engaging in coordinated buying or spreading positive rumours to artificially inflate a security\u0026rsquo;s price before selling at a profit.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003ePump \u0026amp; dump schemes\u003c/strong\u003e: Promoting a security through false or misleading information to drive up its price, and then selling the inflated shares for a profit.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eTo provide clarity and practical insights on the enforcements against these behaviours, we have explored global regulatory fines on firms for market abuse\u003ca href=\"#_ftn1\"\u003e[1]\u003c/a\u003e from 2019-2022, which totalled $1.9 billion across 9 major jurisdictions. To gain further insight into the future priorities and focal points of regulatory bodies, we have also considered qualitative data\u003ca href=\"#_ftn2\"\u003e[2]\u003c/a\u003e, including consultations and press releases by prominent regulators as well as reports on enforcement action at the individual level.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eAre you curious about your own market abuse requirements? Take a look at our\u003c/em\u003e \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\" target=\"_blank\" rel=\"noopener\"\u003e\u003cem\u003etrade surveillance solution.\u003c/em\u003e\u003c/a\u003e\u003c/p\u003e\n\u003ch2 id=\"which-regulators-have-been-most-active\"\u003eWhich regulators have been most active?\u003c/h2\u003e\n\u003ch3 id=\"the-global-view\"\u003eThe global view\u003c/h3\u003e\n\u003cp\u003eFigure 1 shows that enforcement activity in the US has been the major driver of global market abuse fines on firms from 2019-2022. There are a few probable explanations for this, including the US’ market size, extraterritorial reach, well-resourced and aggressive regulators as well as a few high-profile cases that have skewed the numbers upwards.\u003c/p\u003e\n\u003cimg src=\"/images/picture1.png\" height=\"495\" width=\"655\" /\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eFigure 1: Aggregate market abuse fines by jurisdiction, 2019-2022\u003c/strong\u003e\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eThe relatively lower figures in other regions are equally interesting. It is important to note that while these fines were enforced during this period, they typically relate to crimes which initially took place 5-10 years ago - this is relevant as it implies that there are likely many substantial investigations ongoing across the globe which are yet to be closed. What we can be sure of, however, is that the costs of non-compliance are not captured in full by regulatory enforcements. In addition to regulatory enforcements, non-compliant firms often face considerable challenges, such as:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eRemediation costs\u003c/strong\u003e: Firms may need to invest heavily in overhauling their systems, processes, and controls to meet regulatory standards and prevent future violations.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eReputational damage\u003c/strong\u003e: As news of regulatory breaches becomes public, firms may lose the trust of clients and partners, leading to lost business opportunities and a tarnished brand image.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eImpact on stock prices\u003c/strong\u003e: When investor confidence is shaken due to regulatory violations, a firm\u0026rsquo;s stock price can take a hit, adversely affecting its market valuation and shareholder value.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"the-us-view\"\u003eThe US view\u003c/h3\u003e\n\u003cp\u003eFigure 2 provides a breakdown of the market abuse fines imposed by major US institutions in the relevant period:\u003c/p\u003e\n\u003cimg src=\"/images/table.PNG\" height=\"286\" width=\"943\" /\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eFigure 2: Aggregate market abuse fines by jurisdiction, 2019-2022\u003c/strong\u003e\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eWhile the Financial Industry Regulatory Authority (FINRA) has been the most active in terms of the volume of enforcement actions, the US Commodity Futures Trading Commission (CFTC) and the Department of Justice (DOJ) have imposed significantly larger total fines by value. This distinction highlights the different focus areas and enforcement priorities of each regulator.\u003c/p\u003e\n\u003cp\u003eIn some cases, firms are punished by multiple regulators at once. In 2020, the CFTC, DOJ and SEC issued a combined $920 million fine against JPMorgan Chase \u0026amp; Co. for engaging in manipulative and deceptive conduct in the precious metals and U.S. Treasury futures markets. This penalty is the largest ever imposed for spoofing-related misconduct.\u003c/p\u003e\n\u003cp\u003eWhereas FINRA have been more likely to enforce alone, with a high volume of enforcements below $1 million. These typically include supervisory and procedural oversights, position reporting failures and various short selling violations.\u003c/p\u003e\n\u003ch2 id=\"what-are-firms-being-fined-for\"\u003eWhat are firms being fined for?\u003c/h2\u003e\n\u003cp\u003eThe analysis of market abuse fines from 2019 to 2022 reveals that a large majority of the penalties imposed on firms were for market manipulation violations. See Figure 3:\u003c/p\u003e\n\u003cimg src=\"/images/picture2.png\" height=\"419\" width=\"680\" /\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eFigure 3: Aggregate market abuse fines by type, 2019-2022\u003c/strong\u003e\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eInterestingly, there have been relatively few fines imposed on firms for insider trading during the same period. One possible explanation for this is that insider trading offences are more likely than market manipulation to be charged at the level of the individual(s) involved.\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cstrong\u003eAn example: Liability at the individual level\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eIn 2019, Sean Stewart, a former senior banker at 2 New York investment banks, was sentenced to 24 months in prison by the US DOJ for providing his father with confidential information about five healthcare company acquisitions before public announcements.\u003c/p\u003e\n\u003cp\u003eHowever, this is not to say that firms are entirely exempt from the consequences of insider trading, as they can still face reputational damage and increased scrutiny from regulators if their employees are found to have engaged in such activities.\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003ch3 id=\"market-manipulation\"\u003eMarket manipulation\u003c/h3\u003e\n\u003cp\u003eThe spike in Q3 2020 shown in Figure 4 reflects the aforementioned landmark enforcement on JPMorgan. Otherwise, quarterly market manipulation fines average out at around $100 million.\u003c/p\u003e\n\u003cimg src=\"/images/picture3.png\" height=\"400\" width=\"643\" /\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eFigure 4: Aggregate value of quarterly market manipulation fines\u003c/strong\u003e\u003c/em\u003e\u003c/p\u003e\n\u003ch3 id=\"insider-trading\"\u003eInsider trading\u003c/h3\u003e\n\u003cp\u003eFigure 5 reflects the relatively lower level of Insider Trading enforcements on firms.\u003c/p\u003e\n\u003cimg src=\"/images/picture4.png\" height=\"403\" width=\"655\" /\u003e\n\u003cp\u003e\u003cem\u003e\u003cstrong\u003eFigure 5: Aggregate value of quarterly insider trading fines\u003c/strong\u003e\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003e2019 saw a relatively higher level of insider trading enforcements, driven by a flurry of activity in Canada. From 2011 to 2013, Ontario Securities Commission (OSC) staff identified hundreds of instances in which Royal Bank of Canada (RBC) and The Toronto-Dominion Bank (TD) FX traders disclosed confidential customer information via chat rooms with traders at competitor firms. RBC and TD paid fines of almost $20 million for failing to prevent these communications.\u003c/p\u003e\n\u003ch2 id=\"how-are-market-abuse-cases-changing\"\u003eHow are market abuse cases changing?\u003c/h2\u003e\n\u003ch3 id=\"recent-trends\"\u003eRecent trends\u003c/h3\u003e\n\u003cp\u003eThe most recent year of data shows an increased focus on enforcements pertaining to deficiencies in firms’ systems and controls. Though fines for these offences are relatively lower, they do mark firms as targets for further investigation - a firm which can’t configure or enforce their own systems and controls can barely be expected to have a grip on the full complexity of market abuse. Systems and controls deficiencies, including or leading to poor data quality, also contribute to the difficulty faced by regulators in enforcing larger scale offences by diminishing the evidence available.\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u003cstrong\u003eThe difficulty of proving market abuse\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e“Insider dealing and market manipulation infringements imply extensive investigations and complex evidence gathering exercises. Sanctioning those infringements is likely to require more work and longer delays than administrative measures imposed for other infringements e.g., breaching the obligation to report the transactions executed under an accepted market practice” (ESMA, 2022)\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003ch3 id=\"looking-ahead\"\u003eLooking ahead\u003c/h3\u003e\n\u003cp\u003eBy cracking down on systems and controls failures, regulators are setting up a period in which substantial cases will be easier to prove. And to this end they are doing much more. In particular, certain regulators are implementing their own technology to detect market abuse:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eASIC MAI Platform: Launched in 2018, this online system provides market participants with access to ASIC\u0026rsquo;s market surveillance data and analysis tools, enhancing market transparency and oversight.\u003c/li\u003e\n\u003cli\u003eBaFIN ALMA: A real-time surveillance system designed to monitor and detect potential violations of financial regulations, flagging suspicious transactions and behaviour patterns related to market abuse or fraud.\u003c/li\u003e\n\u003cli\u003eSEC ATLAS Initiative: Introduced in 2019, this program leverages advanced data analytics and machine learning to detect potential insider trading and market manipulation, using various data sources like trading data, news feeds, and social media to identify illegal activities.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eAs technology advances, firms must adapt by employing more sophisticated tools to safeguard themselves against both internal vulnerabilities and rogue individuals. To stay ahead of the regulations and the competition, invest in cutting-edge eComms and \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eTrade Surveillance\u003c/a\u003e solutions for a secure and compliant future.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"#_ftnref1\"\u003e[1]\u003c/a\u003e  \u003ca href=\"https://radar.rtassociates.co/insight/388\"\u003ehttps://radar.rtassociates.co/insight/388\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"#_ftnref2\"\u003e[2]\u003c/a\u003e \u003ca href=\"https://radar.rtassociates.co/insight/391\"\u003ehttps://radar.rtassociates.co/insight/391\u003c/a\u003e\u003c/p\u003e\n","date_published":"2023-16-05T10:00:00+0000"},{"title":"Embracing the future: The importance of automation for compliance and operations","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/embracing-the-future-the-importance-of-automation-for-compliance-and-operations/","summary":"\u003ch1 id=\"automation-across-deal-flow-saves-funds-time-and-brings-value\"\u003eAutomation across deal flow saves funds time and brings value\u003c/h1\u003e\n\u003cp\u003e\u003ca href=\"https://www.portfoliobi.com/\" target=\"_blank\" rel=\"noopener\"\u003ePortfolio BI\u003c/a\u003e and eflow Global provide automated end to end deal and compliance solutions in partnership, supporting managers’ growing regulatory and investor requirements.\u003c/p\u003e\n\u003cp\u003eAs the financial market tightens, the strain on managers is being felt more than ever. As regulators harden their stances on non-compliance and markets retain their volatility, managers will increasingly need to adopt new approaches to managing data, front and back office activities and compliance and consumer protection in order to navigate the challenges posed by the current economic climate. Part of this process means embracing technological advancement. It is for this reason that PBI and eflow have partnered to provide end to end workflow efficiency and automation for trading compliance and regulatory oversight.\u003c/p\u003e\n\u003cp\u003eAs pressure to reduce costs and streamline operations increases, manual, resource-intensive approaches to operations and compliance are becoming less and less viable. Because of this, we are seeing a trend towards technological adoption by financial firms. Technology can offer not only a means of improving operational workflow and reducing costs, but a more secure method of ensuring consumer protection and market integrity.\u003c/p\u003e\n\u003cp\u003eSumit Mahajan, Managing Director and Chief Product Officer at Portfolio BI commented, \u003cem\u003e“The team at Portfolio BI have dissected the continuous and growing burden of requirements managers face and, alongside eflow, can implement a seamless universal solution that genuinely supports managers.”\u003c/em\u003e As front and middle office specialists, Portfolio BI have developed market-leading OMS and PMS platforms that offer market-leading execution of transactions and their secure management. Mahajan continued \u003cem\u003e“Our technology optimises operations by seeking out cost-saving new paths which can assist in generating higher revenues. Specialising in process-driven automation produces reliable and accurate operational management tools for firms at a fraction of existing costs.”\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eDouglas Moffat, Chief Revenue Officer at eflow Global, echoed the importance of embracing automation both to improve compliance and increase revenue. “\u003cem\u003eAt eflow, we recognise that the importance of automation is far reaching. By embracing new technologies to automate compliance procedures such as transaction cost analysis, best execution monitoring, transaction reporting and\u003c/em\u003e \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003e\u003cem\u003etrade surveillance,\u003c/em\u003e\u003c/a\u003e \u003cem\u003eclients can streamline resource allocation, strengthen their compliance procedures, and reduce the risk of harm to consumers\u003c/em\u003e.” This adoption of automated technologies, continues Moffat, does far more than ensure a base-level of compliance. \u003cem\u003e“There is an increasingly strong business case for adopting automated compliance workflows. Automation can help reduce overheads, a key component of winning new mandates in a competitive market.”\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eThe increased use of automated solutions to ensure regulatory compliance aligns with a more general push towards improved consumer protection. The use of technology in market abuse monitoring helps to prevent cases of manipulative behaviour, such as insider trading or front-running. While this naturally helps firms meet their regulatory obligations, it equally helps to maintain market integrity and ensure that consumers are protected from unethical trading practices. The use of machine learning algorithms and data analytics to detect unusual trading activity also improves the accuracy and speed of market abuse detection, reducing the risk of harm to consumers.\u003c/p\u003e\n\u003cp\u003eThe use of technology to ensure best execution and streamline operations and regulatory compliance is a crucial step in aligning with consumer protection and regulatory requirements. By reducing costs, improving accuracy, and preventing market abuse, firms can demonstrate their commitment to protecting consumers and maintaining market integrity, which is essential in the current economic climate.\u003c/p\u003e\n","date_published":"2023-22-03T10:00:00+0000"},{"title":"The Consumer Duty: What MiFID II investment firms need to know","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/the-consumer-duty-what-mifid-ii-investment-firms-need-to-know/","summary":"\u003ch1 id=\"the-consumer-duty-what-mifid-ii-investment-firms-need-to-know\"\u003eThe Consumer Duty: What MiFID II investment firms need to know\u003c/h1\u003e\n\u003ch2 id=\"what-is-the-consumer-duty\"\u003eWhat is The Consumer Duty?\u003c/h2\u003e\n\u003cp\u003e\u003ca href=\"https://www.fca.org.uk/publication/finalised-guidance/fg22-5.pdf\" target=\"_blank\" rel=\"noopener\"\u003eThe Consumer Duty\u003c/a\u003e is an imminent FCA Regulation which sets high expectations for the standard of care that firms give to customers in retail financial markets. It includes the addition of a new consumer principle, set to be added to the \u003ca href=\"https://www.handbook.fca.org.uk/handbook/PRIN/2/1.html\" target=\"_blank\" rel=\"noopener\"\u003eFCA Handbook\u003c/a\u003e, which captures the purpose and sentiment of the regulation as a whole:\u003c/p\u003e\n\u003ch4 id=\"principle-12\"\u003ePrinciple 12\u003c/h4\u003e\n\u003cp\u003e\u0026ldquo;A firm must act to deliver good outcomes for retail customers\u0026rdquo;\u003c/p\u003e\n\u003cp\u003eThe Consumer Duty imposes a higher level of attention to customer outcomes than before. In practice, this means that Principle 12 supersedes the existing, lower standards of care outlined in Principles 6 and 7, wherever the Duty applies. In the regulation, The FCA explains that the principle is supported by 3 \u003cem\u003ecross-cutting rules\u003c/em\u003e:\u003c/p\u003e\n\u003ch4 id=\"the-cross-cutting-rules\"\u003eThe cross-cutting rules\u003c/h4\u003e\n\u003col\u003e\n\u003cli\u003eFirms must act in good faith towards retail customers\u003c/li\u003e\n\u003cli\u003eFirms must avoid causing foreseeable harm to retail consumers\u003c/li\u003e\n\u003cli\u003eFirms must enable and support retail customers to pursue their financial objectives\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003eThe cross-cutting rules also inform and are supported by four outcomes which define, at a greater level of detail, firms obligations across key areas of the customer relationship:\u003c/p\u003e\n\u003ch4 id=\"the-relationship-outcomes\"\u003eThe relationship outcomes\u003c/h4\u003e\n\u003col\u003e\n\u003cli\u003eThe products and services outcome - Firms must create and distribute products and services that are suitable for their intended purpose.\u003c/li\u003e\n\u003cli\u003eThe price and value outcome - Firms are required to address factors that may result in products or services that are unfair or of poor value, including unsuitable features that may cause foreseeable harm or hinder customers from using the product or service effectively.\u003c/li\u003e\n\u003cli\u003eThe consumer understanding outcome - Firms should communicate in a manner that facilitates consumers\u0026rsquo; comprehension of their products and services, including their characteristics, potential risks, and the consequences of their decisions.\u003c/li\u003e\n\u003cli\u003eThe consumer support outcome - Firms are expected to provide support that is tailored to their customers\u0026rsquo; needs. Such support should empower consumers to achieve the benefits of the products and services they purchase, pursue their financial objectives, and act in their own interests.\u003c/li\u003e\n\u003c/ol\u003e\n\u003ch3 id=\"implementation-and-scope\"\u003eImplementation and scope\u003c/h3\u003e\n\u003cp\u003eFollowing two consultation papers issued in 2021, the FCA published finalised guidance on 27 July 2022. The most significant changes made in the finalised rules were in the areas of implementation. Notably, the implementation period has been extended from 9 to 12 months, and the final deadline has been pushed to the end of July 2023. In the meantime, firms were required to produce approved implementation plans before the end of October 2022, which the FCA has since been reviewing. In January 2023 the FCA published its \u003ca href=\"https://www.fca.org.uk/publications/multi-firm-reviews/consumer-duty-implementation-plans\" target=\"_blank\" rel=\"noopener\"\u003efindings\u003c/a\u003e, raising ineffective prioritisation, overconfidence in existing systems and inter-firm collaboration as three areas of concern that require attention from firms.\u003c/p\u003e\n\u003cp\u003eThe scope of the regulation is broad, encompassing all firms under the FCA\u0026rsquo;s remit, such as banks, insurance companies, and investment firms that provide products and services to retail customers. These firms are required to not only review their immediate sales channels but also account for the impact of their products and services across the entire distribution chain. This includes a requirement for firms to clearly articulate the target market to their distributors, and to notify the FCA when they become aware of another firm in the distribution chain that is not complying with the Consumer Duty which requires not just management information but also strong oversight and management of the distribution channels.\u003c/p\u003e\n\u003ch2 id=\"how-will-the-consumer-duty-impact-mifid-investment-firms\"\u003eHow will The Consumer Duty impact MiFID investment firms?\u003c/h2\u003e\n\u003cp\u003eMiFID II investment firms are those which offer \u003ca href=\"https://emissions-euets.com/internal-electricity-market-glossary/529-investment-services-and-activities\"\u003eInvestment services and activities\u003c/a\u003e as defined and \u003ca href=\"https://www.esma.europa.eu/publications-and-data/interactive-single-rulebook/mifid-ii\"\u003eregulated by the directive\u003c/a\u003e. Such services are increasingly demanded in \u003ca href=\"https://www.forbes.com/sites/forbesagencycouncil/2022/11/04/the-rise-of-the-retail-investor/\"\u003eretail markets\u003c/a\u003e, and the broad scope of consumer duty means that these firms now face further regulation. This is understandable, against a backdrop of fears that under informed, or even vulnerable individuals might be harmed when engaging in the market for \u003ca href=\"https://mitsloan.mit.edu/ideas-made-to-matter/retail-investors-lose-big-options-markets-research-shows\"\u003einvestment products or services\u003c/a\u003e. This is especially relevant in the context of MiFID II Investment services and activities, which can be highly complex and risky and where significant harm has already been realised (e.g. Retail investors losing significant amounts of money through exposure to high risk, leveraged products such as Contracts for Difference). MiFID II investment firms are therefore likely to face much greater scrutiny under the duty\u003c/p\u003e\n\u003cp\u003eFor instance, MiFID II investment firms which transact directly with the consumers of MiFID II regulated products and services, such as asset managers, will be accountable for various requirements under the duty:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eProviding a thorough understanding of the product and its alternatives\u003c/li\u003e\n\u003cli\u003eSuitability assessment (including risk appetite both from the customer’s financial objectives but also from their ESG objectives)\u003c/li\u003e\n\u003cli\u003eOutcomes testing\u003c/li\u003e\n\u003cli\u003eRisks of harm\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eFirms operating further back in the distribution chain, such as market makers, will also be accountable for ensuring that their actions do not result in harm to consumers. They must clearly define the appropriate target markets and distribution channels and, further, that they achieve the best possible outcomes as measured by factors including transparency, price, venue and speed. In this area, MiFID II and Consumer Duty crossover significantly, as MiFID II already mandates this behaviour through \u003cem\u003ebest execution\u003c/em\u003e rules. Regardless of where they are situated in the distribution chain, firms need to gather the necessary data to demonstrate compliance with regulations.\u003c/p\u003e\n\u003ch2 id=\"the-role-of-technology\"\u003eThe role of technology?\u003c/h2\u003e\n\u003cp\u003eWhen operating at the speed, scale and complexity of MiFID II firms, complying, and proving compliance, with such high standards will require the use of technology. Trade and transaction surveillance technologies, for instance, provide firms with the capability to observe and analyse the outcomes of their activities, thereby potentially identifying instances where consumers may be adversely affected. These technologies are highly aligned with the cross-cutting rules of duty that refer to consumers\u0026rsquo; behavioural biases as a crucial factor for consideration. By leveraging surveillance technologies to monitor trade and transaction activities, firms can identify any instances where consumer behaviour may be influenced or manipulated by these biases, thus helping them to address and mitigate any potential harm to consumers.\u003c/p\u003e\n\u003cp\u003e\u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eeComms surveillance technology\u003c/a\u003e can also help MiFID II firms to comply with the Duty. By allowing firms to monitor their internal and external communications, firms can ensure that they are taking appropriate actions to achieve the best outcomes for customers. Further, the resulting audit trail can serve as part of a package of evidence to prove compliance. The latest technologies are built for added convenience and intelligence - integrating unstructured communications (including voice) data from any platform, utilising machine learning and natural language processing to automate the flagging of suspicious records and presenting these cases alongside subsequent trade or transaction activity that may be related.\u003c/p\u003e\n\u003cp\u003eBest execution, as discussed, is a requirement that sits comfortably in the intersection of MiFID II and Consumer Duty. As such, MiFID II firms will already have some measures in place, and most will utilise technology to support compliance. Consumer Duty therefore serves as an opportunity for firms to review their current systems and ensure they are up to speed with the best-in-class products, which automate the tracking and reporting of best execution performance data (e.g. trade reason codes and the outcomes of off-market rate checks) and trigger workflows in the event of a tolerance breach, enabling firms to react, as mandated by the duty, where foreseeable harm may occur.\u003c/p\u003e\n\u003cp\u003eOn the whole, Consumer Duty is a highly demanding and complex regulation which presents significant challenges to firms and how they comply. Critically, it is potentially impossible to prove compliance in the absence of up-to-date technology. However, firms which embrace technological change will also achieve second-order benefits of greater operational efficiency, data insight and customer satisfaction. Make sure that your firm is equipped to take Consumer Duty for what it is - an opportunity to serve customers’ true needs in order to build relationships that last.\u003c/p\u003e\n","date_published":"2023-20-02T11:00:00+0000"},{"title":"FINRA Publishes Findings on Manipulative Trading","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/finra-publishes-findings-on-manipulative-trading/","summary":"\u003ch2 id=\"finra-publishes-findings-on-manipulative-trading-as-part-of-2023-report\"\u003eFINRA publishes findings on manipulative trading as part of 2023 report\u003c/h2\u003e\n\u003cp\u003eOn January 10, 2023, US financial regulator FINRA (The Financial Industry Regulatory Authority) published its \u003ca href=\"https://www.finra.org/rules-guidance/guidance/reports/2023-finras-examination-and-risk-monitoring-program\"\u003e2023 Report on FINRA’s Examination and Risk Monitoring Program\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eIntended to provide insight on recent findings from the regulator and offer advice and best practices to FINRA member firms, the extensive and widespread report covers a number of new topics for 2023, including sections on Fixed Income Fair Pricing, Cybersecurity, Fractional Shares, and Regulation SHO.\u003c/p\u003e\n\u003cp\u003eOf particular note is a new section on \u003ca href=\"https://www.finra.org/rules-guidance/guidance/reports/2023-finras-examination-and-risk-monitoring-program/manipulative-trading\"\u003eManipulative Trading\u003c/a\u003e. Included under the Financial Crimes header (also new for 2023), this section offers a succinct overview of the regulator’s recent findings on the practice of market abuse, with a particular focus on the t\u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003erade surveillance\u003c/a\u003e measures being taken by firms to ensure abusive trading is being detected, flagged and punished.\u003c/p\u003e\n\u003cp\u003eTo this end, the report emphasises three particular factors which contribute to insufficient market abuse surveillance.\u003c/p\u003e\n\u003ch3 id=\"finras-findings\"\u003eFINRA’s Findings\u003c/h3\u003e\n\u003cp\u003eThe first of these factors is inadequate written supervisory procedures (WSP) with regards to trade surveillance. WSPs are documents outlining a firm’s supervisory procedures which must be submitted by any firm seeking approval to become a FINRA member. The regulator takes this opportunity to stress that trade surveillance procedures fall under the remit of WSPs and that surveillance hierarchies should be thoroughly documented as part of a firm’s WSP documentation.\u003c/p\u003e\n\u003cp\u003eIn particular, FINRA stresses the importance of maintaining proper audit trails and explicitly defining escalation procedures in response to detected or potential market abuse.\u003c/p\u003e\n\u003cp\u003eIf firms are concerned about their WSP, a \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance solution\u003c/a\u003e with effective case management is a necessity. The ability to set up custom escalation flows, produce reports on user interaction with the system, and establish access permissions on a user-by-user basis should all be seen as must-haves.\u003c/p\u003e\n\u003cp\u003eAs well as this, FINRA highlights the prevalence and detrimental impact of “non-specific surveillance thresholds\u0026rsquo;\u0026rsquo;. While many firms rely on static tolerances and alert thresholds, a truly effective trade surveillance system should possess the ability to test adaptively, dynamically altering alert thresholds based on factors such as asset type, instrument liquidity and market volatility. Not only does this greatly reduce false positives, it provides a far more indicative overview of abusive and manipulative trading regardless of unpredictable factors.\u003c/p\u003e\n\u003cp\u003eThe final finding FINRA lists relates to broader deficiencies in surveillance, including a lack of ability to establish patterns of high-risk or manipulative behaviours, not adequately reviewing surveillance exception reports, and not including what one might call holistic factors - factors not directly captured by trade surveillance tools but which may indicate red flags worthy of investigation (including inquiries from regulators and lack of sufficient training).\u003c/p\u003e\n\u003ch3 id=\"effective-practices\"\u003eEffective Practices\u003c/h3\u003e\n\u003cp\u003eIn order to rectify the issues caused by these findings, the regulator advocates for a number of effective practices intended to maximise efficient trade surveillance in financial firms.\u003c/p\u003e\n\u003cp\u003eShared across all of these suggested practices, there seems to be a focus on increasing the scope of surveillance oversight enacted by firms. Rather than focusing on individual or small batches of trades, FINRA stresses the importance of being able to detect and flag longer-lasting iterations of market abuse, including manipulative trading schemes, cross-platform and cross-venue manipulation, and abusive algorithmic trading. Further to this point, the regulator emphasises the need to review trading activity on a macro basis, reviewing monthly exceptions based on a firm’s order entry and trading activity in a given period.\u003c/p\u003e\n\u003cp\u003eeflow’s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eTrade Surveillance platform\u003c/a\u003e offers solutions for all the requirements mentioned in the article above. If you’re unsure if your firm meets all the requirements laid out in FINRA’s report and would like to learn more about how eflow can help, book a consultation today.\u003c/p\u003e\n","date_published":"2023-12-01T08:00:00+0000"},{"title":"eflow Harnesses Machine Learning to Enhance eComms Surveillance Solution","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-harnesses-machine-learning-to-enhance-ecomms-surveillance-solution/","summary":"\u003ch2 id=\"eflow-harnesses-machine-learning-to-enhance-tzec-ecomms-surveillance-solution\"\u003eeflow Harnesses machine learning to enhance TZEC eComms Surveillance solution\u003c/h2\u003e\n\u003cp\u003eUK-based RegTech provider eflow Global has today announced a major update to their \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eeComms surveillance solution\u003c/a\u003e. Offered as part of the TZ suite, the enhanced eComms module will sit alongside the company’s existing solutions for trade surveillance, best execution and transaction cost analysis, providing an integrated suite of regulatory compliance tools.\u003c/p\u003e\n\u003cp\u003eThe enhanced solution provides financial firms with the ability to ingest and archive unstructured voice, communication, calendar, messaging and collaboration data to be monitored and tested alongside structured trade data within TZ.\u003c/p\u003e\n\u003cp\u003eIn keeping with the company’s commitment to streamlining compliance workflows, the enhanced solution introduces a sophisticated form of decision automation aimed at reducing the amount of human intervention needed to run eComms surveillance.\u003c/p\u003e\n\u003cp\u003ePowered by machine learning, this decision automation feature will use natural-language processing, sentiment analysis, behaviour profiling and entity relationship analysis to provide insights on unstructured data. TZ will then automatically use these insights to associate unstructured data with relevant trades when testing for market abuse and manipulation.\u003c/p\u003e\n\u003cp\u003eDespite this impressive machine learning feature set, eflow has emphasised that all automated decisions will still ultimately be controlled by the end users, granting them the ability to override or adjust them to suit.\u003c/p\u003e\n\u003cp\u003eNot only does this feature save users from having to run manual queries, but it greatly reduces the risk of oversight, ensuring users have all the context they need while making sure that no suspicious communication goes unnoticed.\u003c/p\u003e\n\u003cp\u003eIn an effort to ensure flexibility, the solution has also been built to be agnostic towards data type. Users will be able to ingest unstructured data from all email providers, Microsoft Teams, Slack, Bloomberg messaging, Red Box call recording, and any other communication platform currently available on the market.\u003c/p\u003e\n\u003cp\u003eDrawing on the data-handling features of the company’s development platform PATH, all unstructured data will be normalised before being encrypted and archived in WORM format to ensure accurate testing and compliance with MiFID record keeping regulations.\u003c/p\u003e\n\u003cp\u003eBen Parker, CEO and Founder of eflow Global, speaks highly of the solution’s ability to lighten the load for compliance professionals.\u003c/p\u003e\n\u003cp\u003e“As with all of our offerings, our eComms solution really prioritises lightening the workload of the end user. We know that real-life expertise will never be replaced, but by automating certain time-consuming processes, end-users can retain control while greatly reducing time spent on ensuring compliance. The decision automation functionality of TZ gets us to that point.”\u003c/p\u003e\n\u003cp\u003eSpeaking on the decision to prioritise their work in the eComms space, Parker also spoke to the recent COVID-19 pandemic. “Increasing focus on our eComms offerings has always been on our development process, but the rapid change in working practices over the course of the last 2 years has accelerated our work.”\u003c/p\u003e\n\u003cp\u003eeflow’s eComms solution is currently scheduled for release in Q1 2023. \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003eSpeak to eflow\u003c/a\u003e for more information on the \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eeComms Surveillance offering\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2022-08-12T08:00:00+0000"},{"title":"eflow Named in RegTech's 100 Most Innovative Companies","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-named-in-regtechs-100-most-innovative-companies/","summary":"\u003ch2 id=\"eflow-global-named-as-regtech100-company\"\u003eeflow Global named as RegTech100 Company\u003c/h2\u003e\n\u003cp\u003eFor the second consecutive year, eflow Global have been included in the RegTech100. The list, compiled by independent research firm FinTech Global, compiles \u0026ldquo;the world\u0026rsquo;s most pioneering businesses in the regulatory technology market that are helping financial institutions deal with the most pressing compliance and risk management challenges\u0026rdquo;.\u003c/p\u003e\n\u003cp\u003eNow in its sixth year, the RegTech100 list recognises the most innovative and influential RegTech companies operating in the financial services sector. Over the past several years, the list has come to be regarded as a benchmark of quality and reliability for compliance technology vendors.\u003c/p\u003e\n\u003cp\u003eThe 100 selected firms were chosen by a panel of analysts and industry experts from a longlist of 1,300 vendors compiled by RegTech analyst.\u003c/p\u003e\n\u003cp\u003eMariyan Dimitrov, RegTech Analyst Director of Research, said, “With the rapid changes in regulatory frameworks, working habits and customer expectations, compliance and regulatory technology continue to be a growing area of investment for financial institutions as they streamline their operations. The RegTech100 list helps senior executives get a better ROI on that spending by highlighting the leading companies in areas such as onboarding, risk management, fraud prevention and information security”.\u003c/p\u003e\n\u003cp\u003eA full list of the RegTech100 and detailed information about each company is available to download for free at \u003ca href=\"http://www.regtech100.com/\"\u003ewww.RegTech100.com\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2022-07-12T08:00:00+0000"},{"title":"FCA Publishes Open Letter on CFD Regulation","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fca-publishes-open-letter-on-cfd-regulation/","summary":"\u003ch2 id=\"fca-highlights-concern-for-market-integrity-in-cfd-sector\"\u003eFCA Highlights Concern for Market Integrity in CFD Sector\u003c/h2\u003e\n\u003cp\u003eThe FCA has published an \u003ca href=\"https://www.fca.org.uk/publication/correspondence/cfd-portfolio-letter-2022.pdf\"\u003eopen letter\u003c/a\u003e outlining its updated CFD regulatory enforcement strategy.\u003c/p\u003e\n\u003cp\u003eIn a \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-highlights-continuing-concerns-about-problem-firms-cfd-sector\"\u003ecorresponding press release\u003c/a\u003e, the regulator states that a staggering 80% of customers lose money when investing in CFDs. They also claim that the CFD market is particularly susceptible to abusive trading, claim that they are \u0026ldquo;concerned at the level of suspicious transaction activity in the CFD sector and the weakness of some firm\u0026rsquo;s controls\u0026rdquo;\u003c/p\u003e\n\u003cp\u003eTo that end, the regulator\u0026rsquo;s letter has stressed the importance of delivery assertive actin on market abuse. Citing the risks associated with CFD trading and the need to improve consumer protection, the regulator states that firms must ensure that they have effective market abuse systems in place, claiming that \u0026ldquo;poor systems and controls often result in firms being used as conduits of financial crime.\u0026rdquo;\u003c/p\u003e\n\u003cp\u003eIn instances where firms are found to fall short of the FCA\u0026rsquo;s requirements, the letter also outlines a 3-step strategy to regulatory enforcement:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003e\u003cstrong\u003eIdentify:\u003c/strong\u003e The FCA will harness both internal and external data to identify suspicious and potentially abusive or high-risk behaviours.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eIntervene:\u003c/strong\u003e When identified, the regulator will intervene to stop or limit consumer losses and restrict firms\u0026rsquo; regulated activities where necessary.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eEnforce:\u003c/strong\u003e Firms that fall short of the FCA\u0026rsquo;s requirements will be liable to receive enforcement action, including fines, public censure, and the removal of firms/individuals from the UK regulated market. The FCA\u0026rsquo;s strategy for enforcement\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003eIf you\u0026rsquo;re concerned about your regulatory compliance, \u003ca href=\"https://eflowglobal.com/book-a-demo/\"\u003ebook a demo of our market abuse solution\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2022-02-12T10:01:00+0000"},{"title":"London Broker Fined £530,000 Following Market Abuse Reporting Failures","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/london-broker-fined-530000-following-market-abuse-reporting-failures/","summary":"\u003ch2 id=\"fca-fines-sigma-broking-over-500000-following-market-abuse-reporting-failures\"\u003eFCA Fines Sigma Broking Over £500,000 Following Market Abuse Reporting Failures\u003c/h2\u003e\n\u003cp\u003eLondon-based broker Sigma Broking Limited has been fined £531,000 for failing to accurately report on 56,000 CFD transactions between December 2014 and August 2016, the FCA has reported.\u003c/p\u003e\n\u003cp\u003eThe regulator has claimed that, as a result of these reporting failures, Sigma Broking failed to identify and report 97 suspicious transactions and/or orders which may have constituted manipulative or abusive trading.\u003c/p\u003e\n\u003cp\u003eA number of sanctions have been levelled at Sigma\u0026rsquo;s board of directors. Former Chief Executive and Director Simon Tyson and former Director Stephen Tomlin have both been issued prohibitions by the FCA, preventing the pair from holding significant management functions in firms regulated by the FCA.\u003c/p\u003e\n\u003cp\u003eThese prohibitions were accompanied by fines of £67,900 and £69,600 respectively. Current director Matthew Kent was also fined £83,000.\u003c/p\u003e\n\u003ch3 id=\"insufficient-monitoring\"\u003eInsufficient Monitoring\u003c/h3\u003e\n\u003cp\u003eSpeaking on these fines, Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, stated:\u003c/p\u003e\n\u003cp\u003e\u0026lsquo;Firms must accurately report their transactions and bring any suspicious activity to our attention. Sigma failed to do this, which left potential market abuse undetected. Those failures came from the top and two directors have been banned from holding senior positions in financial services, as a result.\u003c/p\u003e\n\u003cp\u003eAccurate transaction reporting and effective surveillance are crucial tools in identifying dodgy dealing that undermines clean markets. These bans and the scale of the fines we have imposed demonstrate our determination to ensure firms – and those who lead them – meet the reporting standards we expect.\u0026rsquo;\u003c/p\u003e\n","date_published":"2022-28-11T10:01:00+0000"},{"title":"What Is Trade Surveillance? Market Abuse Monitoring Explained","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/what-is-trade-surveillance-market-abuse-monitoring-explained/","summary":"\u003cp\u003e\u003cem\u003eDoes your firm need a trade surveillance solution?\u003c/em\u003e \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003e\u003cem\u003eGet in touch\u003c/em\u003e\u003c/a\u003e \u003cem\u003eto find out how we can help.\u003c/em\u003e\u003c/p\u003e\n\u003ch2 id=\"what-exactly-is-trade-surveillance\"\u003eWhat Exactly is Trade Surveillance?\u003c/h2\u003e\n\u003cp\u003eWhile it can get very complex in practice, the concept is fairly simple: trade surveillance is the process of monitoring financial transactions for potentially illegal or abusive trading. This is a requirement of most financial regulators throughout the world.\u003c/p\u003e\n\u003ch3 id=\"what-is-a-trade-surveillance-system\"\u003eWhat is a Trade Surveillance System?\u003c/h3\u003e\n\u003cp\u003eMore often than not the act of trade surveillance is carried out by an automated ‘trade surveillance system’. A \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance system\u003c/a\u003e is a web app or piece of software designed to capture a firm’s trade data and automatically test that data to find and flag any instances of potential market abuse.\u003c/p\u003e\n\u003cp\u003eWhile manually reviewing trade data might technically be considered trade surveillance, the stringent regulations put in place by financial regulators essentially invalidates this approach to market abuse monitoring. In their \u003ca href=\"https://eflowglobal.com/the-state-of-trade-surveillance-in-2022-market-watch-69/\"\u003eMarket Watch 69 newsletter\u003c/a\u003e, the FCA stated that it was no longer sufficient to ‘apply generic calibration across (and within) asset classes, where the nature and scale of the metrics involved are significantly different’, highlighting the need for a more sophisticated approach to market abuse detection.\u003c/p\u003e\n\u003cp\u003eThe complexity of current financial regulations, the number of different forms of potential market abuse which exist, and the sheer quantity of data which must be monitored in order to comply with the relevant regulations necessitates at least some level of automation in order for a trade surveillance system to be accepted by financial regulators.\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/trade-surveillance-graphic.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003ch3 id=\"do-i-need-a-trade-surveillance-system\"\u003eDo I Need a Trade Surveillance System?\u003c/h3\u003e\n\u003cp\u003eChances are, if you are part of a financial firm that takes part in the trading of financial instruments, you will need to implement a trade surveillance system. Monitoring, capturing and reporting abusive trading is required by all global financial regulators, and while the actual regulations put in place by these regulators vary from country to country, the need for appropriate trade surveillance processes is essentially universal.\u003c/p\u003e\n\u003cp\u003eIn the past, before the RegTech industry was well-established and specialised compliance vendors began to offer products to the market, in-house trade surveillance solutions were far more common. However, as the demands of regulators grow stricter and the regulatory requirements of firms become more varied and complex, these legacy systems are becoming less and less common. Regulators are no longer only concerned with the regulation of vanilla equity markets, but are rather taking a more high-level “helicopter” approach in an attempt to expand their visibility across more exotic asset classes - an approach which further invalidates legacy surveillance systems.\u003c/p\u003e\n\u003cp\u003eSince the late 2010s, many firms have begun opting for best-in-class market abuse vendors or holistic, all-in-one compliance solutions rather than attempting to shoulder their own regulatory burdens by building and maintaining in-house solutions.\u003c/p\u003e\n\u003cp\u003eLegacy systems are often hard coded, making them difficult to adapt and expensive to update. With the rapid rate of current regulatory change, this approach is becoming more and more unviable.\u003c/p\u003e\n\u003ch3 id=\"what-happens-if-i-dont-have-a-trade-surveillance-system\"\u003eWhat Happens if I Don’t Have a Trade Surveillance System?\u003c/h3\u003e\n\u003cp\u003eFirms who trade without a trade surveillance system risk fines, permanent closure or even prison time.\u003c/p\u003e\n\u003cp\u003eBefore acts like MAR, MiFID II and Dodd-Frank were passed, financial regulators took a more tokenistic approach to enforcing market integrity. Having something - anything - in place was often regarded as enough to tick a box, and severe punishments and sanctions were rarely, if ever, enforced.\u003c/p\u003e\n\u003cp\u003eThis, however, is no longer the case. Global financial regulators are becoming more stringent by the year. Sanctions are becoming heftier, and the actual requirements firms are expected to meet are becoming stricter and more specific. In recent months, the FCA has stressed the importance of being able to \u003ca href=\"https://eflowglobal.com/the-state-of-trade-surveillance-in-2022-market-watch-69/\"\u003edynamically set testing parameters\u003c/a\u003e to account for market variables, the MFSA has imposed stricter market abuse guidelines, and countless financial institutions including \u003ca href=\"https://eflowglobal.com/etrade-fined-350k-for-market-abuse-surveillance-failures/\"\u003eE-TRADE\u003c/a\u003e and \u003ca href=\"https://eflowglobal.com/natwest-plead-guilty-to-spoofing-charges-will-pay-35m/\"\u003eNatWest\u003c/a\u003e have been fined by financial regulators for market abuse infringements.\u003c/p\u003e\n\u003cp\u003eIn order to remain compliant, firms today are expected to have a fully automated system capable of performing sophisticated, machine-learning powered tests on anything from a few dozen to millions of trades per day; anything less than this risks swift regulatory action.\u003c/p\u003e\n\u003ch3 id=\"how-does-trade-surveillance-work\"\u003eHow Does Trade Surveillance Work?\u003c/h3\u003e\n\u003cp\u003eExactly how a trade surveillance system works will obviously vary depending on the system being used. Even so, assuming we’re talking about an automated system that meets the demands of financial regulators as they stand today, there are certain features which all good trade surveillance systems should have.\u003c/p\u003e\n\u003cp\u003eThe process will usually start with the trade surveillance system automatically loading all of a client’s trade data. This data will then usually be enriched with market data and reference data. This step allows the surveillance system to analyse a client’s trade data against the market so that any anomalies can be highlighted.\u003c/p\u003e\n\u003cp\u003eThe system will then perform a number of tests on the client’s trade data and flag any instances of trading which are considered suspicious.\u003c/p\u003e\n\u003cp\u003eIt will then generally be the job of a firm’s compliance team to manually review any flagged trades. False positives can then be closed off and disregarded, while genuinely suspicious trades can be captured and added to reports which can then be sent to regulators.\u003c/p\u003e\n\u003cp\u003eBecause of how data-dense this process can be, a good trade surveillance system should attempt to simplify and minimise the amount of information displayed to the user. Features such as being exception-based (only displaying infringing or potentially suspicious trade data), escalation workflows, note making and full audit trails all contribute to this and should be seen as high priority when shopping for a trade surveillance solution.\u003c/p\u003e\n\u003ch3 id=\"what-types-of-trading-can-be-captured-by-a-trade-surveillance-system\"\u003eWhat Types of Trading Can Be Captured by a Trade Surveillance System?\u003c/h3\u003e\n\u003cp\u003eThere are countless different types of illegal trading which fall broadly under the umbrella term of ‘market abuse’. While there is some variation from regulator to regulator, there is general consensus on what constitutes market abuse.\u003c/p\u003e\n\u003cp\u003eSome of the most common forms of market abuse include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eInsider dealing / insider trading\u003c/li\u003e\n\u003cli\u003eUnlawful disclosure of insider information\u003c/li\u003e\n\u003cli\u003eSpoofing\u003c/li\u003e\n\u003cli\u003eMarking the Open / Marking the Close\u003c/li\u003e\n\u003cli\u003eWash Trading\u003c/li\u003e\n\u003cli\u003eFront Running\u003c/li\u003e\n\u003cli\u003eSpoofing\u003c/li\u003e\n\u003cli\u003ePinging\u003c/li\u003e\n\u003cli\u003eQuote Stuffing\u003c/li\u003e\n\u003cli\u003eLayering\u003c/li\u003e\n\u003cli\u003eCross-Venue Manipulation\u003c/li\u003e\n\u003cli\u003eRamping\u003c/li\u003e\n\u003cli\u003eChurning\u003c/li\u003e\n\u003cli\u003ePainting the Tape\u003c/li\u003e\n\u003cli\u003ePump and Dump\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e\u003cimg src=\"/images/spoofing-explained-graphic.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003ch3 id=\"what-regulations-enforce-market-abuse-monitoring\"\u003eWhat Regulations Enforce Market Abuse Monitoring?\u003c/h3\u003e\n\u003cp\u003eEssentially all global financial regulators enforce market abuse regulations which require firms to perform trade surveillance in order to stay compliant. While some regulators are more advanced than others, the vast majority of regulators enforce some form of market abuse regulation. Some of the more prominent of these regulations include:\u003c/p\u003e\n\u003ch4 id=\"the-eu-markets-in-financial-instruments-directive-ii-mifid-ii\"\u003e\u003cstrong\u003eThe EU Markets in Financial Instruments Directive II (MiFID II)\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eIntroduced in January of 2018, MiFID II entirely transformed the European approach to financial regulation, not just with regards to market abuse, but the integrity of European financial markets as a whole.\u003c/p\u003e\n\u003cp\u003eAmongst a huge range of other regulations, MiFID II greatly strengthened trade surveillance requirements for UK firms. Under MiFID II, firms are required to capture and store both trade and communication data relating to a transaction for 5-7 years, regardless of whether or not that transaction was actually executed. It also provided regulators with the power to demand that authorised firms reconstruct a transaction if abusive trading is suspected.\u003c/p\u003e\n\u003ch4 id=\"the-eu-market-abuse-regulation-5962014eu-eu-mar\"\u003e\u003cstrong\u003eThe EU Market Abuse Regulation (596/2014/EU) (EU MAR)\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eMAR came into effect on 3 July 2016 and aimed to ‘establish a more uniform and stronger framework in order to preserve market integrity.’ Under this regulation, ‘any person professionally arranging or executing transactions shall establish and maintain effective arrangements, systems and procedures to detect and report suspicious orders and transactions.’\u003c/p\u003e\n\u003cp\u003eMAR states that financial firms operating in the EU are expected to publicly disclose inside information, maintain insider lists, and file Suspicious Transaction and Order Reports (STORs) highlighting and potentially suspicious trading ‘without delay’.\u003c/p\u003e\n\u003cp\u003eEU MAR superseded the pre-existing Market Abuse Directive (2003/6/EC) (MAD), extending its scope to apply to financial instruments traded on Multilateral Trading Facilities (MTFs) and Organised Trading Facilities (OTFs), as well as ‘any other conduct or action which can have an effect on such a financial instrument irrespective of whether it takes place on a trading venue’.\u003c/p\u003e\n\u003cp\u003eEU MAR also grants national regulators the power to detect and penalise market abuse performed by financial firms in their jurisdiction.\u003c/p\u003e\n\u003cp\u003e\u003cimg src=\"/images/market-abuse-regulations.png\" alt=\"\"\u003e\u003c/p\u003e\n\u003ch4 id=\"the-eu-market-abuse-directive-ii-eu-mad-ii\"\u003e\u003cstrong\u003eThe EU Market Abuse Directive II (EU MAD II)\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eMAD II can be seen as a ‘legislative package’ combining the regulations set forward in MAR, and the Directive on Criminal Sanctions for Market Abuse (CSMAD). MAD II is a combination of both the regulations with which financial regulations are expected to comply, and the sanctions which EU regulators are entitled to enforce when breaches in these regulations are detected.\u003c/p\u003e\n\u003ch4 id=\"the-uk-market-abuse-regulation-uk-mar\"\u003e\u003cstrong\u003eThe UK Market Abuse Regulation (UK MAR)\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eFollowing the United Kingdom’s exit from the European Union, the Financial Conduct Authority (FCA) onshored EU MAR into UK law by the EU (Withdrawal) Act 2018. For the most part, UK MAR is identical to its European originator. Firms are still expected to disclose inside information, maintain insider lists, and submit STORs where necessary.\u003c/p\u003e\n\u003cp\u003eHowever, there were minor changes made to STOR reporting under UK MAR. Namely, entities trading in the UK, or with branches in the UK, must report STORs to the FCA, regardless of their obligations under EU law to report STORs to an EU authority. This can lead to instances of double reporting for multinational firms with bases of operation in both the UK and the EU.\u003c/p\u003e\n\u003ch4 id=\"dodd-frank-wall-street-reform-and-consumer-protection-act-us-dodd-frank\"\u003e\u003cstrong\u003eDodd-Frank Wall Street Reform and Consumer Protection Act (US Dodd-Frank)\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eImplemented in the wake of the 2007-2008 financial crisis, the Dodd-Frank Act established a number of agencies to enforce stricter regulation of the financial services industry while implementing a number of new market abuse regulations. Among other things, Dodd-Frank implemented regulations which required firms to publicly disclose more information with regards to swaps trading in an attempt to improve both transparency and integrity. Some of the restrictions enforced by Dodd-Frank were repealed in 2018 by the US congress.\u003c/p\u003e\n\u003ch4 id=\"mas-requirements-on-controls-against-market-abuse-p013-2019\"\u003e\u003cstrong\u003eMAS Requirements on Controls against Market Abuse (P013-2019)\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eWhile not technically a regulation, this consultation paper outlines the Monetary Authority of Singapore’s proposal to impose stricter market abuse regulations for financial institutions operating in Singapore. Like the European regulations listed above, this paper proposed the public disclosure of the ‘ultimate beneficial owners of orders and trades’ as well as record keeping for transactions and instructions for broker-assisted orders and trades.\u003c/p\u003e\n\u003ch4 id=\"asic-market-integrity-rules\"\u003e\u003cstrong\u003eASIC Market Integrity Rules\u003c/strong\u003e\u003c/h4\u003e\n\u003cp\u003eThe Australian Securities and Investments Commision have implemented a range of market abuse regulations for firms with direct market access. Firms with DMA operating in Australia must notify ASIC of suspected misconduct by was of Suspicious Activity Reports (SARs)\u003c/p\u003e\n\u003ch3 id=\"im-concerned-about-my-firms-compliance---what-should-i-do\"\u003eI’m Concerned About My Firm’s Compliance - What Should I Do?\u003c/h3\u003e\n\u003cp\u003eIf you’ve found the above information confusing, you aren’t alone. Regulatory compliance is a hugely complex topic, and understanding your firm’s specific requirements can feel like an impossible task.\u003c/p\u003e\n\u003cp\u003eYour first approach should always be to speak with a compliance expert to better understand your requirements - once you understand your requirements, it will make choosing the right trade surveillance system much easier.\u003c/p\u003e\n\u003cp\u003eWe offer free consultations at this link if you would like to discuss your market abuse monitoring and \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance\u003c/a\u003e requirements in more detail.\u003c/p\u003e\n","date_published":"2022-27-07T09:01:00+0000"},{"title":"eflow Announce Successful Management Buyout ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-announce-successful-management-buyout-/","summary":"\u003ch2 id=\"eflow-executive-team-lead-management-buyout\"\u003eeflow Executive Team Lead Management Buyout\u003c/h2\u003e\n\u003cp\u003eeflow Global, the regulatory compliance technology vendor, has today announced the successful management buyout of the company.\u003c/p\u003e\n\u003cp\u003eAfter several years of sustained growth, the family-owned majority have led a buyout of all remaining VC positions through a highly bespoke funding structure provided by \u003ca href=\"https://www.smecapital.com/\"\u003eSME Capital\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eThe move is a key step in the next phase of growth for eflow. The buyout marks the start of a new period of technological innovation and geographical expansion for the RegTech100 firm.\u003c/p\u003e\n\u003cp\u003eOn the deal, CEO and Founder Ben Parker commented, \u0026ldquo;I am very glad that we have been able to achieve something which isn\u0026rsquo;t common with high growth tech businesses today - eflow is now majority owned by the executive management team. This feat wouldn\u0026rsquo;t have been possible if we didn\u0026rsquo;t have such fantastic people at every level of the company.\u0026rdquo;\u003c/p\u003e\n\u003cp\u003eParker continued by stating the importance of the MBO for current and future eflow clients. \u0026ldquo;Of course we believe that this move will be a great win for all of us at eflow, but the positive impact will be felt most of all by our clients,\u0026rdquo; said Parker. \u0026ldquo;With the successful closure of this deal, we are re-affirming our pledge to commit 60% of all profit back to research and development.\u0026rdquo;\u003c/p\u003e\n\u003cp\u003eThe company now plans to capitalise on this new-found independence by expanding and strengthening their presence in key geographical centres of the US and Asia.\u003c/p\u003e\n","date_published":"2022-05-07T09:01:00+0000"},{"title":"FCA Promises Strict Action Against Abusive Traders","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fca-promises-strict-action-against-abusive-traders/","summary":"\u003ch2 id=\"fca-publishes-market-abuse--manipulation-update\"\u003eFCA Publishes Market Abuse \u0026amp; Manipulation Update\u003c/h2\u003e\n\u003cp\u003eIn the wake of recent market volatility, the Financial Conduct Authority has published an update on their approach to market abuse and manipulation monitoring and enforcement.\u003c/p\u003e\n\u003cp\u003eThis update is the latest in a recent run of published statements from the regulator on the topic of \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance\u003c/a\u003e and market abuse detection. In May 2022, the FCA highlighted the importance of conditional parameterisation when testing for market abuse in their Market Watch 69. A month prior to that, they published a three-year plan promising to be tougher on firms operating in the UK.\u003c/p\u003e\n\u003cp\u003eWith this recent flurry of activity, the regulator has come under pressure to clarify their specific approach to market abuse - a fact which no doubt prompted the publication of this update.\u003c/p\u003e\n\u003ch3 id=\"the-fcas-approach-to-market-abuse-monitoring\"\u003eThe FCA\u0026rsquo;s Approach to Market Abuse Monitoring\u003c/h3\u003e\n\u003cp\u003eThe update begins with a detailed look at how the regulator monitors for market abuse and manipulative trading. It states:\u003c/p\u003e\n\u003cblockquote\u003e\n\u003cp\u003e\u0026ldquo;Ours is a data-led approach. We undertake daily monitoring to ensure the timeliness and accuracy of the disclosure of inside information. Firms and venues send over 30 million transaction reports and over 100 million order reports a day, which are analysed by our market data processor. This processor is a source of regulatory sunshine that allows us to oversee the market in close to real time, with dedicated software and algorithms to detect potential issues.\u0026rdquo;\u003c/p\u003e\n\u003c/blockquote\u003e\n\u003cp\u003eThey continue by stating that this data is supplemented by the 90+ weekly STOR (Suspicious Transaction and Order Reports) that are submitted by financial firms. These reports are then analysed by the regulator\u0026rsquo;s specialised analysts in order to determine whether or not abusive trading has taken place, in which case further disciplinary action will be taken.\u003c/p\u003e\n\u003cp\u003eThe update argues that the publication of their oversight work is a necessary element of improving the quality of STORs - by highlighting the shortcomings of submitted reports in their Market Watch newsletters, the FCA hopes to encourage better practices being followed by financial firms when it comes time for them to submit Suspicious Transaction and Order Reports.\u003c/p\u003e\n\u003ch3 id=\"legal-action-and-criminal-prosecution\"\u003eLegal Action and Criminal Prosecution\u003c/h3\u003e\n\u003cp\u003eThe latter half of the update shifts away from methodology and places the focus on how the FCA will pursue legal action in instances where abusive trading is found. The language used in this section is strong and promises swift and comprehensive action in response to market abuse.\u003c/p\u003e\n\u003cp\u003eCriminal prosecution is highlighted as one of the regulator\u0026rsquo;s \u0026ldquo;tools\u0026rdquo; when responding to market manipulation. They write that they have already been to court once this year, with four further cases set to have decisions made by the start of 2023.\u003c/p\u003e\n\u003cp\u003eThe regulator takes care to emphasise that, while criminal action is one of the \u0026ldquo;tools at [their] disposal\u0026rdquo;, it is not the only one. In particular, they mention pursuing civil cases which require a lesser standard of proof, and working with other international regulators to disrupt abusive trading across borders. They highlight that the latter of these two approaches has recently led to collaboration between the FCA and the DFSA in Dubai, the AMF in France, and numerous US regulators, all of which led to action taking place.\u003c/p\u003e\n\u003ch3 id=\"the-importance-of-deterrence\"\u003eThe Importance of Deterrence\u003c/h3\u003e\n\u003cp\u003eThe update concludes by stating the importance of the regulator\u0026rsquo;s retaliation against market abuse, not only for the sake of legal action, but for deterring future would-be abusive traders. The regulator defines their approach as a \u0026ldquo;blended approach of prevention and deterrence across all forms of market abuse\u0026rdquo; which \u0026ldquo;involves the collective efforts of approximately 90 enforcement staff supported by dedicated specialist intelligence, legal and cyber resources, as well as [their] primary and secondary market oversight teams\u0026rdquo;.\u003c/p\u003e\n\u003cp\u003eThe FCA\u0026rsquo;s hope is that this recent uptick in legal action being taken against abusive traders, as well as the increased publicity being given to this effort by the regulator, traders will reconsider engaging in abusive trading. They close with a simple message: \u0026ldquo;those considering attempting to manipulate our markets should be on notice that we will not hesitate to act\u0026rdquo;.\u003c/p\u003e\n","date_published":"2022-21-06T09:01:00+0000"},{"title":"Market Volatility and Trade Surveillance: A Modern Appoach","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/market-volatility-and-trade-surveillance-a-modern-appoach/","summary":"\u003ch2 id=\"trade-surveillance-and-market-abuse-during-times-of-volatility\"\u003eTrade Surveillance and Market Abuse During Times of Volatility\u003c/h2\u003e\n\u003cp\u003eIn the past several months, the widespread impact of rising interest rates, global supply chain issues and record levels of inflation has been felt across markets globally. In the US markets, the value of publicly traded US stocks is down $9 trillion since the start of 2022; the value of cryptocurrencies is currently well below their peak, leading to lower user adoption rates; and a \u003ca href=\"https://www.cnbc.com/2022/06/08/european-markets-data-earnings-us-fed.html\"\u003erecent profit warning\u003c/a\u003e from Credit Suisse led to losses across Europe.\u003c/p\u003e\n\u003cp\u003eWhile this volatility has caused major uncertainty for investors, regulators still expect firms to fulfil their usual regulatory obligations. However, during periods of high market volatility such as this, meeting these obligations becomes increasingly difficult.\u003c/p\u003e\n\u003cp\u003eOne area of regulatory compliance which is impacted particularly heavily by this phenomenon is trade surveillance. Monitoring trades for market abuse and insider trading using a simple, rule-based surveillance system during extended periods of market volatility creates obvious difficulties when setting tolerances and testing parameters. This, in turn, can lead to a vast increase in false positives, or worse: manipulative trading slipping through the net.\u003c/p\u003e\n\u003cp\u003eThe root cause of this issue is an overly static approach to trade surveillance. For example, a simple, static insider-trading test might trigger an alert when it is found that a trader took a position in a security prior to a price movement or an item of news which might cause a subsequent price movement. In times of relative market tranquillity, this may not cause an issue. However, during periods of market volatility, violent and rapid swings in instrument price are not uncommon, meaning that the static approach would lead to huge quantities of false positive alerts. This in turn would cause compliance teams to waste time clearing irrelevant alerts,increasing the likelihood of actually manipulative trading not being captured in a timely fashion.\u003c/p\u003e\n\u003ch3 id=\"the-solution---conditional-parameters\"\u003eThe Solution - Conditional Parameters\u003c/h3\u003e\n\u003cp\u003eThe solution to this problem is to implement a surveillance system which is able to account for market volatility. By utilising machine learning based \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance systems\u003c/a\u003e such as TZ to provide users with the ability to set conditional parameters which can recognise market volatility and filter our false positives without any manual intervention from the user.\u003c/p\u003e\n\u003cp\u003eConditional parameters allow users to set different tolerances for various forms of market abuse which will then be implemented when particular market conditions are met. TZ can recognise abnormally large price movements in particular instruments, then analyse this movement to determine whether or not trading which takes place around this event should be regarded as suspicious.\u003c/p\u003e\n\u003cp\u003eThis is an opinion shared by the FCA. The UK regulator recently advocated for the use of conditional parameters when monitoring for market abuse in the \u003ca href=\"https://eflowglobal.com/the-state-of-trade-surveillance-in-2022-market-watch-69/\"\u003elatest edition of their Market Watch newsletter\u003c/a\u003e.\u003c/p\u003e\n\u003cdiv style=\"display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;\"\u003e\n    \u003ciframe src=\"https://www.linkedin.com/embed/feed/update/urn:li:share:6932305929463840768\" height=\"350\" width=\"550\" frameborder=\"0\" allowfullscreen=\"\" title=\"Embedded post\"\u003e\u003c/iframe\u003e\n\u003c/div\u003e\n\n\u003cp\u003eThe utility of conditional parameters extends beyond widespread market volatility as well. Even during periods of relatively low volatility, conditional parameters provide compliance teams with the ability to implement flexible tolerances which can account for a variety of criteria such as instrument liquidity, trade volume, execution methods, price, and any other parameterised setting within TZ.\u003c/p\u003e\n\u003cp\u003eConditional parameters - also sometimes referred to as ‘dynamic parameters’ - allow users to categorise records in accordance with various metrics and apply different testing parameters conditionally/dynamically depending on the exact nature of the record being tested. An example could be a client applying a subset of parameters based on a particular instrument or client/entity, strategy or execution method (DMA) etc.\u003c/p\u003e\n\u003cp\u003eWith no end in sight to this market volatility, compliance teams will be stretched more thinly than ever. As such, an automated and sophisticated trade surveillance solution is a must-have. By reducing the compliance workload, this approach not only reduces false positives, but frees up time to ensure real market abuse is monitored and dealt with.\u003c/p\u003e\n","date_published":"2022-13-06T09:01:00+0000"},{"title":"The State of Trade Surveillance in 2022: Market Watch 69","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/the-state-of-trade-surveillance-in-2022-market-watch-69/","summary":"\u003ch2 id=\"the-fca-discusses-the-state-of-trade-surveillance-in-latest-market-watch-newsletter\"\u003eThe FCA Discusses The State of Trade Surveillance in Latest Market Watch Newsletter\u003c/h2\u003e\n\u003cp\u003e6 months on from the last edition, the Financial Conduct Authority has released Market Watch 69 - the latest in their series of newsletters focused specifically on market-abuse surveillance.\u003c/p\u003e\n\u003cp\u003eWhile it has been quite some time since the last edition, this newsletter comes off the back of a recent flurry of activity from the regulator with regards to the regulation of market abuse. Last month, in the space of a week, they published a strict 3-year plan for regulation in the UK and announced a CryptoSprint to discuss the regulation of digital assets and cryptocurrencies.\u003c/p\u003e\n\u003cp\u003eMarket Watch 69 covers a lot of ground, highlighting improvements to be made in market abuse risk assessments, outsourcing and financial crime. However, the greatest point of emphasis is a newly developed stance on trade surveillance, and it is this topic that will be the focus of the following article.\u003c/p\u003e\n\u003ch3 id=\"a-more-targeted-approach\"\u003eA More Targeted Approach\u003c/h3\u003e\n\u003cp\u003eMarket Watch 69 offers more direct and explicit instruction than any of the preceding newsletters with regards to trade surveillance. In particular, it takes great care to outline specific features that a firm’s market abuse solution should have so as to ensure proper compliance with MAR.\u003c/p\u003e\n\u003cp\u003ePrevious editions of the newsletter have shied away from explicitly detailing the features and functionality that financial firms should look for in their market abuse solutions. This fact has been readily noted in both the RegTech space and the financial services industry more generally; a 2021 report published by RegTech Associates and City of London cited the ‘hesitancy of regulators to promote RegTech solutions’ as one of the greatest barriers to RegTech adoption.\u003c/p\u003e\n\u003cdiv style=\"display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;\"\u003e\n    \u003ciframe src=\"https://www.linkedin.com/embed/feed/update/urn:li:share:6932305929463840768\" height=\"350\" width=\"550\" frameborder=\"0\" allowfullscreen=\"\" title=\"Embedded post\"\u003e\u003c/iframe\u003e\n\u003c/div\u003e\n\n\u003cp\u003eMarket Watch 69, however, bucks this trend. While previous newsletters favoured general advice, this edition takes a far more targeted approach, providing specific technical requirements which successful \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance solutions\u003c/a\u003e are expected to meet in order to qualify as effective.\u003c/p\u003e\n\u003ch3 id=\"dynamic-parameters\"\u003eDynamic Parameters\u003c/h3\u003e\n\u003cp\u003eOne such requirement is the inclusion of dynamic parameters. The newsletter states that while ‘some firms consider the different characteristics of different asset classes and instruments before applying this information to calibrating alert scenarios’, a number of firms ‘apply generic calibration across (and within) asset classes, where the nature and scale of the metrics involved (eg price movement) are significantly different’.\u003c/p\u003e\n\u003cp\u003ePut simply, the FCA here is highlighting the importance of being able to configure your \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance system\u003c/a\u003e to test records differently based on factors such as asset class, volatility or liquidity. Depending on the system being used, this feature may be called ‘dynamic’ or ‘conditional’ parameterisation, but the general principle is the same - it is the ability to automatically alter testing parameters based on various criteria, and is usually powered by some form of machine learning.\u003c/p\u003e\n\u003cp\u003eFor instance, a highly liquid, high value stock would need to be tested against a different set of parameters and tolerances than an illiquid, low value instrument. Different instruments have different surveillance requirements, and as such, an effective trade surveillance solution should be able to differentiate between these types and alter its testing approach accordingly.\u003c/p\u003e\n\u003cp\u003eThe ability to set alert parameters dynamically based on metrics such as market volatility, instrument liquidity and major indices movement has been a cornerstone of eflow’s \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance solution TZ\u003c/a\u003e for several years now. TZ offers a feature called ‘scenarios’. Scenarios are a way of identifying and categorising records within TZ which exhibit common behaviours or which have common surveillance requirements. Once a record is placed within one of these scenarios, testing parameters can be applied to it dynamically, offering a flexible approach to testing which is more representative and far less likely to generate false positives.\u003c/p\u003e\n\u003cp\u003eWhile static surveillance solutions which blanket apply the same alert parameters to all trades may have sufficed in years gone by, the inclusion of the above wording in this newsletter shows that regulators will no longer be satisfied with this approach. The expectations of regulators are only growing higher, and\u003c/p\u003e\n\u003ch3 id=\"a-lack-of-awareness\"\u003eA Lack Of Awareness\u003c/h3\u003e\n\u003cp\u003eAnother point of emphasis - albeit a less technical one - is the simple lack of awareness that many firms have with regards to how to properly configure their trade surveillance system. The FCA states that, even when using a solution with the necessary capability to detect insider trading or market abuse, ‘sometimes firms are unaware of these developments and so may not be making best use of the technology’.\u003c/p\u003e\n\u003cp\u003eThis highlights the importance not just of good technology, but of proper support. eflow utilises a three-pillared approach to client support, offering a technical helpdesk, frequent client engagements to keep clients up to date with the latest developments, and active monitoring to ensure that clients are making proper use of their system. Without this support network, financial firms run the risk of failing to comply despite having a trade surveillance system in place.\u003c/p\u003e\n\u003ch3 id=\"our-solution\"\u003eOur Solution\u003c/h3\u003e\n\u003cp\u003eAll of the concerns about the current state of trade surveillance expressed in Market Watch are addressed by \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eTZ\u003c/a\u003e- our trade surveillance solution. If you would like more information on how TZ could help your firm comply, get in touch, or book a consultation.\u003c/p\u003e\n","date_published":"2022-17-05T09:01:00+0000"},{"title":"MFSA Publishes Circular on Market Abuse Regulation","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/mfsa-publishes-circular-on-market-abuse-regulation/","summary":"\u003ch2 id=\"maltese-regulator-publishes-circular-on-eu-mar\"\u003eMaltese Regulator Publishes Circular on EU MAR\u003c/h2\u003e\n\u003cp\u003eMFSA - the Malta Financial Services Authority - has published a \u003ca href=\"https://www.mfsa.mt/wp-content/uploads/2022/04/Circular-on-the-Market-Abuse-Regulation-Article-16-of-MAR-Prevention-and-Detection-of-Market-Abuse.pdf%22\"\u003ecircular\u003c/a\u003e on the Market Abuse Regulation (MAR). The circular highlights the obligations of regulated entities to prevent and detect market abuse, while providing \u0026lsquo;recommendations of what are considered to be the best practices [\u0026hellip;] to seek to adhere to their legal obligations under MAR.\u0026rsquo;\u003c/p\u003e\n\u003cp\u003eIn particular the regulator focuses on market operators and investment firms that operate a trading venue, but there is also attention given to \u0026rsquo;every person that professionally arranges or executes transactions in financial instruments. The following article covers some key take aways from this circular, and gives some further information on how these entities might be impacted.\u003c/p\u003e\n\u003cdiv style=\"display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;\"\u003e\n    \u003ciframe src=\"https://www.linkedin.com/embed/feed/update/urn:li:share:6897074782513324032\" height=\"350\" width=\"550\" frameborder=\"0\" allowfullscreen=\"\" title=\"Embedded post\"\u003e\u003c/iframe\u003e\n\u003c/div\u003e\n\n\u003ch3 id=\"general-obligation-to-maintain-effective-arrangements-systems-and-procedures\"\u003eGeneral Obligation to Maintain Effective Arrangements, Systems and Procedures\u003c/h3\u003e\n\u003cp\u003eThe circular begins with an overview of the broad obligations of regulated Maltese entities with regards to market abuse. The regulator emphasises that market operators, investment firms and individuals who professionally engage in trading \u0026lsquo;must establish and maintain effective arrangements, systems and procedures to detect and notify suspicious orders and transactions\u0026rsquo;. It follows this  with an assertion that, should an entity detect suspicious trading which \u0026lsquo;could constitute insider dealing, market manipulation, or attempted insider dealing or market manipulation\u0026rsquo;, that entity is obliged to notify the MFSA \u0026lsquo;without delay\u0026rsquo;.\u003c/p\u003e\n\u003cp\u003eThe regulator continues that any arrangements, systems and procedures in place must be:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003eAppropriate and proportionate in relation to the scale, size and nature of their business activity;\u003c/li\u003e\n\u003cli\u003eRegularly assessed, at least through an annually conducted audit and internal review, and updated when necessary;\u003c/li\u003e\n\u003cli\u003eClearly documented in writing, including any changes or updates to them, for the purposes of complying with this Regulation, and that the documented information is maintained for a period of five years.\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003eThe systems put in place must also be able to perform the following functions:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003eAllow for the analysis, individually and comparatively, of each and every transaction executed and order placed, modified, cancelled or rejected in the systems of the trading venue and, in the case of persons professionally arranging or executing transactions, also outside a trading venue;\u003c/li\u003e\n\u003cli\u003eProduce alerts indicating activities requiring further analysis for the purposes of detecting potential insider dealing or market manipulation or attempted insider dealing or market manipulation;\u003c/li\u003e\n\u003cli\u003eCover the full range of trading activities undertaken by the persons concerned.\u003c/li\u003e\n\u003c/ol\u003e\n\u003ch3 id=\"best-practices\"\u003eBest Practices\u003c/h3\u003e\n\u003cp\u003eAlong with this general guidance, the circular provides a number of more specific best practices to be followed as a means of ensuring compliance with MAR.\u003c/p\u003e\n\u003cp\u003eOne of these best practices is the lowering of the thresholds of the \u0026lsquo;reasonable suspicion test\u0026rsquo;. The regulator expresses an opinion that, despite the recent  improvement in the submission of STORs, there is still \u0026lsquo;a high-degree of under-reporting of suspicious orders and transactions\u0026rsquo;.\u003c/p\u003e\n\u003cp\u003eThe reason they give for this under-reporting is that \u0026rsquo;the thresholds of the reasonable suspicion test are commonly too stringent resulting in each and every suspicion being discarded on the basis of a high threshold being set for the reasonable suspicion test\u0026rsquo;. Put simply, it seems that MFSA is of the opinion that, even in instances where a regulated firm has an appropriate trade surveillance system in place, the parameterised tolerance thresholds have been set such that the vast majority of suspicious trades are not flagged as suspicious, thereby meaning they go un-reported.\u003c/p\u003e\n\u003cp\u003eThe appropriate solution to this problem, as stated by the MFSA, is re-contextualise the reporting of suspicious trades. They argue that a reporting firm does not need to be 100% certain of abusive trading in order to submit an STOR; rather, it should be regarded as a way of flagging \u003cem\u003epotential or suspected market abuse\u003c/em\u003e. They write \u0026lsquo;a STOR should not be interpreted as being a notification of market abusive behaviour but rather, as the name implies, a notification of suspected market abuse. In other words, the submission of a STOR does not imply market abuse in itself.\u0026rsquo;\u003c/p\u003e\n\u003cp\u003eThis is where the benefit of a trade surveillance system like \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eTZ\u003c/a\u003emakes itself known. With the ability to set parameters dynamically according to various criteria such as market volatility and instrument liquidity, users can establish a more nuanced approach to the detection of potentially suspicious trading.\u003c/p\u003e\n\u003cp\u003eAs well as this the MFSA lists a number of other best practices, including streamlining the analysis of suspicious trades and implementing proper risk management.\u003c/p\u003e\n\u003ch3 id=\"how-to-stay-compliant\"\u003eHow to Stay Compliant\u003c/h3\u003e\n\u003cp\u003eTo stay compliant with these stringent new approaches to market abuse, a robust trade surveillance tool is necessary. If you would like to learn more about how our trade surveillance software TZ could help your firm, fill out a \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003econtact form\u003c/a\u003e or \u003ca href=\"https://eflowglobal.com/book-a-demo/\"\u003ebook a free consultation\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2022-21-04T09:01:00+0000"},{"title":"eflow Partners with TeleMessage to Enhance eComms Offering","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-partners-with-telemessage-to-enhance-ecomms-offering/","summary":"\u003ch2 id=\"eflow-global-teams-up-with-telemessage\"\u003eeflow Global Teams Up With TeleMessage\u003c/h2\u003e\n\u003cp\u003e\u003cem\u003eInterested in this new partnership? Fill out a\u003c/em\u003e \u003ca href=\"https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.telemessage.com%2Flp-eflow-mobile-recording-for-compliance%2F\u0026amp;data=04%7C01%7Cgil%40telemessage.com%7C2e94940f4b5f4f69f0db08da17b4ec0a%7C7d524a33f83246319e10bd43d817e0a5%7C0%7C0%7C637848363066493150%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000\u0026amp;sdata=tYW%2BhyspqLkDZT7oMZ%2FVdQ24%2BKtKF6Y%2BIfLPmizzBQQ%3D\u0026amp;reserved=0\"\u003e\u003cem\u003eform here\u003c/em\u003e\u003c/a\u003e \u003cem\u003eto see how eflow and TeleMessage could help your firm.\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eeflow Global will partner with \u003ca href=\"https://www.telemessage.com/\"\u003eTeleMessage\u003c/a\u003e to enhance the communication data available in their market data library, it has been announced. The partnership aims to further strengthen the \u003ca href=\"https://eflowglobal.com/tz-ecomms-surveillance/\"\u003eeComms surveillance\u003c/a\u003e functionality of eflow’s RegTech solution \u003ca href=\"https://eflowglobal.com/tz-regulatory-compliance/\"\u003eTZ\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eIncreasingly, regulators are requiring higher volumes of more diverse data types for the purposes of trade surveillance, meaning that trade and market data alone are no longer sufficient to ensure proper compliance. With more people working from home and utilizing their mobile apps for communication, the mobile communications that take place around a transaction can provide essential information that might highlight abusive trading, and as such properly capturing and analysing these communications is a vital part of modern trade surveillance.\u003c/p\u003e\n\u003cp\u003eWith this in mind, this partnership will allow eflow to leverage TeleMessage’s extensive mobile eComms capture capabilities and data store for use in their trade surveillance system TZ.\u003c/p\u003e\n\u003cp\u003eeflow provides financial firms with cloud-based solutions designed to ensure compliance with a range of financial regulations. TZ – their flagship trade surveillance solution - provides firms with solutions for \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003emarket abuse and insider trading\u003c/a\u003e, as well as \u003ca href=\"https://eflowglobal.com/tz-best-execution-and-transaction-cost-analysis/\"\u003ebest execution and transaction cost analysis\u003c/a\u003e.\u003c/p\u003e\n\u003ch3 id=\"telemessage\"\u003eTeleMessage\u003c/h3\u003e\n\u003cp\u003eTeleMessage has been providing messaging and communication archiving products and services for over 20 years. Their market-leading connectivity with eComms platforms and telecom carriers will be an invaluable addition to eflow’s existing library of market data.\u003c/p\u003e\n\u003cp\u003eUnder this new partnership, unstructured communication data from a range of platforms including WhatsApp, WeChat, Telegram, Signal, SMS, MMS and voice calls will be captured, normalised and organised before being loaded into TZ for surveillance and testing against a range of regulatory requirements.\u003c/p\u003e\n\u003cp\u003eBen Parker, CEO and Founder of eflow, speaks very highly of the partnership. “As a RegTech vendor, extending the scope of our market data library is always high on our list of priorities”, says Parker. “I have every confidence that this new partnership will achieve just that.\u003c/p\u003e\n\u003cp\u003eGuy Levit, CEO of TeleMessage said “As regulators tighten their grip on mobile communication, we are delighted to partner with eflow, expanding the possibilities of regulated firms and employees to chat and use mobile devices.”\u003c/p\u003e\n","date_published":"2022-10-04T09:01:00+0000"},{"title":"FCA Publishes Strict Three-Year Strategy For Regulation In The UK","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fca-publishes-strict-three-year-strategy/","summary":"\u003ch2 id=\"fca-publishes-2022-2025-strategy-promises-to-be-tougher-on-firms-operating-in-the-uk\"\u003eFCA Publishes 2022-2025 Strategy, Promises to be Tougher on Firms Operating in the UK\u003c/h2\u003e\n\u003cp\u003eThe FCA has published a \u003ca href=\"https://www.fca.org.uk/publication/corporate/our-strategy-2022-25.pdf\"\u003ethree-year plan\u003c/a\u003e outlining its key commitments for the years from 2022-2025.\u003c/p\u003e\n\u003cp\u003ePublished on April 7th, the 32 page document outlines 3 \u0026lsquo;key areas\u0026rsquo; which will serve as focal points for the regulator over the coming years. These key areas are:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eReducing and preventing serious harm\u003c/li\u003e\n\u003cli\u003eSetting and testing higher standards\u003c/li\u003e\n\u003cli\u003ePromoting competition and positive change\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWith an aim to promote participation, competition and integrity in UK markets, this strategy promises to increase the culpability of UK firms when it comes to regulatory compliance. The document states that, where the regulator lacks \u0026lsquo;regulatory power to intervene\u0026rsquo;, they will pursue other methods of harm-prevention, including making public announcements and pursuing the implementation of new legislation.\u003c/p\u003e\n\u003cdiv style=\"display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;\"\u003e\n    \u003ciframe src=\"https://www.linkedin.com/embed/feed/update/urn:li:share:6917742282326581248\" height=\"350\" width=\"550\" frameborder=\"0\" allowfullscreen=\"\" title=\"Embedded post\"\u003e\u003c/iframe\u003e\n\u003c/div\u003e\n\n\u003ch3 id=\"nikhil-rathis-message\"\u003eNikhil Rathi\u0026rsquo;s Message\u003c/h3\u003e\n\u003cp\u003eNikhil Rathi, Chief Executive of the Financial Conduct Authority, opens the strategy document with a high-level overview of the regulator\u0026rsquo;s change in approach.\u003c/p\u003e\n\u003cp\u003eIn this introduction, Rathi puts emphasis on increasing the measures taken by the FCA in response to compliance breaches. He writes, \u0026lsquo;we are being tougher on firms\u0026rsquo; operating in the UK, and claims that the FCA are \u0026lsquo;using data more systematically to ask the firms [they] supervise more rigorous questions\u0026rsquo;.\u003c/p\u003e\n\u003cp\u003eFollowing on from this, he claims that a focal point will be to use their \u0026rsquo;enforcement powers more actively, pushing the boundaries where [they] need to\u0026rsquo;.\u003c/p\u003e\n\u003cp\u003eTowards the end of his introduction, Rathi also claims that this increased strictness will be carried out as a means of \u0026lsquo;[adapting] the regulatory system to further strengthen the attractiveness of UK capital markets\u0026rsquo;, citing improvements in sustainability, transparency and accountability as essential to achieving this goal.\u003c/p\u003e\n\u003ch3 id=\"the-strategys-approach-to-market-abuse\"\u003eThe Strategy\u0026rsquo;s Approach to Market Abuse\u003c/h3\u003e\n\u003cp\u003eOf key importance to the FCA\u0026rsquo;s goal of \u0026lsquo;reducing and preventing serious harm\u0026rsquo; is an increased focus on detecting and preventing market abuse.\u003c/p\u003e\n\u003cp\u003eIn particular, the strategy document highlights the importance of market abuse reporting and correct controls around insider information.\u003c/p\u003e\n\u003cp\u003eThe strategy claims that implementing better controls around market abuse is an essential step in improving the attractiveness of UK markets, stating that \u0026lsquo;market abuse undermines the integrity of the UK financial system, eroding confidence and lowering participation, to the detriment of all market participants\u0026rsquo;.\u003c/p\u003e\n\u003cp\u003eThe regulator\u0026rsquo;s attitude towards \u0026lsquo;assertive action\u0026rsquo; on market abuse seems to be focused on increasing the strictness of supervisory action as a means of deterrence. The section closes with a stark warning: \u0026lsquo;When we find market abuse, we will take decisive action\u0026rsquo;. The document continues, \u0026lsquo;We will use the full range of our supervisory and enforcement tools, including criminal and civil sanctions where appropriate, to pursue offenders and deter future wrongdoers\u0026rsquo;.\u003c/p\u003e\n\u003ch3 id=\"our-solution-to-market-abuse\"\u003eOur Solution to Market Abuse\u003c/h3\u003e\n\u003cp\u003eIf you\u0026rsquo;re concerned about these increased market abuse enforcement measures, \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003econtact us\u003c/a\u003e to learn more about TZ, our \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance solution\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2022-07-04T09:01:00+0000"},{"title":"FCA Announces CryptoSprint to Discuss Cryptocurrency Regulation","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fca-announces-cryptosprint-to-discuss-cryptocurrency-regulation/","summary":"\u003ch2 id=\"fca-schedules-two-day-cryptosprint-to-discuss-regulation-of-cryptoassets\"\u003eFCA Schedules Two-Day CryptoSprint to Discuss Regulation of CryptoAssets\u003c/h2\u003e\n\u003cp\u003eThe FCA has announced that it will hold a two-day \u0026lsquo;CryptoSprint\u0026rsquo; on 10th May 2022 - 11th May 2022. The event will raise a number of key questions about the future of CryptoAsset regulation within the UK.\u003c/p\u003e\n\u003cp\u003eThe purpose of this event is to increase \u0026lsquo;understanding of the emerging cryptoasset technologies and any of the regulatory limitations requiring further consideration, while ensuring [they] support beneficial innovation and mitigate risks to market integrity and consumers\u0026rsquo;.\u003c/p\u003e\n\u003ch3 id=\"what-is-a-cryptosprint\"\u003eWhat is a CryptoSprint?\u003c/h3\u003e\n\u003cp\u003eThis will be the first so-called \u0026lsquo;CryptoSprint\u0026rsquo; hosted by the FCA, but it appears that the event will follow the format of their \u0026lsquo;TechSprints\u0026rsquo; - events which are frequently hosted by the FCA which aim to bring together experts from both within and outside the financial services industry to discuss technology-based solutions to particular industry challenges.\u003c/p\u003e\n\u003cp\u003eThe first such TechSprint was hosted in 2016, and there have been nine hosted in the time since.\u003c/p\u003e\n\u003cp\u003eA CryptoSprint, much like a TechSprint, is focused on developing technological solutions to regulatory problems, but is entirely centered around the CryptoAssets industry. The FCA have stated that this event is \u0026lsquo;focused on informing regulatory policy changes based on evolving technologies\u0026rsquo;.\u003c/p\u003e\n\u003ch3 id=\"who-can-attend\"\u003eWho Can Attend?\u003c/h3\u003e\n\u003cp\u003eThe FCA have stated that they are looking for input from \u0026lsquo;innovators, academics, regulators, technologists and subject matter experts who will collaborate intensively to help inform future policy decisions in a safe and inclusive way\u0026rsquo;.\u003c/p\u003e\n\u003cp\u003eApplicants have until 20th April to apply for a position using \u003ca href=\"https://web.cvent.com/event/62561d15-9f24-485a-99f0-f41c121e877f/register\"\u003ethis link\u003c/a\u003e.\u003c/p\u003e\n\u003cdiv style=\"display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;\"\u003e\n    \u003ciframe src=\"https://www.linkedin.com/embed/feed/update/urn:li:share:6916724845065957377\" height=\"350\" width=\"550\" frameborder=\"0\" allowfullscreen=\"\" title=\"Embedded post\"\u003e\u003c/iframe\u003e\n\u003c/div\u003e\n\n\u003ch3 id=\"what-will-be-discussed\"\u003eWhat Will Be Discussed?\u003c/h3\u003e\n\u003cp\u003eThere are three key \u0026lsquo;problem statements\u0026rsquo; which will be discussed as part of the CryptoSprint.\u003c/p\u003e\n\u003cp\u003eThese three problem statements are:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003eHow should information relating to issuance of cryptoassets be disclosed to investors?\u003c/li\u003e\n\u003cli\u003eHow do we identify (and test) where regulatory obligations on centralised and decentralised cryptoasset models should be placed? These should enable regulators to balance capturing relevant activity that poses a risk to UK consumers and markets now and as the sector evolves, whilst still enabling beneficial innovation.\u003c/li\u003e\n\u003cli\u003eWhat gaps need to be addressed in the UK\u0026rsquo;s existing custody regulatory framework for custody of cryptoassets to help protect UK consumers and markets?\u003c/li\u003e\n\u003c/ol\u003e\n\u003ch3 id=\"why-are-the-fca-doing-this\"\u003eWhy Are The FCA Doing This?\u003c/h3\u003e\n\u003cp\u003eThe announcement of this CryptoSprint is the latest in a long line of movements towards CryptoAsset regulation from both financial services professionals and regulators.\u003c/p\u003e\n\u003cp\u003eAs reported on the \u003ca href=\"https://eflowglobal.com/uk-launches-cross-party-crypto-group/\"\u003eeflow blog\u003c/a\u003e, in February of this year, \u0026lsquo;a number of cryptocurrency firms, exchanges and advocacy groups formed a coalition named the \u0026lsquo;\u003ca href=\"https://www.cryptomarketintegrity.com/\"\u003eCrypto Market Integrity Coalition (CMIC)\u003c/a\u003e\u0026rsquo;\u003c/p\u003e\n\u003cp\u003eWhile CryptoAssets are not technically regulated at the moment, the increased frequency of discussions such as these seem to be hinting that a regulated crypto ecosystem may be on the way.\u003c/p\u003e\n","date_published":"2022-06-04T07:01:00+0000"},{"title":"eflow and GRSS Announce Partnership","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-and-grss-announce-partnership/","summary":"\u003ch2 id=\"eflow-global-and-grss-enhance-their-partnership-to-provide-managed-surveillance-solution\"\u003eeflow Global and GRSS enhance their partnership to provide managed surveillance solution\u003c/h2\u003e\n\u003cp\u003ePowerful technology and experienced compliance professionals - both are important parts of the compliance process.\u003c/p\u003e\n\u003cp\u003eEffective compliance comes from a marriage of powerful technology and real-world expertise, a fact which forms the basis of this partnership between eflow Global and \u003ca href=\"https://grss.group/\"\u003eGRSS\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eBy combining best in class technology with monitoring expertise, the two firms will provide a comprehensive, \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003emanaged market abuse solution\u003c/a\u003e to help ensure regulatory compliance.\u003c/p\u003e\n\u003cp\u003eReleased in 2004, eflow’s ‘TZ’ system has provided compliance professionals with robust market abuse surveillance for the better part of 20 years. But now, with this new partnership, eflow’s market abuse offerings are stronger than ever.\u003c/p\u003e\n\u003cdiv style=\"display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;\"\u003e\n    \u003ciframe src=\"https://www.linkedin.com/embed/feed/update/urn:li:share:6914514983095533569\" height=\"350\" width=\"550\" frameborder=\"0\" allowfullscreen=\"\" title=\"Embedded post\"\u003e\u003c/iframe\u003e\n\u003c/div\u003e\n\n\u003cp\u003eGRSS - Global Regulatory Surveillance Service - offers experienced compliance and trade monitoring specialists who will analyse the output from a firm\u0026rsquo;s surveillance systems, presenting the compliance officer with actionable reports. The team takes care of all the time-consuming tasks, working with the firm’s compliance officer to ensure that the firm uses the TZ system effectively and that its results are appropriately reviewed and considered. By analysing and filtering the output of surveillance systems such as TZ, GRSS are able to ensure an appropriate level of compliance. The GRSS team brings a significant amount of relevant experience and market knowledge to the surveillance process.\u003c/p\u003e\n\u003cp\u003eFor more information on this partnership, fill out a contact form or \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003ebook a consultation\u003c/a\u003e.\u003c/p\u003e\n\u003cdiv style=\"display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;\"\u003e\n    \u003ciframe src=\"https://www.linkedin.com/embed/feed/update/urn:li:share:6914525651119026176\" height=\"350\" width=\"550\" frameborder=\"0\" allowfullscreen=\"\" title=\"Embedded post\"\u003e\u003c/iframe\u003e\n\u003c/div\u003e\n\n","date_published":"2022-29-03T09:01:00+0000"},{"title":"Crypto Firms Launch Coalition for Integrity of Markets","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/crypto-firms-launch-coalition-for-integrity-of-markets/","summary":"\u003ch2 id=\"crypto-firms-launch-coalition-for-integrity-of-markets\"\u003eCrypto Firms Launch Coalition for Integrity of Markets\u003c/h2\u003e\n\u003cp\u003eA number of cryptocurrency firms, exchanges and advocacy groups have formed a coalition to help promote the integrity of the digital assets market and reduce the prevalence of market abuse and market manipulation in cryptocurrency trading.\u003c/p\u003e\n\u003cp\u003eA number of the world\u0026rsquo;s leading digital asset exchanges including Coinbase, Bitstamp, BitMEX and CrossTower have joined this coalition.\u003c/p\u003e\n\u003cp\u003eThe group, known as the \u003ca href=\"https://www.cryptomarketintegrity.com/\"\u003eCrypto Market Integrity Coalition\u003c/a\u003e (CMIC), have made it their goal to route out market abuse and market manipulation in the digital assets market, citing a desire to improve public confidence and investor protection .\u003c/p\u003e\n\u003cdiv style=\"display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;\"\u003e\n    \u003ciframe src=\"https://www.linkedin.com/embed/feed/update/urn:li:share:6896460443934961664\" height=\"350\" width=\"550\" frameborder=\"0\" allowfullscreen=\"\" title=\"Embedded post\"\u003e\u003c/iframe\u003e\n\u003c/div\u003e\n\n\u003ch3 id=\"the-cmics-public-and-unequivocal-pledge\"\u003eThe CMIC\u0026rsquo;s Public and Unequivocal Pledge\u003c/h3\u003e\n\u003cp\u003eThis announcement was followed by a call to action for other crypto firms to strive towards a \u0026ldquo;fair digital asset marketplace to combat market abuse and manipulation\u0026rdquo;. Firms are able to sign a \u0026ldquo;\u003ca href=\"https://uploads-ssl.webflow.com/617320d94ac9cd15c7c74f3f/6200b5189c717f26c7ba9327_CMIC%20Pledge%20-%20Final%20-%20Feb72022.pdf\"\u003ePublic and Unequivocal Plegde\u003c/a\u003e\u0026rdquo; to join this effort to \u0026ldquo;make digital asset financial services more inclusive, transparent, and productive for all consumers and market participants.\u0026rdquo;\u003c/p\u003e\n\u003cp\u003eThe CMIC is expected to recruit more digital asset companies to the pledge and outline a concrete plan for further training programmes, regulator engagements and research in the near future.\u003c/p\u003e\n\u003cp\u003eAt present, 17 firms have joined the coalition including the Coinbase, Bitstamp, BitMEX, CrossTower, the Chamber of Digital Commerce, CryptoUK, Global Digital Finance, Circle, CryptoCompare and Anchorage Digital.\u003c/p\u003e\n","date_published":"2022-08-02T10:01:00+0000"},{"title":"E*TRADE fined $350k for market abuse surveillance failures","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/etrade-fined-350k-for-market-abuse-surveillance-failures/","summary":"\u003ch2 id=\"etrade-has-been-fined-by-finra-for-failures-in-market-abuse-supervision\"\u003eE*TRADE has been fined by FINRA for failures in market abuse supervision\u003c/h2\u003e\n\u003cp\u003eLast Tuesday, it was announced that the trading platform E*TRADE - a subsidiary of Morgan Stanley -  would be fined $350,000 by the Financial Industry Regulatory Authority (FINRA).\u003c/p\u003e\n\u003cp\u003eThis fine, as well as a censure order, was issued by FINRA owing to E*TRADE\u0026rsquo;s failure to maintain adequate \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance\u003c/a\u003e systems to ensure compliance with market abuse regulations.\u003c/p\u003e\n\u003cp\u003eFINRA stated that \u0026ldquo;From February 2016 through November 2021, E*TRADE failed to establish and maintain a supervisory system [\u0026hellip;] related to detecting potentially manipulative trading by its customers.\u0026rdquo;\u003c/p\u003e\n\u003cp\u003eIn particular, the regulator accused the trading platform of altering the parameters for a number of their algos, specifically, marking-the-close. They also claimed that the supervisory system enacted by E*TRADE was insufficient and did not adequately ensure compliance with the relevant market abuse regulations.\u003c/p\u003e\n\u003cp\u003eThis fine follows a $900,000 fine issued by FINRA to E*TRADE for inadequate best execution supervision in 2016. The firm has agreed to pay the fine without contest.\u003c/p\u003e\n\u003ch3 id=\"inadequate-supervision\"\u003eInadequate Supervision\u003c/h3\u003e\n\u003cp\u003eThe most striking aspect of this fine is the fact that E*TRADE \u003cem\u003edid\u003c/em\u003e have trade surveillance processes in place.\u003c/p\u003e\n\u003cp\u003eIn the\u003ca href=\"https://www.finra.org/sites/default/files/fda_documents/2014039952901%20ETRADE%20Securities%20LLC%20CRD%2029106%20AWC%20jlg.pdf\"\u003econsent letter\u003c/a\u003e outlining E*TRADE\u0026rsquo;s infringements, FINRA acknowledged that the firm had trade surveillance processes in place, but emphasised that these processes were insufficient and did not ensure compliance.\u003c/p\u003e\n\u003cp\u003eThe regulator questioned the efficacy of a trade surveillance process incapable of flagging suspicious activity and detecting potentially manipulative trading on the part of its customers.\u003c/p\u003e\n\u003cblockquote\u003e\n\u003ch5 id=\"compliance-is-no-longer-an-issue-of-what-solutions-a-firm-has-in-place-but-how-effective-these-solutions-are\"\u003e\u003cem\u003e\u003cstrong\u003eCompliance is no longer an issue of what solutions a firm has in place, but how effective these solutions are.\u003c/strong\u003e\u003c/em\u003e\u003c/h5\u003e\n\u003c/blockquote\u003e\n\u003cp\u003eTo this end, FINRA stated that \u0026ldquo;E*TRADE failed to maintain a supervisory system that was reasonably designed to achieve compliance with applicable federal securities laws and regulations.\u0026rdquo;\u003c/p\u003e\n\u003cp\u003eWhile many financial firms still seem to believe that implementing any \u003ca href=\"%20https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance solution\u003c/a\u003e will be enough to tick a box and avoid fines from regulators, FINRA\u0026rsquo;s approach here clearly disproves this.\u003c/p\u003e\n\u003cp\u003eDouglas Moffat, eflow\u0026rsquo;s Business Development Director, echoed this point with this point. \u0026ldquo;As a result of their system\u0026rsquo;s one-dimensional parameters producing numerous false positives, they decided to loosen the thresholds in order to reduce the number of alerts,\u0026rdquo; he claimed. \u0026ldquo;This allowed infringing trades to slip through the cracks.\u0026rdquo;\u003c/p\u003e\n\u003cp\u003eA number of software vendors are guilty of this oversight. These types of fines are the direct result of overly static parameters, and E*TRADE are by no means the only firm to fall short on this front.\u003c/p\u003e\n\u003cp\u003eIncreasingly, we expect regulators to push harder on this front. Compliance is no longer an issue of \u003cem\u003ewhat\u003c/em\u003e solutions a firm has in place, but \u003cem\u003ehow effective these solutions are\u003c/em\u003e.\u003c/p\u003e\n\u003ch3 id=\"the-need-for-active-monitoring\"\u003eThe Need for Active Monitoring\u003c/h3\u003e\n\u003cp\u003eBecause of this, firms should be especially cautious when choosing a trade surveillance solution.\u003c/p\u003e\n\u003cp\u003eWhile a good feature set, extensive options for dynamic parameter calibration and a variety of tests and reporting options are all vital for a good trade surveillance solution, firms looking to get compliant should ensure that their vendor provides active monitoring.\u003c/p\u003e\n\u003cp\u003eThe concept of active monitoring involves the vendor actively supervising, analysing and reporting back to the client on how they are interacting with their surveillance system. This ensures that any lapses in compliance are caught early and can be rectified before fines are issued by regulators.\u003c/p\u003e\n\u003cp\u003eAll of eflow\u0026rsquo;s solutions, including \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eTZ for Trade Surveillance\u003c/a\u003e, include active monitoring as standard. For more information on this, fill out a \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003econtact form\u003c/a\u003e or read more \u003ca href=\"\"\u003ehere\u003c/a\u003e.\u003c/p\u003e\n\u003cdiv style=\"display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;\"\u003e\n    \u003ciframe src=\"https://www.linkedin.com/embed/feed/update/urn:li:share:6889132265536839680\" height=\"350\" width=\"550\" frameborder=\"0\" allowfullscreen=\"\" title=\"Embedded post\"\u003e\u003c/iframe\u003e\n\u003c/div\u003e\n\n","date_published":"2022-25-01T10:01:00+0000"},{"title":"UK launches cross-party crypto group","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/uk-launches-cross-party-crypto-group/","summary":"\u003cp\u003eUK parliament has announced the formation of a cross-party group to discuss policy and regulation in the cryptocurrency and digital assets sector.\u003c/p\u003e\n\u003cp\u003eThe group will consist of MPs and Lords and will function as a space for policy-makers and representatives from the cryptocurrency space to discuss new regulation.\u003c/p\u003e\n\u003cp\u003eThe group has specified that any new regulation will aim to promote growth in the industry while simultaneously protecting consumers and limiting the potential for financial crime in the crypto space.\u003c/p\u003e\n\u003cp\u003eLisa Cameron MP, chair of the new group, emphasised both growth and protection for consumers in her statement. She said:\u003c/p\u003e\n\u003cp\u003e“We must ensure that we have an appropriate regulatory framework in the UK which supports innovation and guarantees that the UK remains an attractive destination for innovative firms to set up and grow. It’s just as important to have a clear system in place to protect consumers, ensure they understand the risks, and protect them from the risks of fraud and the financial harm caused by fraud.”\u003c/p\u003e\n","date_published":"2022-10-01T10:01:00+0000"},{"title":"NatWest plead guilty to spoofing charges, will pay $35m","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/natwest-plead-guilty-to-spoofing-charges-will-pay-35m/","summary":"\u003cp\u003eNatWest on Tuesday (December 21st) agreed to pay $35 million in fines after pleading guilty to spoofing in the U.S. Treasury debt markets over the course of 10 years in the period leading up to 2018.\u003c/p\u003e\n\u003cp\u003eThe bank admitted to a long-running scheme of wire and securities fraud perpetrated by a number of traders in NatWest Markets in an attempt to manipulate the US Treasury markets.\u003c/p\u003e\n\u003cp\u003eThe latest fine in a \u003ca href=\"https://www.theguardian.com/business/nils-pratley-on-finance/2021/dec/20/basic-failures-at-natwest-and-stanchart-prompt-much-needed-zeal-from-regulators\"\u003erecent burst of heavy penalties levelled against UK banks\u003c/a\u003e. Earlier this week, the \u003ca href=\"https://eflowglobal.com/standard-chartered-hit-with-record-46.5m-fine-by-pra/\"\u003ePRA fined Standard Chartered £46.5m\u003c/a\u003e for reporting failures, while last week HSBC was fined £64m for insufficient transaction monitoring and AML compliance.\u003c/p\u003e\n\u003cp\u003eThis latest fine levelled against NatWest\u0026rsquo;s investment bank also comes less than a week after the bank was fined more than \u003ca href=\"https://www.reuters.com/business/finance/around-50-natwest-branches-involved-money-laundering-case-fca-2021-12-13/\"\u003e£264m for AML breaches\u003c/a\u003e. The bank failed to prevent and report the laundering of hundreds of millions of pounds over a four year period between 2012 and 2016.\u003c/p\u003e\n\u003ch3 id=\"what-is-spoofing\"\u003eWhat is Spoofing?\u003c/h3\u003e\n\u003cp\u003eSpoofing is a form of market manipulation intended to simulate demand for a particular instrument so as to manipulate its price.\u003c/p\u003e\n\u003cp\u003eIf a trader performs spoofing, they would place a very large number of market orders - buying or selling securities - and then cancel them before they are executed. This has the effect of spamming the markets with false orders which are never intended to be fulfilled.\u003c/p\u003e\n\u003cp\u003eThis process often makes use of algorithmic trading and is therefore often associated with high-frequency trading. By spamming the markets with a huge volume of orders, an illusion is created that demand for a particular instrument is either up or down. This demand is then reflected in the price of the instrument being traded, allowing the trader performing the spoofing to benefit.\u003c/p\u003e\n\u003cimg src=\"/images/natwest1.png\" alt=\"Description of how spoofing works\" title=\"Spoofing diagram\" height=\"960\" width=\"1920\" /\u003e\n\u003cp\u003eThis process is illegal under the regulations of many NCAs. The US\u0026rsquo;s Dodd-Frank Act criminalised this act in 2010, while the FCA and ESMA have also regulated against it since the 2008 financial crash.\u003c/p\u003e\n\u003cp\u003eFor information on our market abuse solutions - including coverage for spoofing - click \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003ehere\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2021-22-12T11:09:00+0000"},{"title":"Standard Chartered hit with record £46.5m Fine by PRA","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/standard-chartered-hit-with-record-46.5m-fine-by-pra/","summary":"\u003cp\u003eIt has been announced that the United Kingdom unit of Standard Chartered has been fined £46.5m by the Bank of England\u0026rsquo;s Prudential Regulatory Authority misreporting its liquidity position on multiple occassions between March 2018 and May 2019.\u003c/p\u003e\n\u003cp\u003eThe bank is guilty of making five separate errors reporting its US dollar liquidity outflows during this period, causing the regulator to have unreliable information about its position. The PRA also cited a historic lack of cooperation when issuing this penalty.\u003c/p\u003e\n\u003cp\u003eThe fine was initially set at £66.5m, but was reduced to £46.5m following Standard Chartered\u0026rsquo;s agreement to comply with the bank and resolve the matter as quickly as possible.\u003c/p\u003e\n\u003cp\u003eSam Woods, Deputy Governer for Prudential Regulation and CEO of the PRA, stated that \u0026lsquo;Standard Chartered\u0026rsquo;s systems, controls and oversight fell significantly below the standards we expect of a systemically important bank, and this is reflected in the size of fine in this case\u0026rsquo;.\u003c/p\u003e\n\u003cp\u003eThe fine of £46.5m is the largest ever issued by the PRA, and marks a clear statement of intent for compliance breaches going forward into 2022.\u003c/p\u003e\n\u003cp\u003eThis incident follows on from another Hong Kong currency issuer being fined by a UK regulator just days earlier. Last Friday (December 17th), HSBC was fined £64m by the FCA, with the regulator citing failures in the bank\u0026rsquo;s transaction monitoring processes, leading to insufficient anti-money laundering (AML) processes.\u003c/p\u003e\n","date_published":"2021-22-12T10:30:00+0000"},{"title":"eflow included in RegTech100 2022","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-included-in-regtech100-2022/","summary":"\u003ch2 id=\"the-award\"\u003eThe Award\u003c/h2\u003e\n\u003cp\u003eIt has been announced today that eflow Global has been selected for inclusion in FinTech Global’s RegTech100 list for 2022.\u003c/p\u003e\n\u003cp\u003eThe RegTech100 list, now in its fifth edition, recognises the 100 most innovative and influential RegTech companies across the globe. Intended to help financial firms “filter through all vendors in the market by highlighting the leading companies in regulatory compliance”, it has come to be seen as a benchmark of quality and reliability for compliance providers in the financial services industry.\u003c/p\u003e\n\u003cp\u003eEach year, a panel of analysts and industry experts selects 100 firms for inclusion from a longlist of the world’s best RegTech vendors. For the 2022 list, almost 1,200 vendors were considered, with only “the world’s most innovative technology solution providers” making the final list.\u003c/p\u003e\n\u003cp\u003eWith the RegTech sector continuing to grow every year, FinTech Global noted that “this year’s process to identify the 100 RegTech innovation leaders was more competitive than ever”. RegTech spending by highly regulated financial institutions is projected to exceed $130bn by 2025, and new vendors continue to enter the space at a rapidly increasing rate.\u003c/p\u003e\n\u003cp\u003eWith such a high level of competition, eflow’s inclusion in the list is particularly significant. The company has been recognised for the quality of their two flagship solutions: \u003ca href=\"https://eflowglobal.com/tz-regulatory-compliance/\"\u003eTZ\u003c/a\u003e and \u003ca href=\"https://eflowglobal.com/tztr-regulatory-reporting/\"\u003eTZTR\u003c/a\u003e. TZ offers trade surveillance for \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003emarket abuse\u003c/a\u003e, \u003ca href=\"https://eflowglobal.com/tz-best-execution-and-transaction-cost-analysis/\"\u003ebest execution monitoring\u003c/a\u003e and reporting. TZTR offers regulatory reporting, with a particular focus on EMIR, MiFIR and SFTR \u003ca href=\"https://eflowglobal.com/tztr-transaction-reporting/\"\u003etransaction reporting\u003c/a\u003e. Both of these solutions are powered by their development platform PATH.\u003c/p\u003e\n\u003cp\u003eMariyan Dimitrov, Director of Research at FinTech Global mirrored this sentiment. He stated that \u0026ldquo;eflow\u0026rsquo;s extensive experience in the RegTech industry and innovative approach to data management in all their compliance solutions make them a worthy member of the RegTech100\u0026rdquo;.\u003c/p\u003e\n\u003cp\u003eCEO and Founder Ben Parker also commented on eflow Global’s inclusion in the list: “With the RegTech industry growing ever more crowded, eflow’s inclusion on FinTech Global’s RegTech100 list is real point of pride for the company. TZ and TZTR are the product of over 2 tireless decades of development and market research, and our inclusion on this list is proof of the success of these efforts.”\u003c/p\u003e\n\u003cp\u003eA full list of the RegTech100 for 2022 and detailed information about each company is available to download for free at \u003ca href=\"http://www.regtech100.com/\"\u003ewww.RegTech100.com\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2021-07-12T09:00:00+0000"},{"title":"FCA proposes changes to MAR and SFTR ","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fca-proposes-changes-to-mar-and-sftr-/","summary":"\u003cp\u003eThe Financial Conduct Authority (FCA) has today announced that they are proposing changes to a number of regulatory standards, including reporting on securities financial transactions (SFTR) and market abuse (MAR) among others.\u003c/p\u003e\n\u003cp\u003eThe changes have been outlined in a \u003ca href=\"https://www.fca.org.uk/publication/consultation/cp21-35.pdf\"\u003econsultation paper\u003c/a\u003e - Quarterly Consultation Paper No. 34. The paper also states that a consultation period has been instigated, during which financial firms will be able to respond with feedback about the proposed changes. The deadline for providing feedback to the FCA is January 10th 2022 for all changes other than those proposed for SFTR. The deadline for responding to SFTR changes is 1 week later on January 17th 2022.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003ch2 id=\"changes-to-mar\"\u003eChanges to MAR\u003c/h2\u003e\n\u003cp\u003eThe proposed MAR changes relate to Data Reporting Services Providers (DRSPs). DRSPs exist in the following 3 types:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eApproved Reporting Mechanisms (ARMs): provide the service of reporting transaction details to competent authorities on behalf of investment firms;\u003c/li\u003e\n\u003cli\u003eApproved Publication Arrangements (APAs): provide the service of publishing post trade reports on behalf of investment firms; and\u003c/li\u003e\n\u003cli\u003eConsolidated Tape Providers (CTPs): collect trade reports for financial instruments from trading venues and APAs. They consolidate the trade reports into a continuous electronic live data stream, providing price and volume data per financial instrument.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe proposed changes relate to how DRSP\u0026rsquo;s should \u0026lsquo;wind-down\u0026rsquo; or (cancel or reduce its data reporting services. The proposed change would require DRSPs to follow a strict wind-down plan \u0026lsquo;which promotes and protects the integrity of financial markets and the interest of the DRSP\u0026rsquo;s clients. The proposed changes would also hold DRSPs to stricter obligations during until the conclusion of the wind-down process.\u003c/p\u003e\n\u003cdiv style=\"display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;\"\u003e\n    \u003ciframe src=\"https://www.linkedin.com/embed/feed/update/urn:li:share:6872544615199727616\" height=\"350\" width=\"550\" frameborder=\"0\" allowfullscreen=\"\" title=\"Embedded post\"\u003e\u003c/iframe\u003e\n\u003c/div\u003e\n\n\u003cp\u003e \u003c/p\u003e\n\u003ch2 id=\"changes-to-sftr\"\u003eChanges to SFTR\u003c/h2\u003e\n\u003cp\u003eThe proposed changes to SFTR aim to simplify and reduce reporting obligations by ensuring that firms only have to report SFTs under a single regime - UK SFTR.\u003c/p\u003e\n\u003cp\u003ePreviously, a number of SFTs - namely those to which the counterparty is a member of the European System of Banks (ESCB) or the Bank of England - were also reportable under UK MiFIR, leading to duplicate reporting requirements.\u003c/p\u003e\n\u003cp\u003eThis change would mean that SFTs where the counterparty is a member of the ESCB or the Bank of England would be exempt from reporting under UK MiFIR. This change, if approved, will be effective from March 31st, 2022.\u003c/p\u003e\n\u003cp\u003eThis would mean that no SFTs would be subject to reporting under UK MiFIR - they would only be reportable under UK SFTR, even if a counterparty was a member of the ESCB or Bank of England.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003ch2 id=\"other-proposed-changes\"\u003eOther Proposed Changes\u003c/h2\u003e\n\u003cp\u003eOther proposed changes relate to\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eEU Exit Passport Regulations\u003c/li\u003e\n\u003cli\u003eSUP 8\u003c/li\u003e\n\u003cli\u003eEU withdrawal-related amendments to FCA forms.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eFor a full overview of proposed changes, see the FCA\u0026rsquo;s consultation paper \u003ca href=\"https://www.fca.org.uk/publication/consultation/cp21-35.pdf\"\u003ehere\u003c/a\u003e.\u003c/p\u003e\n","date_published":"2021-03-12T10:00:00+0000"},{"title":"FCA Market Watch 68: Market abuse in a digital world","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fca-market-watch-68-market-abuse-in-a-digital-world/","summary":"\u003cp\u003eThe UK Financial Conduct Authority (FCA) has published the latest issue of Market Watch. The 68th edition of their newsletter covers a lot of ground, highlighting gaps in surveillance, particularly around the capturing of order data and the governance of platforms for rates and fixed income trading.\u003c/p\u003e\n\u003cp\u003eDespite these points of focus, perhaps the important point made in this newsletter comes in the form of a stark and overarching warning:\u003c/p\u003e\n\u003cp\u003e“\u003cem\u003e\u003cstrong\u003eRequirements for market abuse surveillance are still not being fully met, 5 years after the introduction of the Market Abuse Regulation (MAR) in 2016.”\u003c/strong\u003e\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eWhat’s the reason behind this warning? What parts of surveillance are falling through the net? And what can firms do to ensure compliance? This article covers the key areas discussed in Market Watch 68.\u003c/p\u003e\n\u003cp\u003e- \u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-68\"\u003e\u003cstrong\u003eFinancial Conduct Authority, Market Watch 68\u003c/strong\u003e\u003c/a\u003e\u003c/p\u003e\n\u003ch2 id=\"market-abuse-slipping-through-the-net\"\u003eMarket Abuse Slipping Through the Net\u003c/h2\u003e\n\u003cp\u003eWeb-based trading platforms are used widely, particularly to administer rates and certain fixed income products. While these digital solutions can lead to faster execution times and support elaborate trading strategies, the FCA is concerned that they may not be capable of monitoring all orders to detect market abuse.\u003c/p\u003e\n\u003cp\u003eThrough an ongoing review of digital trading platforms, the Regulator detected an uptick in the use of continuous, periodic and dark liquidity through web-based portals and pop-ups. This is of particular concern given that many users do not systematically record order messages that precede execution, or orders that do not ultimately result in a trade such as amendments and cancellations.\u003c/p\u003e\n\u003cp\u003eIn plain terms, the rapid and ephemeral nature of web-based trading means that platforms may not be able to adequately capture all the information needed to monitor for market manipulation, thereby causing firms not to adequately perform the necessary market abuse surveillance. This is especially problematic in the case of dark pools – private exchanges that allow institutions to trade high volumes of securities away from the public eye. The FCA takes the view that this lack of transparency could degrade market integrity, and is intent on addressing these issues through policy in the months and years to come.\u003c/p\u003e\n\u003ch2 id=\"compliance-challenges\"\u003eCompliance Challenges\u003c/h2\u003e\n\u003cp\u003eIn addition to issues arising from web-based trading platforms themselves, the FCA also identified institutional obstacles that could prevent market participants from properly complying with their monitoring and reporting obligations.\u003c/p\u003e\n\u003cp\u003eFirstly, the Regulator found that many web-based trading platforms do not consistently provide order data in sufficient quantities to enable compliant market surveillance to take place. This makes it difficult for analysts and others to recognise potential market manipulation. While some users are already using mechanisms to overcome these challenges, a significant gap in surveillance and reporting capabilities remains.\u003c/p\u003e\n\u003cp\u003eBeyond this, it was discovered that the compliance and surveillance teams of many market users and operators simply do not know the full extent of web-based platform use. Without a detailed understanding of activity levels, they are unable to allocate sufficient resources to surveillance and reporting functions, meaning that they cannot effectively monitor and mitigate market abuse risks.\u003c/p\u003e\n\u003ch2 id=\"unjustifiable-failings\"\u003eUnjustifiable Failings\u003c/h2\u003e\n\u003cp\u003eDespite the prevalence of these issues across all FCA regulated markets, it appears that many firms have adopted a questionable stance over their compliance obligations. The Regulator observed that a significant number of firms justify their failure to adhere to market abuse monitoring and reporting rules by referencing other firms in a similar position.\u003c/p\u003e\n\u003cp\u003eIn response to these claims, the FCA reiterated that the failings of peers are not an acceptable justification for firms to neglect their own responsibilities. Firms that do not take their compliance obligations seriously face the very real risk of enforcement action and sanctions.\u003c/p\u003e\n\u003ch2 id=\"how-to-stay-compliant\"\u003eHow to Stay Compliant\u003c/h2\u003e\n\u003cp\u003eWith all this pessimism surrounding the state of market surveillance, it important to focus practically on what your firm can do to ensure compliance. The following three points should be a priority for your firm:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003eEnsure all levels of data are captured to make sure your firm has full oversight of trading activity. This is particularly important with regards to Order Data.\u003c/li\u003e\n\u003cli\u003eEnsure that your existing surveillance procedures are up to date and compliant with the latest regulations to avoid further sanctions\u003c/li\u003e\n\u003cli\u003eEnact appropriate governance and due diligence when onboarding new platforms to ensure all necessary data is captured to meet regulatory obligations\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003eAs firms increasingly turn to digital trading solutions and web-based platforms, many are failing to adequately adjust their approach to monitoring and reporting. In some cases, compliance teams lack awareness of digital trading activity by their firm whilst others struggle to obtain the data needed to facilitate effective monitoring.\u003c/p\u003e\n\u003cp\u003eWhile surveillance challenges are clearly prevalent in the UK trading environment, the FCA did recognise that some firms have deployed tactical solutions to help them comply with their obligations. As they continue to assess the suspicious transaction and order reporting (STOR) capabilities of market participants at all levels, it is becoming increasingly important for firms to ease their compliance burden with solutions like eflow’s TZ regulatory compliance and TZTR regulatory reporting platforms.\u003c/p\u003e\n\u003cp\u003eFor more information on how eflow can help you fulfil your regulatory reporting needs, book a demo or \u003ca href=\"https://eflowglobal.com/contact-us\"\u003econtact eflow\u003c/a\u003e today.\u003c/p\u003e\n\u003cp\u003e*\u003cem\u003eThis article is provided for informational purposes only and should not be relied upon as legal or financial advice. Its contents are current at the date of publication and do not necessarily reflect the present state of the law.\u003c/em\u003e\u003c/p\u003e\n","date_published":"2021-26-11T12:00:00+0000"},{"title":"Trade reporting vs transaction reporting - What's the difference?","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/trade-reporting-vs-transaction-reporting-whats-the-difference/","summary":"\u003ch2 id=\"trade-reporting-and-transaction-reporting-under-mifid-ii\"\u003eTrade Reporting and Transaction Reporting Under MiFID II\u003c/h2\u003e\n\u003cp\u003eIn January of 2018, the updated framework of Markets in Financial Instruments Directive (MiFID II) was rolled out, marking one of the biggest overhauls to Europe’s financial industry in decades. The new legislation, updated from 2007’s initial directive, took around seven years to put together and includes an intimidating 1.4m paragraphs of rules.\u003c/p\u003e\n\u003cp\u003eMiFID II is designed to make European markets more transparent and encourage investor confidence. It aims to address issues that have been identified since the initial MiFID law was implemented, and (as stated in Article 26(1) of Markets in Financial Instruments Regulation) address weaknesses and close loopholes that were exposed in the financial market crisis. This includes strengthening investor protection, improving market efficiency and reducing the risks of systematic market abuse.\u003c/p\u003e\n\u003ch3 id=\"mifid-ii-trade-reporting-vs-transaction-reporting\"\u003eMiFID II: Trade reporting vs transaction reporting\u003c/h3\u003e\n\u003cp\u003eWithin MiFID II, is a clear desire for the industry to move away from traditional trading over the phone and onto electronic systems, which offer better opportunities for audit and surveillance. New reporting measures put forward both in MiFID II and MiFIR (Markets in Financial Instruments Regulation) require certain information to be made public almost immediately. These regulations state that, in order to comply, firms must timestamp trades down to the microsecond. Other aspects of the regulation focus on a mandatory seven-year storage time for data, or requirements for evidence that brokers offered the best available price for trades.\u003c/p\u003e\n\u003cp\u003eThe reporting requirements of financial firms have changed significantly with this increased focus on data transparency. Because of this, it’s crucial to understand the differences in trade reporting vs transaction reporting. Each method of reporting varies significantly when it comes to the client information required and the speed at which it needs to be submitted.\u003c/p\u003e\n\u003cp\u003eThis article will explain the differences in trade reporting vs transaction reporting, the relevant changes between MiFID I and MiFID II, and the external services you’ll need to keep your firm compliant.\u003c/p\u003e\n\u003ch3 id=\"trade-reporting\"\u003eTrade reporting\u003c/h3\u003e\n\u003cp\u003eThe new requirements of trade reporting in MiFID II are designed to resolve issues around the quality and availability of data. This is one of the key differences in trade reporting vs transaction reporting: trade reporting operates in near real time. For trading venues and certain investment firms, the volume and price are required to be published within one minute of the completed trade of equity or similar products. For non-equity products, the information needs to be published within 15 minutes of the execution of the transaction.\u003c/p\u003e\n\u003cp\u003eUnder MiFID II, investment firms are required to report basic details of their trades almost immediately, so that the information can be circulated in the market. The near real-time broadcasts of trade information is set to improve the transparency of pricing and offer greater insight into how prices are quoted and formed.\u003c/p\u003e\n\u003ch3 id=\"submitting-a-trade-report\"\u003eSubmitting a trade report\u003c/h3\u003e\n\u003cp\u003eInvestment firms are obliged to send reports whenever they carry out transactions for products, whether for their own accounts or on behalf of clients. The data required in the reports include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThe trading date and time\u003c/li\u003e\n\u003cli\u003eFinancial instrument identification code\u003c/li\u003e\n\u003cli\u003ePrice\u003c/li\u003e\n\u003cli\u003ePrice currency\u003c/li\u003e\n\u003cli\u003eVenue of execution\u003c/li\u003e\n\u003cli\u003eQuantity\u003c/li\u003e\n\u003cli\u003eTransaction identification code\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThese reports need to be submitted to an Approved Publication Arrangement (APA) of the firm’s choice, a person authorised to publish trade reports on behalf of the firm.\u003c/p\u003e\n\u003cp\u003eThe APA – a function that didn’t exist under the first MiFID legislation – is then required to make the information public as soon as technically possible. APAs must circulate the information in a way that ensures fast market-wide access, and in a format that means that the data can be easily merged with data from other sources. The information needs to be published on a non-discriminatory basis, and available free of charge 15 minutes after publication.\u003c/p\u003e\n\u003ch3 id=\"transaction-reporting\"\u003eTransaction reporting\u003c/h3\u003e\n\u003cp\u003eTransaction reporting, on the other hand, has a number of differences. A crucial difference between transaction reporting and trade reporting is that transaction reporting is more relaxed with how quickly a report needs to be sent. Transaction reporting carries a T+1 requirement – T stands for the transaction day, and the number 1 illustrates how many days later a report needs to be sent.\u003c/p\u003e\n\u003cp\u003eAnother difference in trade reporting vs transaction reporting is the purpose of the report. While trade reporting focuses on ensuring transparency and fairness in the market, transaction reporting is primarily used to detect and prevent market abuse, meaning there’s a greater emphasis on the client behind the transaction, as well as anyone working on behalf of the client. This also means that any information won’t be made public.\u003c/p\u003e\n\u003cp\u003eIn order for transaction reporting to be a success, it’s critical for regulation bodies like the Financial Conduct Authority (FCA) to have complete and accurate data. This includes information on the types of financial instruments, when and how they’re traded and by whom. Each transaction report needs to include, amongst other things:\u003c/p\u003e\n\u003cp\u003eInformation about the financial instrument tradedThe firm actioning the tradeThe buyer and the sellerThe date and time the transaction was executed\u003c/p\u003e\n\u003cp\u003eUnder MiFID II, required information for transaction reporting has grown to around 65 fields, to support the goals of transparency and improved data quality.\u003c/p\u003e\n\u003ch3 id=\"submitting-a-transaction-report\"\u003eSubmitting a transaction report\u003c/h3\u003e\n\u003cp\u003eThe last key difference in trade reporting vs transaction reporting is the legal entity you’re required to submit your reports to. In transaction reporting, reports must be made via an Approved Reporting Mechanism (ARM). The ARM provides the service of validating a firm’s data, and reporting details of transactions to the relevant authorities (for example, the FCA) on behalf of the firm. ARMs are authorised by the European Securities and Markets Authority (ESMA) and are required to store and maintain data, as well as make it available to financial regulators to analyse. Once a report has been submitted to an ARM, they will notify the firm if the report has been structured correctly, or send a rejection message if there are errors (for example, if required fields are missing).\u003c/p\u003e\n\u003cp\u003eAlthough ARMs aren’t required to submit data as quickly as APAs, they need to have effective policies in place so they can report the information as quickly as possible – no later than the close of the working day following the day of the transaction. MiFID II also has a number of regulatory obligations that ARMs are required to comply with, since they’re key to providing regulators with high-quality data. These obligations include the use of up-to-date technology and the prevention of conflicts of interest between clients.\u003c/p\u003e\n\u003ch3 id=\"take-the-stress-out-of-reporting-with-eflow\"\u003eTake the stress out of reporting with eflow\u003c/h3\u003e\n\u003cp\u003eeflow\u0026rsquo;s most regulatory reporting solution \u003ca href=\"https://eflowglobal.com/eflow-global-unveils-major-update-to-regulatory-reporting-solution-tztr/\"\u003eTZTR recently underwent a significant upgrade\u003c/a\u003e. It comes with functionality for EMIR, MiFIR and SFTR reporting as standard, and can be configured to perform a variety of regulatory reporting tasks. For more information, \u003ca href=\"https://eflowglobal.com/contact-us/\"\u003eget in touch\u003c/a\u003e and one of our representatives will provide you with additional information.\u003c/p\u003e\n","date_published":"2021-17-10T11:00:00+0000"},{"title":"eflow unveils major update to regulatory reporting solution TZTR","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-global-unveils-major-update-to-regulatory-reporting-solution-tztr/","summary":"\u003ch2 id=\"london-october-4th-2021\"\u003e\u003cstrong\u003eLondon, October 4th, 2021\u003c/strong\u003e\u003c/h2\u003e\n\u003cp\u003eeflow, the UK-based provider of regulatory compliance solutions, has released a major update to TZTR, their regulatory reporting hub. Version 2.0 of TZTR will sit alongside eflow’s trade surveillance and best execution software TZ as part of a holistic, integrated suite of regulatory compliance solutions.\u003c/p\u003e\n\u003cp\u003eDrawing from the results of extensive market research, this TZTR update was designed to address the most common concerns voiced by market participants about their regulatory reporting procedures.\u003c/p\u003e\n\u003cp\u003eIndependent research by eflow found that 59% of financial firms cited an inability to keep up with rapid regulatory change as a key difficulty in remaining compliant with reporting requirements, while nearly 50% cited an over-reliance on manual procedures. 63% claimed data management including the collation of multiple different data sources was also a significant challenge.\u003c/p\u003e\n\u003cp\u003eIn an attempt to overcome these challenges, eflow has implemented a number of new features. TZTR will now be able to collect, ingest, test and perform real-time reconciliation on data from any data source, regardless of format, removing the challenge of trying to combine multiple data sources.\u003c/p\u003e\n\u003cp\u003eTZTR will now also benefit from more agile and flexible development. In order to more quickly implement functionality that addresses new regulations, TZTR will utilise eflow’s proprietary development platform PATH to implement changes in client systems near-instantly. This will allow clients to comply with new regulations as and when they change without the need for a lengthy development process.\u003c/p\u003e\n\u003cp\u003eThe most recent TZTR update will also greatly reduce the need for human intervention throughout the entire reporting workflow. From data enrichment, reconciliation and accuracy checks to automatic formatting submission and error handling, the scope of TZTR’s now covers the entire reporting lifecycle.\u003c/p\u003e\n\u003cp\u003eBen Parker, CEO of eflow, is confident in TZTR version 2.0’s ability to simplify and streamline any firm’s reporting procedures. “Time and time again we come across firms whose reporting procedures can’t keep up with the complexity of current requirements. TZTR version 2.0 has been designed specifically to solve this problem.”\u003c/p\u003e\n","date_published":"2021-04-10T12:00:00+0000"},{"title":"EMIR Refit - Flagship reporting regulation after Brexit","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/emir-refit-flagship-reporting-regulation-after-brexit/","summary":"\u003cp\u003eThe EMIR REFIT Regulation aimed to reduce unnecessary regulatory burdens imposed on market participants. It stemmed from the European Commission’s findings that the original technical standards introduced by EMIR in 2012/13 were unduly onerous, but the question of whether it has achieved its aims is very much up for debate.\u003c/p\u003e\n\u003cp\u003eCritically, the REFIT’s expanded definition of financial counterparties has brought a new class of entity within the bounds of reporting requirements. Coupled with the legal implications of Brexit and the onshoring of EU law to the UK, this development has arguably made the European Union’s financial market protection regime more complicated now than ever before.\u003c/p\u003e\n\u003cp\u003eIn this article, we explore the key provisions of EMIR REFIT and consider the implications of Brexit for UK-based market participants.\u003c/p\u003e\n\u003ch3 id=\"what-is-emir-refit\"\u003eWhat is EMIR REFIT?\u003c/h3\u003e\n\u003cp\u003eThe European Market Infrastructure Regulation (EMIR) was enacted on 15 March 2013 and introduced reporting obligations for financial counterparties to trades of over the counter (OTC) derivatives. With some exceptions, both buyers and sellers of derivatives must report transaction details to a trade repository (TR).\u003c/p\u003e\n\u003cp\u003eFollowing an extensive 2015 review, the European Commission concluded that EMIR was overly complex and required reform. This came as part of the Commission’s Fitness and Performance (REFIT) programme which culminated in\u003c/p\u003e\n\u003ca href=\"https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=uriserv:OJ.L_.2019.141.01.0042.01.ENG\" target=\"_blank\"\u003eRegulation (EU) 2019/834\u003c/a\u003e\n\u003cp\u003e– commonly known as the REFIT Regulation or EMIR II.\u003c/p\u003e\n\u003cp\u003eThe majority of the Regulation’s provisions came into effect on 17 June 2019, but many contend that it has introduced yet further confusion into the EU’s market protection regime. There is significant confusion surrounding the inclusion of Alternative Investment Funds (AIFs) as financial counterparties and further questions surrounding the applicability of the law to UK firms following Brexit.\u003c/p\u003e\n\u003ch3 id=\"emir-refit--key-provisions-explained\"\u003eEMIR REFIT – Key Provisions Explained\u003c/h3\u003e\n\u003cp\u003eThe REFIT Regulation has amended many of the provisions contained within the original EMIR regime, all with the express aim of streamlining the reporting process.\u003c/p\u003e\n\u003ch4 id=\"1-a-wider-class-of-financial-counterparties\"\u003e1. A Wider Class of Financial Counterparties\u003c/h4\u003e\n\u003cp\u003eIn an expansion to \u003ca href=\"https://eflowglobal.com/tztr-emir-reporting/\"\u003eEMIR reporting\u003c/a\u003e requirements, the REFIT Regulation includes EU-established Alternative Investment Funds (AIFs) and central securities depositaries in its definition of financial counterparties. This status change applies to all AIFs established in the EU, regardless of their Alternative Investment Fund Manager’s (AIFMs) status or location.\u003c/p\u003e\n\u003cp\u003eThis change casts a particularly wide regulatory net by introducing reporting requirements for an entirely new class of market participants. AIFs are now subject to EMIR’s clearing requirements and for the margining provisions that affect non-cleared derivatives (NCDs). The amendment has further implications for AIFs established outside of the EU, which are now classified as third-country entities and as such are subject to EMIR margin requirements when transacting with EU dealers.\u003c/p\u003e\n\u003cp\u003eCertain special purpose entities and employee share purchase plans are notably excluded from the definition of an AIF, and instead fall under the banner of non-financial counterparties (NFCs) for the purposes of EMIR.\u003c/p\u003e\n\u003ch4 id=\"2-exemptions-for-small-financial-counterparties\"\u003e2. Exemptions for Small Financial Counterparties\u003c/h4\u003e\n\u003cp\u003eIn addition to widening the definition of financial counterparties, the REFIT Regulation also establishes “small financial counterparty” (SFC) status. Entities that fall within this class of counterparty are exempt from clearing obligations, but are subject to margin requirements and other general risk mitigation obligations.\u003c/p\u003e\n\u003cp\u003eSFC status (and therefore the exemption) is determined by applying the same thresholds that are used for non-financial counterparties (NFCs). The determination must be made once a year, based on aggregate month-end average figures for the preceding 12-month period. Organisations can opt out of ongoing determinations by electing to adopt full financial counterparty status, subject to notifying ESMA and any relevant national competent authority (NCA).\u003c/p\u003e\n\u003ch4 id=\"3-removal-of-backloading-obligations\"\u003e3. Removal of Backloading Obligations\u003c/h4\u003e\n\u003cp\u003eThe REFIT Regulation removed the obligation for counterparties to report historic derivative transactions, effectively ending the practice of ‘backloading’.\u003c/p\u003e\n\u003cp\u003eUnder EMIR, counterparties were required to report derivative transactions that were outstanding on 16 August 2012 despite official reporting commencing on 12 February 2014. Firms faced a technical deadline of 12 February 2019 to report historical trades, but the European Securities and Markets Authority (ESMA) has since stated that it does not expect national authorities to prioritise supervisory action on the reporting of backloaded transactions following the implementation of REFIT.\u003c/p\u003e\n\u003ch4 id=\"4-introduction-of-frandt-requirements\"\u003e4. Introduction of FRANDT Requirements\u003c/h4\u003e\n\u003cp\u003eBeyond changes to reporting requirements, EMIR REFIT also introduced new obligations on clearing members and firms providing clearing services. From 18 June 2021, entities that provide clearing services must offer them using commercial terms that are fair, reasonable, non-discriminatory, and transparent (FRANDT).\u003c/p\u003e\n\u003cp\u003eThe new obligations aim to improve transparency by ensuring that clearing clients are provided with a standardised service both in respect of the terms on which they contract and the information they receive as part of a deal.\u003c/p\u003e\n\u003cp\u003eMore information about the new clearing requirements can be found in\u003c/p\u003e\n\u003ca href=\"https://www.esma.europa.eu/sites/default/files/library/esma70-151-3107_final_report_access_to_clearing-frandt.pdf\" target=\"_blank\"\u003eESMA’s final report on FRANDT.\u003c/a\u003e\n\u003ch4 id=\"5-suspension-powers-for-esma\"\u003e5. Suspension Powers for ESMA\u003c/h4\u003e\n\u003cp\u003eEMIR REFIT introduces further powers for ESMA, including the right to lodge a request with the European Commission to suspend the clearing obligation for up to three months (extendable in three-month increments to a total period of 12 months) for particular types of assets or counterparties.\u003c/p\u003e\n\u003cp\u003eThis provision enables ESMA to take radical action to suspend clearing obligations in order to maintain market suitability and adjust its regime in line with the rapidly evolving financial markets.\u003c/p\u003e\n\u003ch3 id=\"does-emir-apply-after-brexit\"\u003eDoes EMIR Apply After Brexit?\u003c/h3\u003e\n\u003cp\u003eDespite much confusion regarding the applicability of the REFIT Regulation following Brexit, it is important to remember that the UK did not actually leave the EU until 31 January 2020. EMIR Refit came into force on 17 June 2019, and its provisions were largely onshored and enshrined into UK domestic law by the\u003c/p\u003e\n\u003ca href=\"https://www.legislation.gov.uk/ukpga/2018/16/contents\" target=\"_blank\"\u003eEuropean Union (Withdrawal) Act 2018.\u003c/a\u003e\n\u003cp\u003eThis retained body of law is now widely referred to as ‘UK EMIR’, and although it broadly mirrors its EU counterpart there are several key changes for UK entities to be aware of. Most notably, UK-established counterparties must report all qualifying derivative transactions entered after 1 January 2021 to a UK EMIR registered trade repository and may no longer be able to rely on their relationship with an EEA group entity for reporting or clearing exemptions.\u003c/p\u003e\n\u003ch3 id=\"change-on-the-horizon\"\u003eChange on the Horizon\u003c/h3\u003e\n\u003cp\u003eIt remains to be seen whether the EMIR REFIT Regulation will succeed in its objective of simplifying the EU’s derivatives market regulatory regime. In any case, it is clear that this area of regulation is extremely complex and the changes made by REFIT require careful consideration by all market participants dealing in OTC derivatives.\u003c/p\u003e\n\u003cp\u003eReporting regulations are often incredibly difficult to navigate, making it all the more important for firms to adopt a robust approach to compliance. eflow’s TZTR software simplifies the transaction reporting process and makes it easy to stay on the right side of market abuse regulations – however demanding they may be.\u003c/p\u003e\n\u003cp\u003eFor more information, book a demo or \u003ca href=\"/contact-us\"\u003econtact eflow\u003c/a\u003e today.\u003c/p\u003e\n\u003cp\u003e*This article is provided for informational purposes only and should not be relied upon as legal or financial advice. Its contents are current at the date of publication and do not necessarily reflect the present state of the law.\u003c/p\u003e\n","date_published":"2021-10-08T23:00:00+0000"},{"title":"Irish Central Bank joins calls for tighter market abuse regime","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/irish-central-bank-joins-calls-for-tighter-market-abuse-regime/","summary":"\u003ch2 id=\"on-12-july-2021-the-central-bank-of-ireland-published-review\"\u003eOn 12 July 2021, the Central Bank of Ireland published review\u003c/h2\u003e\n\u003cp\u003eThe Central Bank of Ireland published the\u003c/p\u003e\n\u003ca href=\"https://www.centralbank.ie/news/article/press-release-findings-of-review-into-market-abuse-risks-12-July-2021\" target=\"_blank\"\u003efindings of its long-awaited review\u003c/a\u003e\n\u003cp\u003eof compliance with the Market Abuse Regulation (MAR). Its work has uncovered systemic failings on the part of firms to comply with reporting requirements, and has seen the bank move to impose risk mitigation programmes on certain market participants.\u003c/p\u003e\n\u003cp\u003eThe Bank’s review follows its designation of market abuse compliance as a key area of focus in its February 2021\u003c/p\u003e\n\u003ca href=\"https://www.centralbank.ie/docs/default-source/regulation/industry-market-sectors/securities-markets/risk-outlook-reports/securities-markets-risk-outlook-report-2021.pdf\" target=\"_blank\"\u003eSecurities Markets Risk Outlook Report\u003c/a\u003e\n\u003cp\u003e. It launched a cross-industry investigation into securities market conduct risk in January 2020, however the advent of the COVID-19 pandemic saw this exercise uncover more nuanced issues than might otherwise have been expected.\u003c/p\u003e\n\u003cp\u003eIn this article, we summarise the Central Bank’s key findings and explain how they compare with the views of other regulators on Market Abuse.\u003c/p\u003e\n\u003ch3 id=\"key-outcomes\"\u003eKey Outcomes\u003c/h3\u003e\n\u003cp\u003eThe Central Bank of Ireland’s review of market abuse compliance uncovered a mixed set of results, illustrating that the \u003ca href=\"https://actual-frog.cloudvent.net/uk-mar-and-market-abuse-after-brexit-the-new-regime-explained/\"\u003eEuropean Market Abuse Regulation\u003c/a\u003e (EU MAR) is still widely misunderstood.\u003c/p\u003e\n\u003cp\u003eIts report shows that the risk of regulated firms, issuers, and advisors committing market abuse has risen due to factors including post-Brexit growth and new trading technologies. It also indicated that market volatility and home working along with other pandemic-related issues have led to increased instances of unlawful behaviour by market participants.\u003c/p\u003e\n\u003cp\u003eMore specifically, the Central Bank’s report shows that significant improvement is needed in terms of trade surveillance and reporting.\u003c/p\u003e\n\u003ch4 id=\"1-regulated-firms-must-enhance-trade-surveillance-and-stor-reporting\"\u003e1. Regulated Firms Must Enhance Trade Surveillance and STOR Reporting\u003c/h4\u003e\n\u003cp\u003eNotably, the Bank found that many regulated firms do not have a sufficient framework in place to ensure compliance with their trade surveillance and suspicious transaction and order report (STOR) obligations.\u003c/p\u003e\n\u003cp\u003eFirms are required to monitor for and report any orders or transactions that could constitute insider dealing, attempted insider dealing, or market manipulation pursuant to Articles 16(1) and (2) of EU MAR. An almost identical duty is incumbent on UK regulated firms pursuant to the UK Market Abuse Regulation (UK MAR).\u003c/p\u003e\n\u003ch4 id=\"2-issuers-and-professional-advisors-must-improve-the-quality-of-insider-lists\"\u003e2. Issuers and Professional Advisors Must Improve the Quality of Insider Lists\u003c/h4\u003e\n\u003cp\u003eSimilarly, the review highlights that some regulated firms are failing to disclose inside information in a timely manner.\u003c/p\u003e\n\u003cp\u003eListed firms in particular are required to make regular disclosures to the markets pertaining to price-sensitive information. Insider information is defined across both bodies of MAR legislation as information that:\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003ehas not yet been made public;\u003c/li\u003e\n\u003cli\u003edirectly or indirectly relates to one or more issuers, or financial instruments; and\u003c/li\u003e\n\u003cli\u003ewould be likely to have a significant effect on the prices of those instruments if it were made public.\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003e\u003ca href=\"https://www.fca.org.uk/markets/best-practice-note-identifying-controlling-and-disclosing-inside-information\"\u003eInsider trading\u003c/a\u003e has been illegal in the UK since 1980, however it is governed by a complex body of law that makes it hard to ensure compliance. In its review, the Central Bank suggests that issuers and their professional advisors should improve the quality of its insider lists (details of company directors, employees, and major shareholders who may become party to ‘insider information’).\u003c/p\u003e\n\u003ch4 id=\"3-market-participants-must-improve-market-abuse-training-for-staff\"\u003e3. Market Participants Must Improve Market Abuse Training for Staff\u003c/h4\u003e\n\u003cp\u003eContinuing from its comments on insider trading, the Central Bank also highlighted the need for issuers to improve staff training and awareness of their market abuse obligations. In particular, it is suggested that issuers should write to insiders to inform them of their MAR obligations and to underscore the severe consequences of committing market abuse offences.\u003c/p\u003e\n\u003cp\u003eThe review also draws attention to the need for market participants to recognise the unique factors that affect their business activities, and encourages a risk-based approach to stakeholder training.\u003c/p\u003e\n\u003ch3 id=\"market-abuse-in-the-spotlight\"\u003eMarket Abuse in the Spotlight\u003c/h3\u003e\n\u003cp\u003eIreland is not the only jurisdiction that has seen increased market abuse activism from regulators in recent times. The MAR compliance review report was released against a backdrop of announcements from global regulatory bodies, each reiterating the importance of market abuse compliance.\u003c/p\u003e\n\u003cp\u003eOn 13 July 2021, the UK’s Financial Conduct Authority (FCA) announced a joint review of open-ended investment funds with the Bank of England (BoE). This follows from an earlier commitment by the G20 nations to reform derivatives markets to safeguard against market abuse, and a \u003ca href=\"https://www.bankofengland.co.uk/report/2021/assessing-the-resilience-of-market-based-finance\"\u003efurther commitment by the BoE\u003c/a\u003e to improve market resilience.\u003c/p\u003e\n\u003cp\u003eWith recent reports having brought financial regulation into focus, it’s clear that more will be expected of firms in the coming months and years. The FCA has already signalled its intention to impose \u003ca href=\"https://www.cityam.com/uk-to-increase-sentence-for-market-abuse-in-post-brexit-financial-regulation/\"\u003estronger sanctions for market abuse\u003c/a\u003e, and it seems that other regulators are likely to follow suit.\u003c/p\u003e\n\u003cp\u003eAs the Central Bank of Ireland’s Direct General for Financial Conduct, Derville Rowland, put it: “as the scale of securities market activity […] increases, so too does the obligation of market participants to ensure their organisational arrangements to identify, mitigate, and manage market abuse risk are effective.”\u003c/p\u003e\n\u003ch3 id=\"staying-compliant-in-a-complex-market\"\u003eStaying Compliant in a Complex Market\u003c/h3\u003e\n\u003cp\u003eThe Central Bank’s review draws particular attention to the failings of certain firms to manage compliance as their business grows in scale and complexity. It is in such situations when manual monitoring and reporting frameworks may prove insufficient to meet compliance obligations, leaving firms open to the risk of sanctions and intervention by regulators.\u003c/p\u003e\n\u003cp\u003eeflow’s TZ compliance platform and TZTR transaction reporting software makes it easy to stay compliant with market abuse regulations. With full-market monitoring and reporting capabilities, it offers a scalable approach to MAR compliance that will stand up to regulatory scrutiny.\u003c/p\u003e\n\u003cp\u003eFor more information, book a demo or \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003econtact eflow\u003c/a\u003e today.\u003c/p\u003e\n\u003cp\u003e*This article is provided for informational purposes only and should not be relied upon as legal or financial advice. Its contents are current at the date of publication and do not necessarily reflect the present state of the law.\u003c/p\u003e\n","date_published":"2021-20-07T23:00:00+0000"},{"title":"FCA Market Watch 67: Market manipulation in the spotlight","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fca-market-watch-67-market-manipulation-in-the-spotlight/","summary":"\u003cp\u003eThe UK’s Financial Conduct Authority (FCA) has recently published the latest issue of Market Watch – its newsletter on market conduct and transaction reporting issues. This issue focuses on market manipulation and the controls that the regulator deploys to detect and prevent it.\u003c/p\u003e\n\u003cp\u003eAs a direct communication from the regulator, these newsletters serve as a notice of intention when it comes to market management. They also highlight key areas of focus that firms and trading venues should approach carefully to ensure compliance with the law.\u003c/p\u003e\n\u003cp\u003eIn this article, we unpack the contents of the\u003c/p\u003e\n\u003ca href=\"https://www.fca.org.uk/publications/newsletters/market-watch-67\" target=\"_blank\"\u003eFCA’s Market Watch Issue 67\u003c/a\u003e\n\u003cp\u003eand explain what the findings mean for trading venues and market participants.\u003c/p\u003e\n\u003ch2 id=\"the-law-explained-article-16-of-the-market-abuse-regulation\"\u003eThe Law Explained: Article 16 of the Market Abuse Regulation\u003c/h2\u003e\n\u003cp\u003eOn 1 January, the UK Market Abuse Regime (MAR) onshored the EU’s Market Abuse Regulation (EU MAR).\u003c/p\u003e\n\u003cp\u003eThis move effectively codified the EU framework into domestic law, and ensures that the UK markets and financial instruments can benefit from relative continuity post-Brexit.\u003c/p\u003e\n\u003cp\u003eMuch of the FCA’s work to combat market manipulation is underpinned by Article 16 of MAR. This requires any person professionally arranging or executing transactions to establish and maintain effective systems and procedures to detect and report suspicious orders and transactions. This duty extends to firms providing investment services under MiFID.\u003c/p\u003e\n\u003cp\u003eIn plain terms, the law requires firms and trading venues to monitor for and report suspicious transactions to the FCA. Article 16 of UK MAR prescribes that Suspicious Transaction and Order Reports (STORs) must be used for this purpose.\u003c/p\u003e\n\u003cp\u003eThe FCA’s Approach to Market Manipulation\u003c/p\u003e\n\u003cp\u003eIt’s the function of STORs and other reporting data that the FCA focuses on in Market Watch 67. As outlined below, there are a number of strategies that the regulator deploys to identify suspicious activity and mitigate against market manipulation.\u003c/p\u003e\n\u003ch3 id=\"1-using-data-to-identify-suspicious-activity\"\u003e1. Using Data to Identify Suspicious Activity\u003c/h3\u003e\n\u003cp\u003eUK equity trading venues have been required to provide order book records to the FCA since 2017. According to the latest reports, approximately 150 million are filed per day. These are amalgamated to provide a single holistic picture of the market at any one time. This snapshot view makes it easier for FCA analysts to identity manipulative trading.\u003c/p\u003e\n\u003cp\u003eIn\u003c/p\u003e\n\u003ca href=\"https://www.fca.org.uk/publication/newsletters/market-watch-59.pdf\" target=\"_blank\"\u003eMarket Watch issue 59\u003c/a\u003e\n\u003cp\u003e, the FCA highlighted the negative impact of inaccurate reporting by firms and trading venues, explaining that it may limit their ability to effectively monitor for market abuse. Firms are reminded of the importance of ensuring that their systems use adequate client coding, and it’s worth noting that the FCA regularly investigates those who do not comply with reporting best practice.\u003c/p\u003e\n\u003ch3 id=\"2-supervising-staff-conduct\"\u003e2. Supervising Staff Conduct\u003c/h3\u003e\n\u003cp\u003eThe FCA’s work is supported by a set of surveillance algorithms that identify manipulative trading strategies. Examples of commonly detected schemes include spoofing, layering, ramping, reference price gaming, and a range of other prohibited behaviours.\u003c/p\u003e\n\u003cp\u003eThese surveillance algorithms are used to monitor for patterns of behaviour that suggest impropriety on the part of a firm or individual trader. In one instance, a trader’s activity gave rise to concerns about ‘spoofing’.\u003c/p\u003e\n\u003cp\u003eThis goes to show that the regulator is proactive when it comes to policing trading activity in the UK. In this case, the FCA commenced a more detailed enquiry and the firm introduced additional market abuse training alongside enhanced surveillance measures.\u003c/p\u003e\n","date_published":"2021-20-06T23:00:00+0000"},{"title":"eflow wins Best Trade Surveillance at 2021 A-Team awards","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-wins-best-trade-surveillance-at-2021-a-team-awards/","summary":"\u003cp\u003eIt was announced this week that eflow has won Best Trade Surveillance Solution for MAD/MAR at the 2021 European RegTech Insight Awards hosted by A-Team Group.\u003c/p\u003e\n\u003cp\u003eOur trade surveillance platform TZ is our flagship product, and we couldn’t be happier to see it gaining this recognition from a renowned RegTech institution such as A-Team. Our priority as a business is providing quality, reliable products and services to our clients to help ensure their compliance with an increasingly complex landscape of regulations, and we feel that this award is proof of our success in this mission.\u003c/p\u003e\n\u003cp\u003eIn a post to\u003c/p\u003e\n\u003ca href=\"https://www.linkedin.com/in/ben-parker-1a72069/\" target=\"_blank\"\u003ehis LinkedIn\u003c/a\u003e\n\u003cp\u003e, CEO Ben Parker made the claim that ‘our entire company works tirelessly to deliver the best possible service to our clients, and this award fills us with pride that our work is being recognised for its quality and reliability.’\u003c/p\u003e\n\u003cp\u003eThis award marks the second consecutive year in which eflow has been nominated for and won an A-Team Group award. In 2020, eflow won Best Transaction Cost Analysis Tool at the TradingTech Insight Awards.\u003c/p\u003e\n","date_published":"2021-19-05T23:00:00+0000"},{"title":"eflow and Euronext announce new ARM and APA connectivity partnership","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-and-euronext-announce-new-arm-and-apa-connectivity-partnership/","summary":"\u003cp\u003eLondon-based regulatory compliance firm eflow have today announced that they will be partnering with Euronext in the interest of extending the connectivity of their transaction reporting solution TZTR.\u003c/p\u003e\n\u003cp\u003eAs a result of this new partnership, Euronext will provide eflow with authorised MiFID II APAand ARM services to all major European regulators and national competent authorities.\u003c/p\u003e\n\u003cp\u003eEuronext’s connectivity to European NCAs is extensive; with this new partnership, eflow clients will be able to submit MiFID II-compliant reports to all European NCAs, including but not limited to AMF, AFM, FCA, FSMA, CMVM and Consob.\u003c/p\u003e\n\u003ch5 id=\"euronext-is-synonymous-with-quality-and-reliability-their-first-rate-connectivity-will-be-a-welcome-addition-to-eflows-transaction-reporting-solution\"\u003e\u003cstrong\u003e“Euronext is synonymous with quality and reliability. Their first-rate connectivity will be a welcome addition to eflow’s transaction reporting solution”\u003c/strong\u003e\u003c/h5\u003e\n\u003cp\u003eeflow will leverage Euronext’s reporting solution Saturn to utilise this connectivity for their transaction reporting clients. By harnessing the connectivity afforded by Saturn, eflow will be able to provide an even more flexible transaction reporting solution to their client base.\u003c/p\u003e\n\u003cp\u003eSpeaking about this new partnership. Ben Parker, CEO and founder of eflow said, ‘Euronext is synonymous with quality and reliability,’ says Parker. ‘Their first-rate connectivity will be a welcome addition to eflow’s transaction reporting solution’.\u003c/p\u003e\n\u003cp\u003eGeorges Lauchard, COO of Euronext said, ‘We are delighted to establish a partnership with eflow on \u003ca href=\"\"\u003eMiFIR reporting\u003c/a\u003e. Together, we will create value for investment firms that are looking for simple, reliable, and cost-effective data driven solutions – and delivered with the confidence that comes from the leading pan-European market infrastructure.’\u003c/p\u003e\n","date_published":"2021-13-05T23:00:00+0000"},{"title":"Why regulators should be promoting Regtech adoption","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/why-regulators-should-be-promoting-regtech-adoption/","summary":"\u003cp\u003eAsk anyone on the street whether they know about FinTech and you’re likely to be met with a resounding yes. The same cannot, unfortunately, be said for RegTech.\u003c/p\u003e\n\u003cp\u003eRegTech (Regulatory Technology) was\u003c/p\u003e\n\u003ca href=\"https://www.fca.org.uk/news/speeches/fca-regional-fintech-engagement\" target=\"_blank\"\u003edefined by the UK’s Financial Conduct Authority\u003c/a\u003e\n\u003cp\u003e(FCA) as “a subset of FinTech that focuses on technologies that may facilitate the delivery of regulatory requirements more efficiently and effectively than existing capabilities.” In the same document, the regulator also spoke of its intention to support the development of digital regulatory solutions.\u003c/p\u003e\n\u003cp\u003eIn a recent survey, we posed the question of whether financial regulators should promote the adoption of RegTech solutions by financial institutions. The majority of industry respondents expressed a belief that regulators should encourage and support the proliferation of RegTech solutions, but views on how this should be done were mixed.\u003c/p\u003e\n\u003cp\u003eHere we unpack the findings of our survey, and consider how regulators should approach the fast-emerging area of Regulatory Technology.\u003c/p\u003e\n\u003ch3 id=\"why-regtech-is-important\"\u003eWhy RegTech is Important\u003c/h3\u003e\n\u003cp\u003eWhichever way you look at it, RegTech is an inescapable part of the modern financial landscape. It’s used to monitor trading, prevent market abuse, and comply with reporting obligations. RegTech is also often conflated with SupTech (Supervisory Technology) that is used by regulators to supervise the markets and their participants.\u003c/p\u003e\n\u003cp\u003eAlthough RegTech is widely misunderstood, it is an essential component of compliance across global financial markets. Financial services have expanded at an astonishing rate over the past decade, and internet trading platforms have democratised the trading of stocks and other key instruments. In the UK alone, one trading platform saw\u003c/p\u003e\n\u003ca href=\"https://www.marketwatch.com/story/u-k-retail-investors-dive-into-derivatives-driving-an-exceptional-year-for-trading-platform-plus500-11613569636\" target=\"_blank\"\u003e85 million customer trades placed during 2020\u003c/a\u003e\n\u003cp\u003e– up 142% from the previous year.\u003c/p\u003e\n\u003cp\u003eFor each trade, a variety of metrics must be tested and these could give rise to reporting obligations both on a domestic and international level. This explosion in market involvement has significantly increased the compliance burden on trading platforms and public companies alike.\u003c/p\u003e\n\u003cp\u003eWith market participation only set to rise, it has become increasingly clear that existing means of handling trade monitoring and reporting are insufficient. RegTech fills that gap, and can meet regulatory compliance obligations at speed and scale.\u003c/p\u003e\n\u003ch3 id=\"the-current-approach-of-regulators\"\u003eThe Current Approach of Regulators\u003c/h3\u003e\n\u003cp\u003eDespite the FCA’s positive view of RegTech solutions, its current approach is somewhat reactive. It has long been the position of the UK authorities that ‘management-based’ regulation is the most effective way to handle the markets. This means that “regulators do no prescribe how regulatees should comply, but require them to develop their own systems for compliance and demonstrate that type of compliance to the regulator.”\u003c/p\u003e\n\u003cp\u003eThis ethos has led to a patchwork of regulatory standards and methods that leave the FCA and the Prudential Regulation Authority (PRA) with a substantial workload. Some platforms, trade venues, and companies have led the way with increasingly sophisticated RegTech solutions, while others remain much closer to their manual reporting roots.\u003c/p\u003e\n\u003cp\u003eWhile it is only right that the regulators remain ‘technologically-neutral’ and avoid championing one digital solution over another, it seems that they are also undergoing a cultural shift. In a\u003c/p\u003e\n\u003ca href=\"https://www.fca.org.uk/news/speeches/innovation-hub-innovation-culture\" target=\"_blank\"\u003e2019 speech\u003c/a\u003e\n\u003cp\u003e, the FCA’s Director of Innovation, Nick Cook, said that “data and technology are changing the way we regulate” and suggested that the industry authority was working towards a future where innovative thinking becomes part of ‘business as usual’.\u003c/p\u003e\n\u003ch3 id=\"views-on-regtech--eflows-2021-survey\"\u003eViews on RegTech – eflow’s 2021 Survey\u003c/h3\u003e\n\u003cp\u003eSeeking to promote an open dialogue around the future of the industry, we gathered feedback from industry figures on the need for financial regulators to encourage the adoption of RegTech solutions by financial institutions.\u003c/p\u003e\n\n\n\n\n\u003cfigure style=\"margin-left: 0;margin-right: 0; position: relative; height: 0; padding-bottom: 56.25%; overflow: hidden;\"\u003e\n    \u003cimg style=\"position: absolute; inset: 0; width: 100%; height:100%; border-radius: 10px; object-fit: cover;\" srcset=\"https://video-page-fix--eflow-website.netlify.app/images/article-7_hub4879a6873156d1c51199f96173ac3cf_85240_500x0_resize_box_3.png 500w,https://video-page-fix--eflow-website.netlify.app/images/article-7_hub4879a6873156d1c51199f96173ac3cf_85240_980x0_resize_box_3.png 980w\" sizes=\"(max-width:500px) 500px, 980px \" src=\"/images/article-7.png\" /\u003e\n    \u003cfigcaption class=\"visually-hidden\"\u003e\n        \u003ch4\u003eThis is image title\u003c/h4\u003e\n    \u003c/figcaption\u003e\n  \u003c/figure\u003e\n\n\n\u003cp\u003eAsk anyone on the street whether they know about FinTech and you’re likely to be met with a resounding yes. The same cannot, unfortunately, be said for RegTech.\u003c/p\u003e\n\u003cp\u003eRegTech (Regulatory Technology) was defined by the UK’s Financial Conduct Authority (FCA) as “a subset of FinTech that focuses on technologies that may facilitate the delivery of regulatory requirements more efficiently and effectively than existing capabilities.” In the same document, the regulator also spoke of its intention to support the development of digital regulatory solutions.\u003c/p\u003e\n\u003cp\u003eIn a recent survey, we posed the question of whether financial regulators should promote the adoption of RegTech solutions by financial institutions. The majority of industry respondents expressed a belief that regulators should encourage and support the proliferation of RegTech solutions, but views on how this should be done were mixed.\u003c/p\u003e\n\u003cp\u003eHere we unpack the findings of our survey, and consider how regulators should approach the fast-emerging area of Regulatory Technology. Why RegTech is Important\u003c/p\u003e\n\u003cp\u003eWhichever way you look at it, RegTech is an inescapable part of the modern financial landscape. It’s used to monitor trading, prevent market abuse, and comply with reporting obligations. RegTech is also often conflated with SupTech (Supervisory Technology) that is used by regulators to supervise the markets and their participants.\u003c/p\u003e\n\u003cp\u003eAlthough RegTech is widely misunderstood, it is an essential component of compliance across global financial markets. Financial services have expanded at an astonishing rate over the past decade, and internet trading platforms have democratised the trading of stocks and other key instruments. In the UK alone, one trading platform saw 85 million customer trades placed during 2020 – up 142% from the previous year.\u003c/p\u003e\n\u003cp\u003eFor each trade, a variety of metrics must be tested and these could give rise to reporting obligations both on a domestic and international level. This explosion in market involvement has significantly increased the compliance burden on trading platforms and public companies alike.\u003c/p\u003e\n\u003cp\u003eWith market participation only set to rise, it has become increasingly clear that existing means of handling trade monitoring and reporting are insufficient. RegTech fills that gap, and can meet regulatory compliance obligations at speed and scale. The Current Approach of Regulators\u003c/p\u003e\n\u003cp\u003eDespite the FCA’s positive view of RegTech solutions, its current approach is somewhat reactive. It has long been the position of the UK authorities that ‘management-based’ regulation is the most effective way to handle the markets. This means that “regulators do no prescribe how regulatees should comply, but require them to develop their own systems for compliance and demonstrate that type of compliance to the regulator.”\u003c/p\u003e\n\u003cp\u003eThis ethos has led to a patchwork of regulatory standards and methods that leave the FCA and the Prudential Regulation Authority (PRA) with a substantial workload. Some platforms, trade venues, and companies have led the way with increasingly sophisticated RegTech solutions, while others remain much closer to their manual reporting roots.\u003c/p\u003e\n\u003cp\u003eWhile it is only right that the regulators remain ‘technologically-neutral’ and avoid championing one digital solution over another, it seems that they are also undergoing a cultural shift. In a 2019 speech, the FCA’s Director of Innovation, Nick Cook, said that “data and technology are changing the way we regulate” and suggested that the industry authority was working towards a future where innovative thinking becomes part of ‘business as usual’. Views on RegTech – eflow’s 2021 Survey\u003c/p\u003e\n\u003cp\u003eSeeking to promote an open dialogue around the future of the industry, we gathered feedback from industry figures on the need for financial regulators to encourage the adoption of RegTech solutions by financial institutions.\u003c/p\u003e\n\u003cp\u003eWhile the majority of respondents were resolute in their belief that regulators do bear some responsibility for the future of RegTech, these views were qualified by several key arguments.\u003c/p\u003e\n\u003cp\u003eMany respondents believed that the FCA and other regulatory bodies should be overtly pro-technology, and that they should lead by example. These views were tempered, however, by the near-unanimous belief that the authorities must remain neutral and should not champion individual solutions, products, or providers.\u003c/p\u003e\n\u003cp\u003eA number of respondents also raised the issue of knowledge and education. It is perhaps not surprising that few people have a detailed understanding of what RegTech has to offer, and a variety of labels including TaxTech, LegalTech and others are captured by the overarching term. This complicates the argument and makes it harder for institutions to ‘sell’ RegTech adoption to stakeholders.\u003c/p\u003e\n\u003cp\u003eFinally, participants drew a key distinction between promoting RegTech and promoting better systems and controls more generally. Many solutions have already received informal appreciation and recognition from regulators, and this in itself could be viewed as a promotion to financial institutions who seek out credible providers.\u003c/p\u003e\n\u003ch3 id=\"what-next-for-regtech\"\u003eWhat Next for RegTech?\u003c/h3\u003e\n\u003cp\u003eBoth technology and financial regulation are areas of constant change, and it is very difficult to predict the direction they might take in the coming months and years.\u003c/p\u003e\n\u003cp\u003eIn a recent report prepared by\u003c/p\u003e\n\u003ca href=\"https://events.rtassociates.co/a-critical-year-for-regtech\" target=\"_blank\"\u003eRegTech Associates\u003c/a\u003e\n\u003cp\u003eand commissioned by the City of London, a compelling case was made for faster adoption of digital regulatory solutions. The report argues that policymakers should focus on building awareness of the benefits of RegTech, adopting tech themselves to advocate for improved standards, and establishing a collective voice for the industry.\u003c/p\u003e\n\u003cp\u003eThese recommendations are reflective of the industry trends that we see day in, day out. They also speak directly to the concerns raised by some of the participants in eflow’s survey. By establishing a coherent voice for RegTech providers and advocates, regulators can improve the market’s understanding of the solutions available, and drive digital adoption without favouring certain providers over others.\u003c/p\u003e\n\u003ch3 id=\"preparing-for-the-future-of-financial-regulation\"\u003ePreparing for the Future of Financial Regulation\u003c/h3\u003e\n\u003cp\u003eIn the coming years, RegTech is set to become an increasingly crucial component of the financial regulation sphere. Just as was the case for FinTech before it, RegTech must first face an uphill battle in educating regulators and institutions of its merits while continuing to improve monitoring and reporting processes across the board.\u003c/p\u003e\n\u003cp\u003eWhile it may seem far off now, there is scope to suggest that the term RegTech (and indeed FinTech) will one day become obsolete. There will come a time when everything is powered by technology, and so the label will no longer be necessary.\u003c/p\u003e\n\u003cp\u003eUntil then, it falls to regulators, providers, and institutions to move towards faster and more effective ways of satisfying compliance obligations. With a full complement of transaction reporting, \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003etrade surveillance\u003c/a\u003e, transaction cost analysis and trade life-cycle management solutions, eflow’s flagship TZ software could help your business to get ahead of the curve.\u003c/p\u003e\n\u003cp\u003eFor more information, book a demo or \u003ca href=\"/contact-us\"\u003econtact eflow\u003c/a\u003e today.\u003c/p\u003e\n\u003cp\u003e*\u003cem\u003eThis article is provided for informational purposes only and should not be relied upon as legal or financial advice. Its contents are current at the date of publication and do not necessarily reflect the present state of the law.\u003c/em\u003e\u003c/p\u003e\n","date_published":"2021-03-05T23:00:00+0000"},{"title":"Best execution and beyond - What’s happening to RTS 27 \u0026 28 post-Brexit?","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/best-execution-and-beyond-whats-happening-to-rts-27-28-post-brexit/","summary":"\u003cp\u003eThe Brexit transition period has now ended, and the UK has severed its legal framework from the EU. For those expecting a marked change in the way business is done outside of the trading bloc, the past few months may have come as a shock. EU legislation that applied to the UK before 11 pm on 31 December has been\u003c/p\u003e\n\u003ca href=\"https://www.legislation.gov.uk/eu-legislation-and-uk-law\" target=\"_blank\"\u003etransposed into domestic law\u003c/a\u003e\n\u003cp\u003e– including the majority of provisions concerning financial firms and the securities markets.\u003c/p\u003e\n\u003cp\u003eAlthough the UK’s financial reporting and market abuse regimes continue to closely mirror those in effect across the EU, cracks are starting to emerge. Notably, the UK has temporarily ended the need for firms to file RTS 27 reports on execution quality. While the EU has also enacted its own suspension, the UK’s Financial Conduct Authority (FCA) looks set to abolish the requirement altogether.\u003c/p\u003e\n\n\n\n\n\u003cfigure style=\"margin-left: 0;margin-right: 0; position: relative; height: 0; padding-bottom: 56.25%; overflow: hidden;\"\u003e\n    \u003cimg style=\"position: absolute; inset: 0; width: 100%; height:100%; border-radius: 10px; object-fit: cover;\" srcset=\"https://video-page-fix--eflow-website.netlify.app/images/article-5_hu0bd5f0f642c6d6c9edbbf16ec63f1033_13552_500x0_resize_box_3.png 500w,https://video-page-fix--eflow-website.netlify.app/images/article-5_hu0bd5f0f642c6d6c9edbbf16ec63f1033_13552_980x0_resize_box_3.png 980w\" sizes=\"(max-width:500px) 500px, 980px \" src=\"/images/article-5.png\" /\u003e\n    \u003cfigcaption class=\"visually-hidden\"\u003e\n        \u003ch4\u003etesting\u003c/h4\u003e\n    \u003c/figcaption\u003e\n  \u003c/figure\u003e\n\n\n\u003cp\u003eAs the first signs of divergence between the financial regimes of the EU and the newly independent UK begin to show, we’ve summarised the requirements firms must still meet and outlined where things might change.\u003c/p\u003e\n\u003ch3 id=\"rts-27-reporting-requirements-suspended\"\u003eRTS 27 reporting requirements suspended\u003c/h3\u003e\n\u003cp\u003eRTS 27 reporting (under Article 27(3) of MiFID II) involves providing quality of execution data on all instruments traded with reference to cost, price, and speed of execution. The obligation usually applies to all execution venues including regulated markets, MTFs, market makers and all firms that execute client orders under the Best Execution regime. EU law requires firms to submit such reports quarterly and in a machine-readable format.\u003c/p\u003e\n\u003cp\u003eOn 19 March 2021, the FCA announced that it would not take action against firms that fail to produce RTS 27 reports for the remainder of 2021. This move follows concerns about the general utility of such reports along with their relevance given that the upcoming round of submissions would have been based on pre-Brexit execution quality data. The FCA’s misgivings about RTS 27 reporting requirements have also been compounded by the EU’s own two-year suspension of the same provision.\u003c/p\u003e\n\u003cp\u003eWhile some firms breathe a sigh of relief as they are relinquished of their RTS 27 reporting obligations, the regulators are considering their positions. A\u003c/p\u003e\n\u003ca href=\"https://www.esma.europa.eu/sites/default/files/library/esma35-43-2632_statement_suspension_rts_27.pdf\" target=\"_blank\"\u003epress statement\u003c/a\u003e\n\u003cp\u003efrom the European Securities and Markets Authority (ESMA) commented on the potential for a review of the adequacy of execution quality reporting requirements by the European Commission. In the FCA’s equivalent notice, the UK’s financial regulator made clear its intentions to pursue the outright abolition of the requirement.\u003c/p\u003e\n\u003cp\u003eAlthough both regulators have temporarily suspended the reporting requirement, only the FCA has given a firm indication that it intends to do away with the RTS 27 obligations altogether. ESMA’s current position is much softer, and naturally depends on the findings of any review by the EU Commission along with the input of member states.\u003c/p\u003e\n\u003ch3 id=\"rts-28-reporting-obligations-remain\"\u003eRTS 28 reporting obligations remain\u003c/h3\u003e\n\u003cp\u003eAlthough firms may not face penalties in respect of RTS 27 reporting omissions, it is important to note that RTS 28 remains in force for UK and EU investment firms. With a due date of 30 April 2021, this provision requires firms to summarise their top five execution venues by trading volume and to provide quality of execution data for each relevant class of financial instruments.\u003c/p\u003e\n\u003cp\u003eThese obligations apply to execution venues, but also firms receiving and transmitting orders along with portfolio managers.\u003c/p\u003e\n\u003ch3 id=\"change-on-the-horizon\"\u003eChange on the horizon\u003c/h3\u003e\n\u003cp\u003eEven though there is relative parity between the ESMA and FCA positions regarding RTS 27 reporting, there are indications of a split in direction between the regulators. As already mentioned, ESMA’s promise of a review is far more cautious than that of the FCA. This is perhaps not surprising given that the UK’s regime is not tied to the political machinery of 27 distinct partner nations.\u003c/p\u003e\n\u003cp\u003eThe FCA’s RTS 27 announcement also included a pledge to review the MiFID II notification requirements that obliged financial advisers to notify clients if their investment portfolios fell by 10% or more in value. While this provision was\u003c/p\u003e\n\u003ca href=\"https://www.fca.org.uk/news/statements/coronavirus-ten-per-cent-depreciation-notifications-further-temporary-measures-firms\" target=\"_blank\"\u003esuspended in light of the financial pressures of the COVID-19 pandemic\u003c/a\u003e\n\u003cp\u003e, the potential for a review suggests that the FCA may pursue a more liberal approach to financial reporting in the future.\u003c/p\u003e\n\u003cp\u003eIt could be that the UK’s new-found legal agility leads to greater divergence from the EU in the future. For firms that are subject to reporting and compliance requirements, this all makes for an uncertain situation that looks set to disrupt the relative stability of the MiFID II regime.\u003c/p\u003e\n\u003ch3 id=\"make-regulatory-reporting-simple\"\u003eMake regulatory reporting simple\u003c/h3\u003e\n\u003cp\u003eAs the gulf widens between the recently separated financial regimes of the EU and the UK, firms face a more complex regulatory environment than ever before. Even despite the relaxation of RTS 27 reporting rules, there can be no doubt that the coming months and years will bring further changes on both sides of the English Channel. New legal hurdles will be created, and reviews of market abuse and reporting obligations are already underway.\u003c/p\u003e\n\u003cp\u003eThe prospect of change can be frustrating for firms who invest significantly in the development of their compliance procedures – and especially those who have become subject to dual reporting obligations following Brexit. As new developments complicate regulatory compliance, firms need to ensure their systems can keep pace with transaction monitoring and reporting obligations.\u003c/p\u003e\n\u003cp\u003eFor more information on how eflow can help you fulfil your regulatory reporting needs, book a demo using the form below.\u003c/p\u003e\n","date_published":"2021-31-03T23:00:00+0000"},{"title":"Quality Control: Is Sampling Effective in Transaction Reporting?","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/quality-control-is-sampling-effective-in-transaction-reporting/","summary":"\u003cp\u003eFinancial firms face a complex web of regulatory requirements – with transaction reporting undoubtedly taking the crown as one of the most challenging. Firms need to ensure that they fall on the right side of the regulations. Sampling might seem like an easy way to perform compliance checks on the quality of your transaction reports, but it may not be the effective solution you think it is.\u003c/p\u003e\n\u003cp\u003eFollowing Brexit, the Markets in Financial Instruments Directive (\u003cem\u003eMiFID II\u003c/em\u003e) and the Markets in Financial Instruments Regulation (\u003cem\u003eMIFIR\u003c/em\u003e) have been onshored and enshrined into UK law. The UK Financial Conduct Authority (FCA) has a robust enforcement regime, and the \u003ca href=\"https://www.fca.org.uk/news/press-releases/fca-fines-goldman-sachs-international-transaction-reporting-failures\"\u003e£34 million fine\u003c/a\u003e imposed on Goldman Sachs International just goes to show that no business is exempt from the need for proper compliance.\u003c/p\u003e\n\u003cp\u003eWith such severe consequences for non-compliance, no firm can afford to take the wrong approach to transaction reporting. In this article, we look at whether sampling is an effective way to monitor the quality of submissions to regulators, and consider whether there’s a better approach to transaction reporting.\u003c/p\u003e\n\u003ch2 id=\"compliant-transaction-reporting--the-law\"\u003eCompliant transaction reporting – the law\u003c/h2\u003e\n\u003cp\u003eAlongside a raft of other requirements, regulations, and guidelines, firms must abide by the Regulatory Technical Standards (RTS) as set out by the European Securities and Markets Authority (ESMA). These remain relevant post Brexit, since they are part of UK law by virtue of the European Union (Withdrawal) Act 2018.\u003c/p\u003e\n\u003cp\u003eFirms should pay particular attention to \u003ca href=\"https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017R0590\u0026amp;from=EN\"\u003eArticle 15 of RTS 22\u003c/a\u003e, which sets out requirements for the ‘methods and arrangements’ for reporting. Among other provisions, Article 15 requires trading venues and investment firms to have:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003emechanisms for identifying errors and omissions within transaction reports; and\u003c/li\u003e\n\u003cli\u003ethe means to ensure that transaction reports are complete and accurate – including through the testing of reporting processes and regular reconciliation of front-office trading records against samples provided by the authorities.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe burden presented by these requirements will naturally weigh less on firms that have robust reporting mechanisms in place. Even so, it’s still important to conduct quality assurance checks and the fact that a report can pass regulator-imposed validation checks does not mean that it’s error-free.\u003c/p\u003e\n\u003ch2 id=\"how-can-firms-check-the-quality-of-transaction-reports\"\u003eHow can firms check the quality of transaction reports?\u003c/h2\u003e\n\u003cp\u003eTo avoid substantial fines and other sanctions, firms need to check the accuracy of all the data they submit to financial regulators. It’s important to ensure that all data fields are assessed against a benchmark to ensure that they are correct, and that reporting integrity is not compromised across any area of a firm’s financial activity.\u003c/p\u003e\n\u003cp\u003eTransaction reporting quality assurance can be carried out in several ways:\u003c/p\u003e\n\u003ch3 id=\"1-transaction-testing\"\u003e1. Transaction testing\u003c/h3\u003e\n\u003cp\u003eTransaction testing involves the quality testing of transaction reports against source documentation. Firms typically use samples either from their own records, or provided by the regulator for use in end-to-end reconciliations. The frequency with which this testing must be performed depends on the organisation in question, and sample sizes also vary.\u003c/p\u003e\n\u003cp\u003eIn simple terms, the FCA provides firms with report samples that have been validated by instrument reference data. The information held by firms in their front-office records should be brought in line with the validated reporting records, and any errors or omission must be flagged to the FCA’s Markets Reporting Team.\u003c/p\u003e\n\u003cp\u003eThe process of transaction testing shows just how challenging transaction reporting can be. The FCA regularly publishes information about the failures it sees regularly, for instance in its \u003ca href=\"https://www.fca.org.uk/publication/newsletters/market-watch-59.pdf\"\u003eMarket Watch Newsletters\u003c/a\u003e which highlight common reporting errors including:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eIncorrect time reporting (particularly in respect of the UK’s transition to British Summer Time);\u003c/li\u003e\n\u003cli\u003eThe recycling of identifiers for multiple clients; and\u003c/li\u003e\n\u003cli\u003eFailure to report price in the major currency.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"2-controls-testing\"\u003e2. Controls testing\u003c/h3\u003e\n\u003cp\u003eControls testing involves the evaluation of the design and operational effectiveness of the controls put in place around transaction reporting. These functions are generally carried out on a more infrequent basis, perhaps owing to the lack of regulatory scrutiny of backend transaction reporting processes.\u003c/p\u003e\n\u003ch3 id=\"3-conformance-testing\"\u003e3. Conformance testing\u003c/h3\u003e\n\u003cp\u003eConformance testing involves analysing regulatory filings and identifying nonconformance issues. As opposed to the approach taken in respect of transaction testing, conformance testing goes beyond the basic compliance burden to reconcile reporting processes with regulator instructions.\u003c/p\u003e\n\u003cp\u003eAs with controls testing, conformance testing seems to be less of a priority for many firms since regulators do not pursue issues in this field quite so proactively.\u003c/p\u003e\n\u003ch2 id=\"common-transaction-reporting-compliance-issues\"\u003eCommon transaction reporting compliance issues\u003c/h2\u003e\n\u003cp\u003eTransaction reporting has always been a challenging affair for investment firms, but the rules shifted significantly with the implementation of MiFID II. This broadened the scope of reporting, bringing more instruments and institutions into the regulatory fold than ever before. Matters have only been complicated further by Brexit, as although the EU regime has been broadly translated into domestic law, certain dual reporting obligations have arisen where transactions have a multi-jurisdictional element.\u003c/p\u003e\n\u003cp\u003eWhile firms may have become comfortable with transaction testing, report sampling, and even end-to-end reconciliations, it’s clear that many businesses have deeper issues. As reporting becomes a more complex activity, business leaders should look beyond whether their reports comply with regulatory standards.\u003c/p\u003e\n\u003cp\u003eFirms should also consider whether their systems and internal governance frameworks allow for a consistently compliant approach to transaction reporting. Transaction reports and the data within them flow throughout an organisation before they reach the regulator, and so it’s essential to have proper controls in place to maintain the integrity of data while facilitating accurate report generation.\u003c/p\u003e\n\u003ch2 id=\"the-simple-approach-to-compliant-transaction-reporting\"\u003eThe simple approach to compliant transaction reporting\u003c/h2\u003e\n\u003cp\u003eIt has become increasingly clear that the FCA is not afraid to flex its regulatory muscles when it comes to sanctions for non-compliant transaction reporting. Sampling and end-to-end reconciliations of data reports are an essential part of the governance regime for all firms, but these activities are the bare minimum for compliance.\u003c/p\u003e\n\u003cp\u003eFor an altogether safer and more compliant approach to transaction reporting that minimises the risk of regulator sanctions, firms should ensure that they have robust systems in place. By using eflow’s TZTR transaction reporting software, you could improve the accuracy of your transaction reports and make end-to-end reconciliations even simpler.\u003c/p\u003e\n\u003cp\u003eTo improve your internal compliance regime, book a demo below or \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003econtact eflow\u003c/a\u003e today.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003e*This article is provided for informational purposes only and should not be relied upon as legal or financial advice. Its contents are current at the date of publication and do not necessarily reflect the present state of the law.\u003c/em\u003e\u003c/p\u003e\n","date_published":"2021-19-03T00:00:00+0000"},{"title":"Regulatory responses to algorithmic trading","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/regulatory-responses-to-algorithmic-trading/","summary":"\u003ch2 id=\"a-new-regulatory-challenge\"\u003eA New Regulatory Challenge\u003c/h2\u003e\n\u003cp\u003eAlgorithmic trading continues to evolve, prompting regulators worldwide to adapt their frameworks. Recent years have seen significant updates aimed at enhancing transparency, risk management, and market integrity.\u003c/p\u003e\n\u003cp\u003eWith the COVID-19 pandemic frustrating the trading of instruments via conventional manual methods, little has changed for trading algorithms. It’s this continuity and ease of application that has seen automation come to account for over \u003ca href=\"https://ukfinancialservicesinsights.deloitte.com/post/102gk9a/how-covid-19-has-accelerated-the-global-regulatory-response-to-algorithmic-tradin\"\u003e50% of activity\u003c/a\u003e across many markets. As the Reserve Bank of Australia put it: \u003cem\u003e“It is likely that the COVID period will have only furthered the industry’s shift toward electronic trading\u003c/em\u003e.”\u003c/p\u003e\n\u003cp\u003eAs regulators turn their attention towards algorithmic trading, firms should carefully monitor developments and adjust their processes to ensure compliance.\u003c/p\u003e\n\u003ch2 id=\"what-is-algorithmic-trading\"\u003eWhat is algorithmic trading?\u003c/h2\u003e\n\u003cp\u003eAlgorithmic trading is defined by the UK’s \u003ca href=\"https://www.handbook.fca.org.uk/handbook/glossary/G3552a.html?starts-with=A\"\u003eFinancial Conduct Authority\u003c/a\u003e (FCA) as ‘\u003cem\u003etrading in financial instruments which meets the following conditions\u003c/em\u003e:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cem\u003eWhere a computer algorithm automatically determines individual parameters of orders such as whether to initiate the order, the timing, price or quantity of the order or how to manage the order after its submission; and\u003c/em\u003e\u003c/li\u003e\n\u003cli\u003e\u003cem\u003ethere is limited or no human intervention.’\u003c/em\u003e\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"the-problem-with-algorithmic-trading\"\u003eThe problem with algorithmic trading\u003c/h2\u003e\n\u003cp\u003eAs with many other areas of life, automation is set to become a significant part of equities trading and investing. When applied properly, algorithms can make for a highly efficient approach to investment research and while facilitating rapid trading execution. Beyond this, algorithms can also be used to minimise the market impact of large trades since they ease the burden of subdividing orders.\u003c/p\u003e\n\u003cp\u003eDespite the benefits brought by algorithmic trading, there are also concerns that a lack of proper controls could lead to market manipulation. The FCA’s 2018 \u003ca href=\"https://www.fca.org.uk/publications/multi-firm-reviews/algorithmic-trading-compliance-wholesale-markets\"\u003eAlgorithmic Trading Compliance in Wholesale Markets report\u003c/a\u003e expressed concern that unconstrained AI algorithms could make the ‘logical’ decision to engage in market manipulation to maximise profits.\u003c/p\u003e\n\u003cp\u003eOther potential issues have been raised in legal proceedings such as those brought by the NYSE in response to the SEC’s approval of a new mechanism for trading stocks via a particular exchange. Evidence filed in the case pertains to the issue of whether protecting automation undermines the reliability of the markets while harming millions of retail investors. The NYSE deems its case necessary to protect investors from \u003ca href=\"https://www.telegraph.co.uk/technology/2021/02/22/new-york-stock-exchange-joins-robinhood-supplier-citadel-oppose/\"\u003e‘\u003cem\u003epredatory\u003c/em\u003e’ algorithmic trading strategies\u003c/a\u003e, and it seems likely that regulation in this area will become more complex regardless of the outcome.\u003c/p\u003e\n\u003ch2 id=\"how-have-regulators-responded\"\u003eHow have regulators responded?\u003c/h2\u003e\n\u003cp\u003eAs with any shift in the markets, the rise of automated trading has not gone unnoticed by regulators. In December 2020, the European Securities and Markets Authority (ESMA) issued a consultation paper on automated trading with a view to bringing the Markets in Financial Instruments Directive (MiFID II) framework up to speed with current trends.\u003c/p\u003e\n\u003cp\u003eSimilar actions have been taken by bodies across the world, and it’s quickly becoming apparent that regulation of algorithmic trading is firmly on the agenda. While the international picture is broadly one of consultation to gain a better understanding of this form of trading’s impact, some regulators have gone further and faster.\u003c/p\u003e\n\u003ch3 id=\"regulation-in-asia\"\u003eRegulation in Asia\u003c/h3\u003e\n\u003cp\u003eIn Asia the Hong Kong Monetary Authority (HKMA) commenced a review of automated trading activities in 2019. The resultant \u003cem\u003esupervisory expectations\u003c/em\u003e document suggests that all firms should align their policies with those of the regulator when using automated trading strategies. Put more simply, firms are expected to develop policies around governance, oversight, and post-trade controls while keeping a comprehensive inventory of algorithms.\u003c/p\u003e\n\u003cp\u003eThe principle (rather than rules-based) approach taken by the HKMA is far from unique and takes its lead from the EU’s \u003ca href=\"https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017R0589\u0026amp;from=EN\"\u003eMiFID II Regulatory Technical Standards (RTS) 6\u003c/a\u003e. The exception is the addition of an annual self-assessment requirement for Hong Kong firms, which illustrates the willingness of regulators to impose new compliance obligations in this area.\u003c/p\u003e\n\u003cp\u003eElsewhere in Asia, regulators continue to study the use of automation and its impact on markets. The \u003ca href=\"https://www.boj.or.jp/en/research/wps_rev/rev_2020/rev20e05.htm/\"\u003eBank of Japan\u003c/a\u003e (BoJ), for instance, has published its own findings on the effect of algorithmic trading on market liquidity and has committed to deepening its understanding of the topic.\u003c/p\u003e\n\u003ch3 id=\"regulation-in-america\"\u003eRegulation in America\u003c/h3\u003e\n\u003cp\u003eIn the US, the fracas between the NYSE and the Securities and Exchange Commission (SEC) was preceded by a \u003ca href=\"https://www.sec.gov/files/Algo_Trading_Report_2020.pdf\"\u003ereport\u003c/a\u003e from the regulator detailing the need for “\u003cem\u003econtinued vigilance in monitoring these advances in technology and trading\u003c/em\u003e.”\u003c/p\u003e\n\u003cp\u003eWhile the SEC appears to be more ambivalent towards algorithmic trading than some of its international counterparts, the report did conclude that the “\u003cem\u003eupdating of systems and expertise will be necessary in order to help ensure that our capital markets remain fair, deep, and liquid.\u003c/em\u003e”\u003c/p\u003e\n\u003cp\u003eIt remains to be seen how the NYSE case will pan out, but additional regulations are certainly a possibility in North America.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eSEC Guidelines and Proposed Rules:\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eIn July 2023, the U.S. Securities and Exchange Commission (SEC) proposed new rules targeting the use of predictive data analytics and artificial intelligence by registered investment advisers and broker-dealers, aiming to mitigate conflicts of interest and enhance investor protection.\u003c/li\u003e\n\u003cli\u003eThe SEC also focused on enhancing regulations for trading platforms, specifically targeting the use of predictive analytics that encourage trading, to align with the Regulation Best Interest (BI) standard.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"regulation-in-europe\"\u003eRegulation in Europe\u003c/h3\u003e\n\u003cp\u003e\u003cstrong\u003eMiFID II and MiFIR Updates (2024):\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eIn March 2024, the European Union adopted amendments to MiFID II and MiFIR, introducing a consolidated tape for EU financial markets to improve data transparency and market competitiveness.\u003c/li\u003e\n\u003cli\u003eThe European Securities and Markets Authority (ESMA) launched a Common Supervisory Action (CSA) in 2024 to assess the implementation of pre-trade controls by EU investment firms using algorithmic trading techniques.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003e\u003cstrong\u003eRTS 6 Self-Assessment:\u003c/strong\u003e\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\n\u003cp\u003eMiFID II mandates that investment firms engaged in algorithmic trading perform an annual self-assessment to demonstrate compliance with RTS 6 requirements.\u003c/p\u003e\n\u003cp\u003e \u003c/p\u003e\n\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"keeping-up-with-the-regulators\"\u003eKeeping up with the regulators\u003c/h2\u003e\n\u003cp\u003eWith international regulatory authorities keeping a close eye on automated trading practices, it seems almost inevitable that further compliance obligations will arise for listed companies and firms operating in the equities trading sphere.\u003c/p\u003e\n\u003cp\u003eAlgorithmic trading undoubtedly has its benefits, but firms must be careful to keep their activities in step with laws and guidelines. eflow’s TZ platform helps businesses to cope with these challenges and provides a single solution for trade surveillance, transaction reporting, and a range of other essential legal responsibilities.\u003c/p\u003e\n\u003cp\u003eTo find out more, book a demo below or contact \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003eeflow\u003c/a\u003e today.\u003c/p\u003e\n","date_published":"2021-02-03T00:00:00+0000"},{"title":"David vs. Goliath or market abuse? The regulatory challenge posed by Gamestop","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/david-vs.-goliath-or-market-abuse-the-regulatory-challenge-posed-by-gamestop/","summary":"\u003ch2 id=\"a-new-regulatory-challenge\"\u003eA New Regulatory Challenge\u003c/h2\u003e\n\u003cp\u003eGlobal financial regulators are eyeing up new controls on market manipulation following the widely reported GameStop (NYSE:GME) debacle.\u003c/p\u003e\n\u003cp\u003eWith social media ‘hot tips’ driving retail investors to the markets in greater numbers than previously seen, it seems inevitable that new guidelines (and perhaps even tightened rules) will follow. This goes to show that the regulatory environment is constantly evolving, and as legislators scramble to keep up with the financial reality of an ever-changing investment market, firms are left with an increasingly complex compliance burden.\u003c/p\u003e\n\u003cp\u003eHere we look at what happened with the GameStop investment frenzy, and consider the potential regulatory fallout for financial firms.\u003c/p\u003e\n\u003ch2 id=\"what-happened-with-gamestop\"\u003eWhat happened with GameStop?\u003c/h2\u003e\n\u003cp\u003eIn January 2021, GameStop became the subject of what some publications pitched as a ‘David and Goliath’ battle between retail investors and hedge funds.\u003c/p\u003e\n\u003cp\u003eThe ailing American video game retailer had seen its share price steadily tumble following years of declining physical retail sales, prompting hedge funds to bet against its continued devaluation by short-selling. By ‘borrowing’ shares of GME and immediately selling them, the funds could profit by then repurchasing the stock to at a lower cost as the price dropped further.\u003c/p\u003e\n\u003cp\u003eThis is a fairly common (and legal) practice that has been conducted by funds for years. It was only when a forum on the social media site Reddit took an interest in short selling that the financial battle commenced. Guided by posts on the ‘WallStreetBets’ forum, retail investors began purchasing GameStop stocks, causing the share price to skyrocket. In just 16 days, the value of GME stocks rose by nearly \u003ca href=\"https://www.thisismoney.co.uk/money/diyinvesting/article-9194053/Gamestonk-Caveat-emptor-Gamestop-saga-FOMO-bubble.html\"\u003e1600%\u003c/a\u003e before dropping by 50% and falling into continuous decline.\u003c/p\u003e\n\u003cp\u003eThe event caused short sellers to lose an estimated \u003ca href=\"https://www.vox.com/recode/2021/2/2/22261097/gamestop-wallstreetbets-short-seller-hedge-funds-losses-robinhood\"\u003e$13 billion\u003c/a\u003e on GameStop stocks alone, with the battle continuing to rage as the social media retail investment groups turn their sights onto the likes of AMC, BlackBerry, and Cineworld. Naturally, considerable market volatility has followed.\u003c/p\u003e\n\u003ch2 id=\"how-have-regulators-responded\"\u003eHow have regulators responded?\u003c/h2\u003e\n\u003cp\u003eThe rise of the activist ‘retail investor’ has prompted concern from global financial regulators. This is not because of the losses incurred by hedge funds – it is a free market after all – but rather that such volatility presents a real risk to retail investors and brings into question the role of regulatory bodies.\u003c/p\u003e\n\u003cp\u003eIn the UK, the FCA commented that: \u003cem\u003e“UK investors should take care when trading shares in highly volatile market conditions that they fully understand the risks they are taking. This applies to UK investors trading both US and UK stocks.\u003c/em\u003e \u003cem\u003eFirms and individuals should also ensure they are familiar with, and abiding by, all regulations including the market abuse and short selling regimes in the jurisdiction they are trading in.\u0026quot;\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eBeyond this, concerns have also been expressed that the artificial inflation of stock values through coordinated investment efforts could cross over into the realms of market manipulation. In the US, the Securities and Exchange Commission (SEC) reaffirmed their commitment to ensuring that \u003cem\u003e“regulated entities uphold their obligations to protect investors and to identify and pursue potential wrongdoing”\u003c/em\u003e, and noted that they would act to protect retail investors \u003cem\u003e“when the facts demonstrate abusive or manipulative trading activity\u003c/em\u003e”.\u003c/p\u003e\n\u003ch2 id=\"what-could-the-regulatory-implications-be\"\u003eWhat could the regulatory implications be?\u003c/h2\u003e\n\u003cp\u003eLooking to the future, the increased popularity of social media investment content could force the hand of regulators. Reports now suggest that \u003ca href=\"https://www.wealthadviser.co/2021/02/15/295927/retail-investors-increasing-reliance-social-media-could-lead-poor-investment\"\u003eone in ten investors\u003c/a\u003e are using social media to inform their investing strategy, and it’s not inconceivable that the FCA could take the lead of the \u003ca href=\"https://www.asa.org.uk/uploads/assets/uploaded/3af39c72-76e1-4a59-b2b47e81a034cd1d.pdf\"\u003eAdvertising Standards Agency\u003c/a\u003e by introducing rules that limit the proliferation of unqualified investment advice while encouraging more transparent online practices. In plain terms, we can expect financial content to be accompanied by warnings and a crackdown on creators whose musings stray into the territory of unauthorised financial advice could follow.\u003c/p\u003e\n\u003cp\u003eA stronger stance has been taken by the likes of Hong Kong’s Securities and Futures Commission, and brokers there are now subject to enhanced reporting obligations. These rules specifically relate to any instructions received in respect of specified trading accounts that are suspected to be involved in market manipulation, and it follows that similar measures could be adopted by other international regulatory bodies as they act to curb so-called ‘pump-and-dump’ scams.\u003c/p\u003e\n\u003cp\u003eFor institutional investors and financial firms, the future is as yet unknown. How regulators in the UK and EU will react is likely to depend on the results of their continued monitoring of market volatility over the coming weeks and months. Outside of retail trade chat forums, their focus is on the practice of short selling and whether there is a need to shield the equities market from volatility. It was only in March 2020 that regulatory action was taken to temporarily halt short selling in Austria, Belgium, France, and Greece amongst other jurisdictions – and such action has once again been mooted following the run on GameStop.\u003c/p\u003e\n\u003cp\u003eEven if the FCA does not take a similar line, we could at the very least see lower thresholds for the reporting of short positions and enhanced trade surveillance rules.\u003c/p\u003e\n\u003ch2 id=\"regulatory-compliance-made-easy\"\u003eRegulatory compliance made easy\u003c/h2\u003e\n\u003cp\u003eAll of this makes for a complex and constantly shifting regulatory compliance burden. With no steer as to how the regulators will ultimately act, firms have been left to continue with their usual compliance and reporting obligations all whilst wondering when new rules will be applied.\u003c/p\u003e\n\u003cp\u003eCompliance can be challenging for listed companies and financial services providers, and this is especially true now that the spotlight is firmly pointed at share dealing. The growth of the retail investment market is only likely to complicate the approach taken by regulators, and it has never been more important to stay abreast of reporting requirements.\u003c/p\u003e\n\u003cp\u003eFor firms that are set on taking their regulatory compliance duties seriously, eflow’s TZ platform provides a \u003ca href=\"https://eflowglobal.com/tz-market-abuse-trade-surveillance/\"\u003eone-stop solution for trade surveillanc\u003c/a\u003ee, transaction reporting, and a range of other essential legal responsibilities.\u003c/p\u003e\n\u003cp\u003eTo find out more about keeping your business on the right side of the regulators, book a demo below or contact \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003eeflow\u003c/a\u003e today.\u003c/p\u003e\n","date_published":"2021-18-02T00:00:00+0000"},{"title":"Technology, compliance and COVID - The 2021 Thomson Reuters Regulatory Report","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/technology-compliance-covid-the-2021-thomson-reuters-regulatory-report/","summary":"\u003cp\u003eAn increased reliance on technology, continued investment in compliance, and predictably mixed opinions on budgets. Those are the findings of the fifth annual Thomson Reuters’ report on Fintech, RegTech, and the Role of Compliance.\u003c/p\u003e\n\u003cp\u003eDelivered by Thomson Reuters Regulatory Intelligence (TRRI) and released in December 2020, the report takes stock of a year that has been extraordinary for many reasons – not least the COVID-19 pandemic. Condensing the experiences and opinions of more than 400 compliance and risk practitioners, it clearly shows that firms accelerated their adoption of technology during 2020, but there is also useful analysis of just what happened over the past 12 months.\u003c/p\u003e\n\u003cp\u003eWith these thoughts in mind, we’ve unpacked Thompson Reuters’ report (\u003ca href=\"https://legal.thomsonreuters.com/en/insights/reports/fintech-regtech-compliance-report-2021\"\u003eavailable here\u003c/a\u003e) – outlining their key findings, and their outlook for 2021.\u003c/p\u003e\n\u003ch2 id=\"a-year-of-technological-leaps\"\u003eA year of technological leaps\u003c/h2\u003e\n\u003cp\u003eAs the COVID-19 pandemic acted as a catalyst for a change in global working practices, it follows that it has also accelerated the adoption and implementation of technological solutions to provide continuity across business operations. Figures from the TRRI indicate that some 70% of firms surveyed saw their reliance on technology increase during the pandemic, as a result of necessity and by design.\u003c/p\u003e\n\u003cp\u003eWith home working and remote commerce becoming part of the established norm, businesses approached by Thompson Reuters’ indicated that they were increasingly relying on technology to carry out business-critical functions including client onboarding, regulatory reporting, and a whole host of essential compliance activities that might ordinarily depend on more office-bound, personnel-intensive processes.\u003c/p\u003e\n\u003cp\u003eLooking to the future, Thompson Reuters suggest that this trend is likely to continue – and it is indeed the case that the rate of adoption of fintech solutions (especially by financial services firms) had already been increasing long before 2020. The expected benefits of fintech seem to far outweigh the short-term downside of high-cost investment, and as suggested by Financial Conduct Authority (FCA) Executive Committee member, Nausicaa Delfas, “\u003cem\u003edigital innovation may help address issues from the longer-term decline in the use of cash, increase the availability of mass-market financial advice, and reduce the need for manual processes in businesses.”\u003c/em\u003e\u003c/p\u003e\n\u003ch2 id=\"increased-reliance-on-regtech\"\u003eIncreased reliance on RegTech\u003c/h2\u003e\n\u003cp\u003eThis year’s report has also shown that major corporate entities are increasingly relying on RegTech solutions. Defined by the \u003ca href=\"https://www.fca.org.uk/news/speeches/fca-regional-fintech-engagement\"\u003eFCA\u003c/a\u003e as “\u003cem\u003ea subset of fintech that focuses on technologies that may facilitate the delivery of regulatory requirements more efficiently and effectively than existing capabilities\u003c/em\u003e”, the past year has seen RegTech solutions cement their place as a means of improving regulatory responses and optimising the efficiency of compliance processes.\u003c/p\u003e\n\u003cp\u003eData from the TRRI shows that know your client (KYC), onboarding, and regulatory change management solutions were among the most popular RegTech functions deployed during 2020, with one respondent suggesting that the primary benefit of RegTech lies in limiting the need for manual monitoring, therefore freeing up time “\u003cem\u003eto focus on the decision-making process and risk evaluation\u003c/em\u003e.”\u003c/p\u003e\n\u003cp\u003eIt seems that this belief tracks across commercial entities of all sizes, too. TRRI charts indicate that 38% of respondents considered RegTech to be important to operational management, whilst this figure skyrocketed to 73% for Global Systemically Important Financial Institutions (G-SIFIs). Moving forward, Thompson Reuters’ predicts that reliance on RegTech will continue to grow provided that innovators can deliver reliable and repeatable results that foster the confidence needed for firms to truly accept and depend upon these solutions.\u003c/p\u003e\n\u003ch2 id=\"barriers-to-innovation\"\u003eBarriers to innovation\u003c/h2\u003e\n\u003cp\u003eWhilst this year’s report illustrates a trend towards the adoption of fintech and RegTech solutions for compliance monitoring and regulatory reporting, it also suggests that technology providers will face an uphill battle in rolling out their digital products.\u003c/p\u003e\n\u003cp\u003eConcerns over budget constraints led the way when it came to barriers to adoption of technological solutions during 2020, with 27% of respondent firms lacking any budget for RegTech solutions. It does at least seem that this situation is fluid since some 32% of firms suggested their RegTech budget would grow in the next 12 months, but evidently cost still presents a barrier to firms adopting new technology.\u003c/p\u003e\n\u003cp\u003eHappily, the outlook from Thompson Reuters is that fintech and RegTech already offer something of a bridge over the financial issues that prevent their adoption. The report shows that improved efficiency and cost reductions are among the top benefits firms expect to see from financial technology over the coming 12 months. It’s therefore not outside the realm of possibility that firms and G-SIFIs could shoulder the initial cost of fintech and RegTech implementation given that they will make their spend back later in operational savings.\u003c/p\u003e\n\u003ch2 id=\"the-future-of-compliance\"\u003eThe future of compliance\u003c/h2\u003e\n\u003cp\u003eAlthough Thompson Reuters’ report paints a positive picture of technology uptake during 2020, it is crystal clear that there is still room for improvement. Perhaps surprisingly, the data shows that only 16% of respondent firms reported that they had implemented RegTech solutions, despite 34% of firms reporting that RegTech solutions were in some way influencing their management of compliance.\u003c/p\u003e\n\u003cp\u003eThis shows that budget constraints should not necessarily prevent firms from seeking out technological solutions, since they will need to do so to keep up speed with regulators and the markets at large.\u003c/p\u003e\n\u003cp\u003eAs report Co-Author and Senior Regulatory Intelligence Expert Susannah Hammond puts it, “\u003cem\u003eConcern about budgetary limitations and pressures are a natural consequence of business and economic disruption but firms will need to consider very carefully any cuts which might affect risk and compliance functionality. Although boards and risk and compliance functions are becoming more involved with fintech onboarding, and firms have begun to invest in specialist skill sets, further investment may still be necessary.\u003c/em\u003e”\u003c/p\u003e\n\u003ch2 id=\"responding-to-adversity\"\u003eResponding to adversity\u003c/h2\u003e\n\u003cp\u003eThe report’s creators clearly intend to spell out the importance of technology to financial and commercial markets, but what makes their commentary all the more poignant is the suggestion that regulators are unlikely to be tolerant of any senior managers who “\u003cem\u003efail to take the expected reasonable steps with regard to skill sets, systems upgrades and cyber resilience\u003c/em\u003e.”\u003c/p\u003e\n\u003cp\u003eFor those firms that are keen to rise to the challenges of the constantly shifting regulatory environment, \u003ca href=\"https://eflowglobal.com\"\u003eeflow\u003c/a\u003e offers a flexible and cost-effective package of fintech and regtech solutions that can be moulded around existing compliance operations.\u003c/p\u003e\n\u003cp\u003eWith trade surveillance, transaction reporting, and regulatory reporting amongst other available services, the company already provides a range of regulatory compliance solutions to leading international clients. For more information, book a demo below or \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003econtact eflow\u003c/a\u003e today.\u003c/p\u003e\n","date_published":"2021-18-01T12:00:00+0000"},{"title":"eflow and Refinitiv announce new market data service agreement","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-and-refinitiv-announce-new-market-data-service-agreement/","summary":"\u003ch2 id=\"london-november--2020\"\u003e\u003cem\u003eLondon, November , 2020\u003c/em\u003e\u003c/h2\u003e\n\u003cp\u003eLondon-based regulatory compliance firm eflow have today announced that they will be working with Refinitiv in order to further improve the existing market data store currently used in eflow’s award winning Trade Surveillance platform TZ.\u003c/p\u003e\n\u003cp\u003eAs a global leader in the provision and supply of data to the financial community, Refinitiv provides access to the widest range of cross-asset market and pricing data, covering up to 90 million instruments from 150,000 sources, including 68,000 public companies.\u003c/p\u003e\n\u003cp\u003eWith this arrangement, eflow will gain access to this industry-leading market data coverage. TZ – eflow’s flagship compliance software – makes use of market data for the purposes of running tests and generating alerts on client data to ensure proper compliance with a variety of global regulatory standards.\u003c/p\u003e\n\u003cp\u003eThe benefits of this fast delivery will be felt first and foremost by eflow’s TZ clients\u003c/p\u003e\n\u003cp\u003eThe extensive market data coverage offered by Refinitiv will both increase the number of instruments and records available for testing in TZ, and strengthen the accuracy of any alerts generated. With this enhancement made to eflow’s library of market data, TZ’s ability to provide reliable and efficient regulatory compliance has never been greater.\u003c/p\u003e\n\u003cp\u003eRefinitiv also boasts one of the fastest market data delivery times of any provider thanks to their low-latency optimization and cloud delivery options.\u003c/p\u003e\n\u003cp\u003eThe benefits of this fast delivery will be felt first and foremost by eflow’s TZ clients. Utilising Refinitiv data will allow client trade data to be processed faster than ever, meaning a more efficient workflow for compliance teams using TZ.\u003c/p\u003e\n\u003cp\u003eBen Parker, CEO of eflow, has made his excitement about this new arrangement known. ‘Refinitiv are industry leaders in the market data space, and we at eflow are delighted to begin utilising Refinitiv data,’ says Parker. ‘The tick history service offered by Refinitiv will be a welcome contribution to the multi-asset global data coverage already available to the TZ user base.’\u003c/p\u003e\n\u003cp\u003eJanelle Veasey, Head of Real-Time Data at Refinitiv, added: “We’re delighted to provide our comprehensive global market data to help power eflow’s trade surveillance services and assist its customers in meeting their regulatory obligations.”\u003c/p\u003e\n","date_published":"2021-04-01T12:00:00+0000"},{"title":"MiFIR: A guide to compliant investment transaction reporting","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/mifir-a-guide-to-compliant-investment-transaction-reporting/","summary":"\u003cp\u003eMiFIR and MiFID II are familiar terms in investment circles. These are the statutes that regulate firms involved in the trading of financial instruments across the European Union.\u003c/p\u003e\n\u003cp\u003eThe scope and aim of the MiFID II regime are perhaps most succinctly set out in the first sentence of Article 26 MiFIR, namely that “\u003cem\u003eInvestment firms which execute transactions in financial instruments shall report complete and accurate details of such transactions to the competent authority as quickly as possible, and no later than the close of the following working day\u003c/em\u003e.”\u003c/p\u003e\n\u003cp\u003eThis requirement alone is significant for firms involved in trading across the European Union and in third countries, yet it hardly scratches the surface of the broad reporting requirements imposed by MiFIR. Whilst previous legislation was aimed at harmonising reporting rules across the Member States of the European Union, the new and updated rules brought in under MiFIR are intended to achieve the much loftier goal of promoting and maintaining the integrity of European investment markets.\u003c/p\u003e\n\u003cp\u003eIn this article, we explain where MiFIR applies and summarise the transaction reporting requirements that it has introduced.\u003c/p\u003e\n\u003ch2 id=\"what-is-mifir\"\u003eWhat is MiFIR?\u003c/h2\u003e\n\u003cp\u003eTo understand \u003ca href=\"https://eflowglobal.com/tztr-mifir-reporting/\"\u003eMiFIR reporting\u003c/a\u003eobligations, we need first to look at the Regulation’s EU Directive counterpart – the \u003cstrong\u003eM\u003c/strong\u003earkets in \u003cstrong\u003eF\u003c/strong\u003einancial \u003cstrong\u003eI\u003c/strong\u003enstruments \u003cstrong\u003eD\u003c/strong\u003eirective (\u003cstrong\u003eMiFID\u003c/strong\u003e). This law first became effective in 2007, with the intention of standardising the rules governing the sale and handling of financial instruments (which, in broad summary, are tradable assets such as equities, bonds and commodities).\u003c/p\u003e\n\u003cp\u003eIn its first incarnation (known as \u003cstrong\u003eMiFID I\u003c/strong\u003e), the Directive introduced compliance monitoring processes and rules around how financial firms should handle client data. Firms were also made subject to reporting requirements for equities and bonds – enabling regulators to analyse the markets to identify any illegitimate trading that could amount to market manipulation.\u003c/p\u003e\n\u003cp\u003eThe second incarnation of the Directive, \u003ca href=\"https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32014L0065\"\u003e\u003cstrong\u003eMiFID II\u003c/strong\u003e\u003c/a\u003e, came in response to issues that arose during the global financial crisis. Coming into effect on 3 January 2018, MiFID II remains in force today and brings a much wider range of trading activity into the regulatory fold.\u003c/p\u003e\n\u003cp\u003eTo further clarify and codify the new trade reporting requirements that took effect during 2018, the European Parliament passed the \u003cstrong\u003eM\u003c/strong\u003earkets \u003cstrong\u003ei\u003c/strong\u003en \u003cstrong\u003eF\u003c/strong\u003einancial \u003cstrong\u003eI\u003c/strong\u003enstruments \u003cstrong\u003eR\u003c/strong\u003eegulation (\u003ca href=\"https://www.esma.europa.eu/databases-library/interactive-single-rulebook/mifir\"\u003e\u003cstrong\u003eMiFIR\u003c/strong\u003e\u003c/a\u003e). Containing 55 articles, MiFIR greatly expanded on the reporting requirements originally set out in MiFID I, casting a wider net in terms of the financial instruments caught by the rules, and widening the scope of measures concerning corporate governance policies.\u003c/p\u003e\n\u003ch2 id=\"who-and-what-does-mifir-apply-to\"\u003eWho and what does MiFIR apply to?\u003c/h2\u003e\n\u003cp\u003eMiFID I imposed reporting requirements on trades involving equities and bonds that were traded on a regulated market, in addition to over the counter (OTC) derivatives that are connected to the performance of those financial instruments.\u003c/p\u003e\n\u003cp\u003eThe scope of this regulatory regime has seen a significant expansion under MiFID II (including MiFIR), and now covers financial a multitude of financial instruments that are linked to trading venues. Regulated trading venues include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThe Regulated Market (RM);\u003c/li\u003e\n\u003cli\u003eMultilateral Trading Facilities (MTFs); and\u003c/li\u003e\n\u003cli\u003eOrganised Trading Facilities (OTFs).\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eAs a result of these expanded requirements, a wider range of asset classes are now subject to reporting requirements than had been the case under the previous legislation. These include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eEquities\u003c/li\u003e\n\u003cli\u003eBonds\u003c/li\u003e\n\u003cli\u003eForeign Exchange (FX / FOREX)\u003c/li\u003e\n\u003cli\u003eIndices and Baskets\u003c/li\u003e\n\u003cli\u003eInterest Rates\u003c/li\u003e\n\u003cli\u003eCommodities\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIt now falls to operators of trading venues to report transactions executed on their platform by firms that are not subject to the regulation. This means that transaction reporting obligations are incumbent on all investment firms and trading venue operators. UCITS (Undertakings for the Collective Investment in Transferable Securities) and AIF (Alternative Investment Fund) management companies are not necessarily subject to the rules, however they may have to meet the requirements if they carry out any portfolio management or investment advisory services.\u003c/p\u003e\n\u003cp\u003eIt now falls to investment firms that execute transactions in the above financial instruments to report complete and accurate details of the transactions they act on to a National Competent Authority (NCA). The Financial Conduct Authority (FCA) is the NCA in the UK. As mentioned previously, complete and accurate reports should be filed without delay and by no later than the close of the following working day.\u003c/p\u003e\n\u003ch2 id=\"what-has-to-be-reported-under-mifir\"\u003eWhat has to be reported under MiFIR?\u003c/h2\u003e\n\u003cp\u003eIn the simplest terms, investment firms are required to report details pertaining to the execution of a transaction that falls under the scope of the MiFID II regime. A ‘transaction’ is defined by Article 26 of MiFIR as “\u003cem\u003ethe conclusion of an acquisition or disposal of a financial instrument\u003c/em\u003e”. This effectively means that any sale or purchase of a reportable financial instrument and the entering or closing of a derivative contract involving a financial instrument will now fall under the remit of MiFID II reporting requirements.\u003c/p\u003e\n\u003cp\u003eFor those transactions that are subject to \u003ca href=\"\"\u003eMiFIR reporting\u003c/a\u003e requirements, there are now 65 individual details that must be reported per transaction – substantially more than the 13 that were required in the past under MiFID I. These include the basic details of the trade and information that identifies the parties involved, through to the algorithms used in the execution, and even technical order transmission data.\u003c/p\u003e\n\u003cp\u003eIt’s also important to note that MiFID II imposes a further requirement on firms to perform \u003cem\u003etrade reporting\u003c/em\u003e functions in addition to the transaction reporting we’ve discussed in this article. This means that, amongst other things, investment firms are required to make certain trading information available to the public almost immediately – with the need to timestamp trades down to the microsecond.\u003c/p\u003e\n\u003ch2 id=\"how-can-firms-comply-with-mifir-reporting-obligations\"\u003eHow can firms comply with MiFIR reporting obligations?\u003c/h2\u003e\n\u003cp\u003eAs is clear from the above, MiFIR subjects investment firms and trading platform operators to extensive reporting requirements. To comply, they must provide details including those listed above to an NCA by no later than the close of the next working day after a transaction has been executed. Firms may choose to perform these reporting functions themselves, but they may also report through a trading venue or via an Approved Reporting Mechanism (ARM).\u003c/p\u003e\n\u003cp\u003eGiven the extensive nature of transaction reporting requirements under MiFIR, it is perhaps unsurprising that some firms have struggled to meet the requirements incumbent upon them. In a July 2020 \u003ca href=\"https://www.esma.europa.eu/sites/default/files/library/35-43-2427_report_mifid_ii_sanctions_2019.pdf\"\u003ereport\u003c/a\u003e published by the European Securities and Markets Authority (ESMA), it was revealed that NCAs imposed 371 sanctions in respect of reporting failures during 2019 – totalling €1,828,802.\u003c/p\u003e\n\u003ch2 id=\"updated-mifir-transaction-reporting-requirements-20232024\"\u003eUpdated MiFIR Transaction Reporting Requirements (2023–2024)\u003c/h2\u003e\n\u003ch3 id=\"1-expanded-reporting-fields\"\u003e1. \u003cstrong\u003eExpanded Reporting Fields\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe European Securities and Markets Authority (ESMA) has proposed amendments to Regulatory Technical Standards (RTS) 22, aiming to enhance the granularity and accuracy of transaction reporting. These changes include the addition of new data fields and modifications to existing ones, necessitating firms to review and update their reporting systems accordingly.\u003c/p\u003e\n\u003ch3 id=\"2-introduction-of-iso-20022-xml-format\"\u003e2. \u003cstrong\u003eIntroduction of ISO 20022 XML Format\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eTo standardize data submission and improve interoperability, both EU and UK regulators are moving towards the adoption of the ISO 20022 XML format for transaction reporting. This transition requires firms to adapt their reporting infrastructures to accommodate the new format.\u003c/p\u003e\n\u003ch3 id=\"3-revised-reporting-timelines\"\u003e3. \u003cstrong\u003eRevised Reporting Timelines\u003c/strong\u003e\u003c/h3\u003e\n\u003cp\u003eThe updated MiFIR provisions, effective from 28 March 2024, have introduced changes to reporting timelines, including adjustments to the deadlines for submitting transaction reports. Firms must ensure compliance with these new timelines to avoid regulatory breaches.\u003c/p\u003e\n\u003ch2 id=\"step-by-step-transaction-reporting-process\"\u003eStep-by-Step Transaction Reporting Process\u003c/h2\u003e\n\u003col\u003e\n\u003cli\u003e\u003cstrong\u003eTrade Execution\u003c/strong\u003e: A financial instrument is traded.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eData Collection\u003c/strong\u003e: Relevant trade details are gathered, including instrument identifiers, price, quantity, and counterparties.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eData Validation\u003c/strong\u003e: The collected data is validated against regulatory requirements to ensure accuracy and completeness.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eReport Generation\u003c/strong\u003e: A transaction report is generated in the prescribed format, incorporating all necessary data fields.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eSubmission via ARM\u003c/strong\u003e: The report is submitted to the competent authority through an Approved Reporting Mechanism (ARM).\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eAcknowledgment and Error Handling\u003c/strong\u003e: The ARM provides acknowledgment of receipt, and any errors identified are addressed promptly.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eRecord Keeping\u003c/strong\u003e: Firms maintain records of all transaction reports and related communications for the required retention period.\u003c/li\u003e\n\u003c/ol\u003e\n\u003ch2 id=\"key-considerations-for-compliance\"\u003eKey Considerations for Compliance\u003c/h2\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eApproved Reporting Mechanism (ARM)\u003c/strong\u003e: Firms must utilize an ARM authorized by the relevant regulatory authority to submit transaction reports.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eMiFID II Reporting Requirements\u003c/strong\u003e: Compliance with MiFID II entails adherence to detailed reporting obligations, including the submission of accurate and timely transaction reports.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eMiFID II Transaction Reporting Guidelines\u003c/strong\u003e: Firms should regularly consult the latest guidelines issued by regulators to stay informed about reporting standards and expectations.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2 id=\"mifir-compliance-made-easy\"\u003eMiFIR compliance made easy\u003c/h2\u003e\n\u003cp\u003eThe reporting requirements imposed under MiFID II (and specifically MiFIR) have created a significant administrative burden for investment firms and platform operators. With national authorities having made it clear that they are willing to issue punitive sanctions on firms that fail to comply, the importance of rising to this regulatory challenge could not be any clearer.\u003c/p\u003e\n\u003cp\u003eAs the end of the Brexit transition period draws near, the possibility of dual reporting requirements for some transactions has arisen, making it all the more vital to find an effective reporting solution. By deploying eflow’s TZTR regulatory reporting software, firms can benefit from the effortless creation, management and filing of transaction reports whilst sticking to MiFIR’s tight deadlines.\u003c/p\u003e\n\u003cp\u003eFor more information on how your firm can modernise its transaction reporting system, book a demo below or contact \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003eeflow\u003c/a\u003e today.\u003c/p\u003e\n","date_published":"2020-16-12T12:00:00+0000"},{"title":"EMIR reporting after Brexit - What to expect","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/emir-reporting-after-brexit-what-to-expect/","summary":"\u003cp\u003eThe end of the UK’s Brexit transition period is fast approaching, and businesses on both sides of the English Channel are hurriedly priming themselves for what’s to come. Whilst nobody can predict exactly what a transitional arrangement with the EU might look like, we do know that firms will need to make adjustments to the way they do business with the continent – particularly if an agreement is not reached.\u003c/p\u003e\n\u003cp\u003eWith time running out the future is coming into focus and changes abound, not least in the field of financial services regulation. The government has already announced, for instance, that the UK will not implement the fourth phase of the Securities Financing Transactions Regulation (SFTR) due to come into effect across the EU from January 2021. The treatment of financial reporting post-Brexit is perhaps less clear, however. Firms that are used to the existing regime under the \u003ca href=\"https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32012R0648\u0026amp;from=EN\"\u003eEuropean Market Infrastructure Regulation\u003c/a\u003e (EMIR) may need to brace for a significant shift in the way the Over the Counter (OTC) and Exchange Traded derivatives markets are managed.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eWhat will happen after 31 December 2020 remains to be seen, but the EMIR reporting regime is changing. Here’s how.\u003c/strong\u003e\u003c/p\u003e\n\u003ch2 id=\"the-emir-regime---a-summary\"\u003eThe EMIR regime - A summary\u003c/h2\u003e\n\u003cp\u003eAs it stands, EMIR sets out the requirements for the clearing of OTC derivatives through central counterparties (CCPs), and imposes post-trade reporting requirements. Its provisions affect a broad range of entities including banks, investment firms, and asset managers that participate in transactions involving derivatives. For the uninitiated, derivatives are financial contracts that are linked to the price of an underlying asset or group of assets.\u003c/p\u003e\n\u003cp\u003eUnder the existing regime, reports of trades and transactions involving derivatives must be submitted to an Approved Reporting Mechanism (ARM) or Trade Repository (TR). TRs (which act as central data centres for reports and records concerning the exchange of derivative contracts) are authorised at an EU level, whilst ARMs are authorised by a national competent authority. The Financial Conduct Authority (FCA) is the body that takes that role in the UK.\u003c/p\u003e\n\u003cp\u003eEMIR applies to the Member States of the European Economic Area (EEA), comprising the 27 EU Member States in addition to Iceland, Liechtenstein, and Norway. Once the UK’s Brexit transition period has elapsed, it will become a “Third-Country” for EMIR purposes and the Regulation will no longer apply directly.\u003c/p\u003e\n\u003cp\u003eFor more information about reporting obligations under the existing EMIR regime, why not read our full explanation \u003ca href=\"https://eflowglobal.com/emir-refit-what-you-need-to-know-and-what-you-need-to-do/\"\u003ehere\u003c/a\u003e.\u003c/p\u003e\n\u003ch2 id=\"what-will-happen-after-brexit\"\u003eWhat will happen after Brexit?\u003c/h2\u003e\n\u003cp\u003eYou might be relieved to hear that the UK government plans to \u003ca href=\"https://www.gov.uk/government/publications/draft-over-the-counter-derivatives-central-counterparties-and-trade-repositories-amendment-etc-and-transitional-provision-eu-exit-regulations/draft-over-the-counter-derivatives-central-counterparties-and-trade-repositories-amendment-etc-and-transitional-provision-eu-exit-regulations\"\u003emaintain the current policy approach\u003c/a\u003e set out in the EMIR legislation as far as possible after Brexit. Both sides have shown an interest in securing continuity for businesses, and the European Union (Withdrawal) Act 2018 transcribed a substantial body of EU legislation into UK law – including the EU’s EMIR. The FCA and other bodies refer to the transcribed legislation as ‘\u003ca href=\"https://www.fca.org.uk/publication/documents/reporting-derivatives-under-uk-emir-after-transition-period.pdf\"\u003eonshored’\u003c/a\u003e, and it’s important to note that the UK government will be able to make amendments as it sees fit following the exit date.\u003c/p\u003e\n\u003cp\u003eThere will be two versions of EMIR to pay heed to from the beginning of 2021. This means that:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThe original \u003cstrong\u003eEU EMIR\u003c/strong\u003e will apply to EU counterparties to derivatives transactions, whilst the UK’s version (‘\u003cstrong\u003eUK EMIR\u003c/strong\u003e’) will apply to firms registered in the UK.\u003c/li\u003e\n\u003cli\u003eStarting from 1 January 2021, UK counterparties to derivatives contracts must comply with UK EMIR rather than EU EMIR – although this may change if the UK leaves with a transitional arrangement in place.\u003c/li\u003e\n\u003cli\u003eThe FCA will assume responsibility for the registration and supervision of TRs operating in post-Brexit Britain.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eOn a practical level, TRs and ARMs based in the UK will not be a compliant destination for EMIR reports submitted by EU-based firms after a no-deal Brexit. Similarly, an EU-based TR or ARM will not be a compliant destination for reports submitted by UK firms.\u003c/p\u003e\n\u003cp\u003eTo accommodate these changes, many TRs and ARMs have established new entities and obtained registration on either side of the Channel – although businesses should be careful to ensure that any arrangements made by their partners bring them in line with the relevant EMIR regulations.\u003c/p\u003e\n\u003ch2 id=\"what-counts-as-a-uk-counterparty-under-emir\"\u003eWhat counts as a UK counterparty under EMIR?\u003c/h2\u003e\n\u003cp\u003eHow you need to respond to the upcoming compliance changes will depend on the status of your business. With this in mind, your existing reporting obligations could act as a rule of thumb when deciding how to proceed in the post-Brexit landscape:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eFirms that are obliged only to report to the UK Financial Conduct Authority (FCA) will need to report their trades and transactions to a UK-registered TR or ARM. Overseas branches of UK firms will fall under the scope of the UK EMIR regime and so will need to submit reports of their derivative transactions to an FCA-registered TR.\u003c/li\u003e\n\u003cli\u003eFirms that report to other EU National Competent Authorities (NCAs) only should continue to do so. UK branches of third-country firms (for instance incorporated in an EU Member State) will not be caught by the provisions of UK EMIR and will not be required to submit reports to UK-based TRs.\u003c/li\u003e\n\u003cli\u003eFirms with dual reporting obligations under the current EMIR regime will need to report to the relevant TRs and ARMs in the UK and the EU.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIn essence, perhaps the greatest challenge for businesses involved in derivative transactions will be to decide where EMIR reports should be submitted after the end of the Brexit transition period.\u003c/p\u003e\n\u003ch2 id=\"derivatives-reporting-after-brexit--how-to-prepare\"\u003eDerivatives reporting after Brexit – how to prepare\u003c/h2\u003e\n\u003cp\u003eFrom 11:00 pm on 31 December 2020, all new derivative trades entered into by UK counterparties will fall under the UK EMIR regime. Historical trades made after 16 August 2012 will need to be held in an FCA-registered TR too – so it’s essential for firms to take account of their complete portfolio of trades when considering their compliance obligations.\u003c/p\u003e\n\u003cp\u003eThe FCA has confirmed that UK TRs will be obliged to provide UK authorities with “\u003cem\u003edirect and immediate\u003c/em\u003e” access to data reported by UK counterparties from the end of the transition period. Ultimately, the task between now and that time is to decide where your business falls in terms of \u003ca href=\"https://eflowglobal.com/tztr-emir-reporting/\"\u003eEMIR reporting\u003c/a\u003e and to ensure that you have an arrangement in place with Trade Repositories or Authorised Reporting Mechanisms that are registered or recognised under the correct regime.\u003c/p\u003e\n\u003ch2 id=\"get-ready-for-the-brexit-transition\"\u003eGet ready for the Brexit transition\u003c/h2\u003e\n\u003cp\u003eWith the added complexity of the dual UK / EU EMIR regimes to compete with, it’s critical for businesses to ensure that the EMIR reports they submit are accurate and compliant.\u003c/p\u003e\n\u003cp\u003eBy making use of eflow’s TZTR regulatory reporting software, you could avoid the complexities of having to prepare and format your reports for the different regimes whilst benefiting from a simple and united approach to dealing with Trade Repositories, Approved Reporting Mechanisms and National Competent Authorities.\u003c/p\u003e\n\u003cp\u003eFor an effective, cost-efficient, and above all compliant approach to post-Brexit transaction reporting, book a demo below or \u003ca href=\"https://eflowglobal.com/book-a-consultation/\"\u003econtact eflow\u003c/a\u003e today.\u003c/p\u003e\n","date_published":"2020-01-12T12:00:00+0000"},{"title":"eflow Partners with e-Comms Surveillance Provider IP Sentinel","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-partners-with-e-comms-surveillance-provider-ip-sentinel/","summary":"\u003cp\u003eAddressing the growing requirement within financial compliance to unify dedicated best of breed trade and e-Communications surveillance at a widely accessible price point.\u003c/p\u003e\n\u003cp\u003eLondon, 8th July 2020: eflow, provider of regulatory compliance solutions, today announces a new partnership with IP Sentinel\u003c/p\u003e\n\u003cp\u003eIn the recent FCA Thematic Review, the regulator has clearly set out that the intent to commit market abuse or financial crime is frequently hidden within the unstructured e-Communications data of a firm. Consequently, the FCA advises that detailed supervision of electronic communications data (for example as systematic and exception driven process) is considered to be best practice.\u003c/p\u003e\n\u003cp\u003eTo enable firms to follow this guidance, eflow has partnered with e-Communications monitoring and supervision technology firm IP Sentinel.\u003c/p\u003e\n\u003cp\u003eThe new partnership will provide a holistic and unified trade monitoring and market surveillance solution capable of analysing both structured trade data and unstructured electronic communications. This approach perfectly complements eflow’s existing regulatory compliance solutions. IP Sentinel’s e-Comms surveillance completes the post-trade regulatory compliance suite offered by eflow. With this partnership, firms will be able to access eflow’s Best Execution Monitoring, Transaction Cost Analysis, Best Execution Reporting and Trade Surveillance along with a range of e-Comms surveillance functionality.\u003c/p\u003e\n","date_published":"2020-11-08T17:20:00+0000"},{"title":"eflow Enters Into New Partnership with Unavista","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-enters-into-new-partnership-with-unavista/","summary":"\u003cp\u003eLondon – 12th July 2018 – eflow Ltd has entered in to a partnership agreement with London Stock Exchange Group’s UnaVista to automate Transaction Reporting under MiFID II.\u003c/p\u003e\n\u003cp\u003eUnaVista, which is an ARM (Approved Reporting Mechanism) will  report transactions to the relevant competent authorities. As a UnaVista partner, eflow clients will have a “One stop shop” for Post Trade Surveillance, Analysis and Reporting, satisfying multiple requirements under the Market Abuse Regulation, MiFID II transaction reporting and other reporting regimes into the future.\u003c/p\u003e\n\u003cp\u003e“Our aim is to make TZ a complete regulatory platform for Cross Asset Trade Surveillance, Analysis and reporting. The Partnership with UnaVista brings us another step closer to this goal. Existing and upcoming regulation means Buy and Sell side firms face a plethora of issues around data fragmentation, a problem we are familiar with as experts in Trade Lifecycle management” said Managing Director Ben Parker.\u003c/p\u003e\n\u003cp\u003eWendy Collins, Managing Director, Global Strategic Partnerships, UnaVista commented: “We are extremely pleased to welcome Eflow into the Partner Programme. Six months after MiFID II go-live, we are seeing continued interest from our partners and clients. It is a testament to the efforts driven by UnaVista, and the response of our partners, to create an efficient regulatory reporting ecosystem in which firms like Eflow can help clients fulfil their reporting obligations more seamlessly while showcasing their knowledge and expertise”.\u003c/p\u003e\n\u003ch2 id=\"about-eflow-ltd\"\u003eAbout eflow Ltd\u003c/h2\u003e\n\u003cp\u003eMarket leading provider of regulatory compliance, trade lifecycle management and white labelling solutions. Eflow’s solutions are used in Investment Banks, Brokers, Asset Managers and Hedge Funds to deliver significant Operational Risk Reduction, Processing Cost containment and total business process transparency through its Trade Lifecyle Management, Monitoring and Transactional Workflow solutions.\u003c/p\u003e\n","date_published":"2018-12-07T17:20:00+0000"},{"title":"Indices monitoring with eflow","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/indices-monitoring-with-eflow/","summary":"\u003cp\u003eAs of May 2018 we have the ability to monitor Indices. We are able to benchmark and to surveil Indices from Europe, North America and Asia-Pacific.\u003c/p\u003e\n\u003cp\u003eCEO Ben Parker said “ furthering our commitment to CFD houses to take ownership of their assets eflow Ltd is offering the ability to harness Indices trading. In turn proving to the regulator that CFDs can be monitored if the right solution is in place. I know that this will be another giant step in the quest for visibility. Indices are no longer out of scope.”\u003c/p\u003e\n\u003cp\u003eFor more on the solutions we offer, see the solutions page of our website.\u003c/p\u003e\n","date_published":"2018-11-07T23:00:00+0000"},{"title":"eflow integrates Dow Jones Newswires content","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-integrates-dow-jones-newswires-content/","summary":"\u003cp\u003eLONDON (21st September 2017) -– eflow Ltd, a UK-based specialist in enterprise regulatory solutions in capital markets, has announced the integration of content from Dow Jones Newswires with its TZ™ Market Surveillance offering.\u003c/p\u003e\n\u003cp\u003eTZ enables buy-side and sell-side firms to adapt to regulations, including the Market Abuse Regulation (MAR), which came into effect in July 2016. Combining Dow Jones Newswires’ premium content with the in-depth analytical and reporting capabilities of eflow’s TZ platform, the enhanced offering provides closer scrutiny of an investment firm’s trading around market moving events.\u003c/p\u003e\n\u003cp\u003eDow Jones Newswires delivers global business insights, market commentary and expert analysis from publishers including The Wall Street Journal and Barron’s.\n“We’re excited to extend our existing relationship with Dow Jones into a deeper content partnership, offering a solution that is at the forefront of contextual Trade Surveillance Analytics,” said Ben Parker, CEO at eflow ltd.\u003c/p\u003e\n\u003cp\u003eTZ alerts cover regulatory requirements for MIFID, MIFIR/ MIFID II, MAD, MAD II and ESMA guidelines in Europe, and Dodd Frank, the Volcker Rule and MAD in North America. ENDS\u003c/p\u003e\n\u003cp\u003eFounded in 2004, eflow is a UK based specialist in the development of Enterprise Application Workflow solutions primarily for financial markets with offerings for Compliance, Straight Through Processing and Enterprise Workflow Backbones. All applications are built on eflow’s PATH technology. PATH is the only complete purpose-built Workflow service oriented architecture software available to the Financial Markets that combines all the best facets of middleware, work flow, business decision rules, data aggregation, case management, and toolkit with Change management in one complete package.\u003c/p\u003e\n\u003cp\u003eAbout Dow Jones Dow Jones is a global provider of news and business information, delivering content to consumers and organizations around the world across multiple formats, including print, digital, mobile and live events. Dow Jones has produced unrivaled quality content for more than 130 years and today has one of the world’s largest newsgathering operations globally. It produces leading publications and products including the flagship Wall Street Journal, America’s largest newspaper by paid circulation; Factiva, Barron’s, MarketWatch, Financial News, DJX, Dow Jones Risk \u0026amp; Compliance, Dow Jones Newswires, and Dow Jones VentureSource. Dow Jones is a division of News Corp (NASDAQ: NWS, NWSA; ASX: NWS, NWSLV).\u003c/p\u003e\n","date_published":"2018-24-05T17:20:00+0000"},{"title":"eflow Shortlisted for TradingTech Insight Awards 2020","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/eflow-shortlisted-for-tradingtech-insight-awards-2020/","summary":"\u003cp\u003eA-Team’s shortlist for their European TradingTech Insight Awards 2020 was announced this week on December 16th. eflow is delighted to announce that we have been shortlisted in the Best \u003ca href=\"/tz-best-execution-and-transaction-cost-analysis\"\u003eTransaction Cost Analysis (TCA)\u003c/a\u003e Tool for \u003ca href=\"/tz-best-execution-and-transaction-cost-analysis\"\u003eBest Execution\u003c/a\u003e category.\u003c/p\u003e\n\u003cp\u003eFirst taking place in 2019, this will be the second TradingTech Insight European Awards ceremony in as many years. The awards celebrate innovation and quality in the field of financial technology.\u003c/p\u003e\n\u003cp\u003eIn A-Team’s own words, the ‘European awards reflect the different challenges facing market practitioners and suppliers as they seek to develop trading and data solutions in the rapidly changing European marketplace.’\u003c/p\u003e\n\u003cp\u003eeflow’s best execution solutions have proven themselves to be effective and innovative solutions. Our TZ system can perform TCA against countless benchmarks using market data from over 250 global venues.\u003c/p\u003e\n\u003cp\u003eOur TCA solution can perform comprehensive implementation shortfall and slippage calculations and handle extremely large volumes of data. It is a comprehensive solution for all MiFID II best execution requirements.\u003c/p\u003e\n\u003cp\u003eThe TCA solution we offer also allows users to compile reports at the click of a button. Both preset and custom, bespoke reports are easy to generate, making best execution compliance easier than ever.\u003c/p\u003e\n\u003cp\u003eFor more information visit our \u003ca href=\"/tz-best-execution-and-transaction-cost-analysis\"\u003eTCA\u003c/a\u003e page. To set up a free proof of concept or ask us a question, fill out the contact form below, or click the ‘Get In Touch’ button in the menu bar above.\u003c/p\u003e\n\u003cp\u003eVote for eflow by clicking the button below.\u003c/p\u003e\n","date_published":"2018-24-05T17:20:00+0000"},{"title":"FXCM selects Eflow and TZ to provide Market Abuse and Trade Surveillance Monitoring","url":"https://video-page-fix--eflow-website.netlify.app/insights/blogs/fxcm-selects-eflow-and-tz-to-provide-market-abuse-and-trade-surveillance-monitoring/","summary":"\u003cp\u003eeflow today announced that Forex Capital Markets (FXCM), has selected eflow’s TZ Platform to provide a Market Abuse and Trade Surveillance. elfow has been providing regulatory compliance solutions since 2004 and is one of Europe’s leading software providers of Best Execution, Market Abuse and Trade Surveillance solutions.\u003c/p\u003e\n\u003cp\u003e1st October 2019\u003c/p\u003e\n\u003cp\u003eHaving selected Eflow’s TZ Platform, FXCM will be able to monitor any potential market abuse or manipulation alongside Eflow’s powerful case management tool, which allows users to escalate and manage alerts raised within the system. TZ is an exception driven platform which aims to work in the background only bringing up alerts that fall outside the users defined parameters.\u003c/p\u003e\n\u003cp\u003eEflow’s automated solution covers many of the market abuse alerts defined by ESMA and the FCA, which include tests such as spoofing, layering, wash trading, front running, marking the open/close, insider trading and trading ahead of the news. FXCM will also take advantage of TZ’s flexible reporting functionality, which allows users to build and schedule customs reports.\u003c/p\u003e\n\u003cp\u003e“FXCM provides world-class services to clients globally, and we are proud they have selected TZ for their market abuse, best execution and trade surveillance,” said Ben Parker, CEO at Eflow. “We look forward to a flourishing relationship and supporting them in the ever changing regulatory landscape’’.\u003c/p\u003e\n\u003cp\u003eBrendan Callan, CEO at FXCM, comments: “We serve clients in multiple global regions, who trade in a variety of different time zones 24 hours a day. It is crucial that we can gain effective insight into customer trading patterns for risk management and compliance purposes. Eflow is a market leader in this respect; integrating its TZ Platform will allow FXCM to enhance our current strengths and ability to detect anomalies in behaviour, such as fraudulent trading or market abuse.”\u003c/p\u003e\n\u003ch2 id=\"about-eflow\"\u003eAbout Eflow\u003c/h2\u003e\n\u003cp\u003eEflow is a market-leading, UK-based fintech company specialising in regulatory compliance, business process management, monitoring and workflow software primarily for the financial industry. We offer a number of services intended to help investment firms understand and comply with complex financial regulations enacted by global regulatory bodies. Eflow’s solutions can help firms located both within and outside of the European Union to achieve this goal. All of our services are regularly updated to adhere to any new regulations which have been passed. Our solutions cover MiFID II, MiFIR, MAD II, MAR, Dodd-Frank and Volcker Rule, just to name a few. We pride ourself on our bespoke approach to regulatory compliance and we are willing to work with our clients to find a solution that works for them, and our expert support team will ensure you have all the information you need to make the most of our services.\u003c/p\u003e\n\u003ch2 id=\"about-fxcm\"\u003eAbout FXCM\u003c/h2\u003e\n\u003cp\u003eFXCM is a leading provider of online foreign exchange (FX) trading, CFD trading, and related services. Founded in 1999, the company’s mission is to provide global traders with access to the world’s largest and most liquid market by offering innovative trading tools, hiring excellent trading educators, meeting strict financial standards and striving for the best online trading experience in the market. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. In addition, FXCM offers educational courses on FX trading and provides trading tools, proprietary data and premium resources. FXCM Pro provides retail brokers, small hedge funds and emerging market banks access to wholesale execution and liquidity, while providing high and medium frequency funds access to prime brokerage services via FXCM Prime. FXCM is a Leucadia Company.\u003c/p\u003e\n","date_published":"2018-24-05T17:20:00+0000"},{"title":"A Unified EMIR Reporting Solution | eflow’s TZTR Platform","url":"https://video-page-fix--eflow-website.netlify.app/tztr-emir-reporting/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"About eflow","url":"https://video-page-fix--eflow-website.netlify.app/meet-the-team/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"AI eBook Download","url":"https://video-page-fix--eflow-website.netlify.app/ai-in-trade-surveillance/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Asset Management Compliance Solutions - eflow","url":"https://video-page-fix--eflow-website.netlify.app/asset-and-wealth-managers/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Book A Consultation","url":"https://video-page-fix--eflow-website.netlify.app/book-a-consultation/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Book A Demo","url":"https://video-page-fix--eflow-website.netlify.app/book-a-demo/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Booking Form Acknowledgement","url":"https://video-page-fix--eflow-website.netlify.app/booking-form-acknowledgement/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Business Analyst","url":"https://video-page-fix--eflow-website.netlify.app/careers/business-analyst-1/","summary":"\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs a Business Analyst, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eWorking with project sponsor to understand and document project objectives and scope\u003c/li\u003e\n\u003cli\u003eLiasing with business managers and end-users to understand and document business requirements and then manage these\u003c/li\u003e\n\u003cli\u003eWorking with project manager/s to plan analysis work and highlight risks and issues\u003c/li\u003e\n\u003cli\u003eIdentifying and defining business requirements, and presenting findings to management\u003c/li\u003e\n\u003cli\u003eProducing high quality documentation\u003c/li\u003e\n\u003cli\u003eWorking on projects from briefs and requirements\u003c/li\u003e\n\u003cli\u003ePulling data from internal and external sources, and performing hands-on analysis with statistical modelling tools\u003c/li\u003e\n\u003cli\u003eUtilising Microsoft Excel up to an advanced level with Macros\u003c/li\u003e\n\u003cli\u003eAssisting in the management of both internal and external stakeholders\u003c/li\u003e\n\u003cli\u003eAnalysing and mapping business processes (current state/future state)\u003c/li\u003e\n\u003cli\u003ePreparing or providing input to business cases, performing feasability assessments\u003c/li\u003e\n\u003cli\u003eGuiding stakeholders on devising effective and efficient approaches to achieving project objectives\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"requirements\"\u003eRequirements\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eProject initiation documents defining high-level scope\u003c/li\u003e\n\u003cli\u003eDetailed requirements that enable the chosen solution to be developed and tested with minimal analysis support\u003c/li\u003e\n\u003cli\u003eUser acceptance test plans\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Business Analyst","url":"https://video-page-fix--eflow-website.netlify.app/careers/business-analyst/","summary":"\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs a Business Analyst, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eWorking with project sponsor to understand and document project objectives and scope\u003c/li\u003e\n\u003cli\u003eLiasing with business managers and end-users to understand and document business requirements and then manage these\u003c/li\u003e\n\u003cli\u003eWorking with project manager/s to plan analysis work and highlight risks and issues\u003c/li\u003e\n\u003cli\u003eIdentifying and defining business requirements, and presenting findings to management\u003c/li\u003e\n\u003cli\u003eProducing high quality documentation\u003c/li\u003e\n\u003cli\u003eWorking on projects from briefs and requirements\u003c/li\u003e\n\u003cli\u003ePulling data from internal and external sources, and performing hands-on analysis with statistical modelling tools\u003c/li\u003e\n\u003cli\u003eUtilising Microsoft Excel up to an advanced level with Macros\u003c/li\u003e\n\u003cli\u003eAssisting in the management of both internal and external stakeholders\u003c/li\u003e\n\u003cli\u003eAnalysing and mapping business processes (current state/future state)\u003c/li\u003e\n\u003cli\u003ePreparing or providing input to business cases, performing feasability assessments\u003c/li\u003e\n\u003cli\u003eGuiding stakeholders on devising effective and efficient approaches to achieving project objectives\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"requirements\"\u003eRequirements\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eProject initiation documents defining high-level scope\u003c/li\u003e\n\u003cli\u003eDetailed requirements that enable the chosen solution to be developed and tested with minimal analysis support\u003c/li\u003e\n\u003cli\u003eUser acceptance test plans\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Contact Us","url":"https://video-page-fix--eflow-website.netlify.app/contact-us/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Customer Success Analyst","url":"https://video-page-fix--eflow-website.netlify.app/careers/customer-success-analyst-1/","summary":"\u003ch3 id=\"role-summary\"\u003eRole Summary\u003c/h3\u003e\n\u003cp\u003eWe are looking for a Customer Success Analyst to join our team. In this role, you will ensure our clients optimise the use of eflow’s Regulatory Reporting and Surveillance platform, TZ. Reporting into the Head of Client Services, you will work with our sales, product development, programmes and Client Service teams to give the client a fantastic end-to-end and ongoing experience.\u003c/p\u003e\n\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs a Model Developer, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eProviding customer support as a means of learning the eflow products and modules\u003c/li\u003e\n\u003cli\u003eBuilding and maintaining strong stakeholder relationships via a client engagement plan to ensure we stay in tune with our clients\u0026rsquo; needs\u003c/li\u003e\n\u003cli\u003eAssisting with go-live process and delivering training for new customers\u003c/li\u003e\n\u003cli\u003eMonitoring usage, proactively contacting clients and delivering training to maximise usage, including the identification of any change resistance\u003c/li\u003e\n\u003cli\u003eOffering customers a clear view of their objectives to achieve maximum usage and deliver superior customer experience\u003c/li\u003e\n\u003cli\u003eActing as a product expert with a specific focus on usage and improvements\u003c/li\u003e\n\u003cli\u003eActing as the client\u0026rsquo;s voice/advocate and providing feedback to the internal team on how we can better serve our clients\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"requirements\"\u003eRequirements\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eExperience with software of SaaS service delivery and/or customer success management\u003c/li\u003e\n\u003cli\u003eCommercial experience of working in financial services is an advantage\u003c/li\u003e\n\u003cli\u003eStrong Excel and CRM skills\u003c/li\u003e\n\u003cli\u003eBI Analytics experiences is preferred but not essential\u003c/li\u003e\n\u003cli\u003eExcellent communication and interpersonal skills, with the ability to positively influence clients\u003c/li\u003e\n\u003cli\u003eExcellent organisation, project management and time management skills\u003c/li\u003e\n\u003cli\u003eStrong teamwork mentality and willingness to assist if needed\u003c/li\u003e\n\u003cli\u003eStrong listening teamwork mentality and willingness to assist if needed\u003c/li\u003e\n\u003cli\u003eStrong listening skills and ability to judge a situation and help customers effectively\u003c/li\u003e\n\u003cli\u003eStrong relationship building skills, ability to be empathetic and good at \u0026ldquo;reading\u0026rdquo; people\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Customer Success Analyst","url":"https://video-page-fix--eflow-website.netlify.app/careers/customer-success-analyst/","summary":"\u003ch3 id=\"role-summary\"\u003eRole Summary\u003c/h3\u003e\n\u003cp\u003eWe are looking for a Customer Success Analyst to join our team. In this role, you will ensure our clients optimise the use of eflow’s Regulatory Reporting and Surveillance platform, TZ. Reporting into the Head of Client Services, you will work with our sales, product development, programmes and Client Service teams to give the client a fantastic end-to-end and ongoing experience.\u003c/p\u003e\n\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs a Model Developer, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eProviding customer support as a means of learning the eflow products and modules\u003c/li\u003e\n\u003cli\u003eBuilding and maintaining strong stakeholder relationships via a client engagement plan to ensure we stay in tune with our clients\u0026rsquo; needs\u003c/li\u003e\n\u003cli\u003eAssisting with go-live process and delivering training for new customers\u003c/li\u003e\n\u003cli\u003eMonitoring usage, proactively contacting clients and delivering training to maximise usage, including the identification of any change resistance\u003c/li\u003e\n\u003cli\u003eOffering customers a clear view of their objectives to achieve maximum usage and deliver superior customer experience\u003c/li\u003e\n\u003cli\u003eActing as a product expert with a specific focus on usage and improvements\u003c/li\u003e\n\u003cli\u003eActing as the client\u0026rsquo;s voice/advocate and providing feedback to the internal team on how we can better serve our clients\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"requirements\"\u003eRequirements\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eExperience with software of SaaS service delivery and/or customer success management\u003c/li\u003e\n\u003cli\u003eCommercial experience of working in financial services is an advantage\u003c/li\u003e\n\u003cli\u003eStrong Excel and CRM skills\u003c/li\u003e\n\u003cli\u003eBI Analytics experiences is preferred but not essential\u003c/li\u003e\n\u003cli\u003eExcellent communication and interpersonal skills, with the ability to positively influence clients\u003c/li\u003e\n\u003cli\u003eExcellent organisation, project management and time management skills\u003c/li\u003e\n\u003cli\u003eStrong teamwork mentality and willingness to assist if needed\u003c/li\u003e\n\u003cli\u003eStrong listening teamwork mentality and willingness to assist if needed\u003c/li\u003e\n\u003cli\u003eStrong listening skills and ability to judge a situation and help customers effectively\u003c/li\u003e\n\u003cli\u003eStrong relationship building skills, ability to be empathetic and good at \u0026ldquo;reading\u0026rdquo; people\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Data Analyst","url":"https://video-page-fix--eflow-website.netlify.app/careers/data-analyst-bristol/","summary":"\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs a Data Analyst, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eWorking on projects from briefs and requirements\u003c/li\u003e\n\u003cli\u003ePull data from internal and external sources and do hands on analysis with statistical modelling tools\u003c/li\u003e\n\u003cli\u003eBasic querying of SQL database\u003c/li\u003e\n\u003cli\u003eWorking with a variety of Trading and Back office system within the financial services\u003c/li\u003e\n\u003cli\u003eUtilising MS Excel up to an advanced level with Macros\u003c/li\u003e\n\u003cli\u003ePresenting findings to management\u003c/li\u003e\n\u003cli\u003eAssist in the management of both internal \u0026amp; external stakeholders\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"requirements\"\u003eRequirements\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eBasic knowledge of Windows and generally computer literate\u003c/li\u003e\n\u003cli\u003eSelf-motivated with the ability to work with minimal supervision\u003c/li\u003e\n\u003cli\u003eAbility to write basic SQL queries to pull data\u003c/li\u003e\n\u003cli\u003eAbility to use initiative to source data required to meet project briefs\u003c/li\u003e\n\u003cli\u003eConfident and a quick learner\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"other-duties\"\u003eOther Duties\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eAssisting as and where required across the business within the capabilities of the individual\u003c/li\u003e\n\u003cli\u003eQuality Assurance\u003c/li\u003e\n\u003cli\u003eHelpdesk Level 1 duties\u003c/li\u003e\n\u003cli\u003eRemote Client Training\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"career-path-options\"\u003eCareer Path Options\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eSenior Data Analyst\u003c/strong\u003e\n\u003cul\u003e\n\u003cli\u003eWorking with the most complex data sets\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eBusiness Analyst\u003c/strong\u003e\n\u003cul\u003e\n\u003cli\u003eBusiness analysis for external stakeholders. Matching client business requirements to eflow product sets to deliver best solution for the client\u003c/li\u003e\n\u003cli\u003eBusiness analysis for internal stakeholders. Matching internal business requirements\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eModel Developer\u003c/strong\u003e\n\u003cul\u003e\n\u003cli\u003eMore technical role\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eProgrammes\u003c/strong\u003e\n\u003cul\u003e\n\u003cli\u003eWork in scheduling and project management for internal and external stakeholders\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Data Analyst","url":"https://video-page-fix--eflow-website.netlify.app/careers/data-analyst-london/","summary":"\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs a Data Analyst, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eWorking on projects from briefs and requirements\u003c/li\u003e\n\u003cli\u003ePull data from internal and external sources and do hands on analysis with statistical modelling tools\u003c/li\u003e\n\u003cli\u003eBasic querying of SQL database\u003c/li\u003e\n\u003cli\u003eWorking with a variety of Trading and Back office system within the financial services\u003c/li\u003e\n\u003cli\u003eUtilising MS Excel up to an advanced level with Macros\u003c/li\u003e\n\u003cli\u003ePresenting findings to management\u003c/li\u003e\n\u003cli\u003eAssist in the management of both internal \u0026amp; external stakeholders\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"requirements\"\u003eRequirements\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eBasic knowledge of Windows and generally computer literate\u003c/li\u003e\n\u003cli\u003eSelf-motivated with the ability to work with minimal supervision\u003c/li\u003e\n\u003cli\u003eAbility to write basic SQL queries to pull data\u003c/li\u003e\n\u003cli\u003eAbility to use initiative to source data required to meet project briefs\u003c/li\u003e\n\u003cli\u003eConfident and a quick learner\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"other-duties\"\u003eOther Duties\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eAssisting as and where required across the business within the capabilities of the individual\u003c/li\u003e\n\u003cli\u003eQuality Assurance\u003c/li\u003e\n\u003cli\u003eHelpdesk Level 1 duties\u003c/li\u003e\n\u003cli\u003eRemote Client Training\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"career-path-options\"\u003eCareer Path Options\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eSenior Data Analyst\u003c/strong\u003e\n\u003cul\u003e\n\u003cli\u003eWorking with the most complex data sets\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eBusiness Analyst\u003c/strong\u003e\n\u003cul\u003e\n\u003cli\u003eBusiness analysis for external stakeholders. Matching client business requirements to eflow product sets to deliver best solution for the client\u003c/li\u003e\n\u003cli\u003eBusiness analysis for internal stakeholders. Matching internal business requirements\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eModel Developer\u003c/strong\u003e\n\u003cul\u003e\n\u003cli\u003eMore technical role\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eProgrammes\u003c/strong\u003e\n\u003cul\u003e\n\u003cli\u003eWork in scheduling and project management for internal and external stakeholders\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Data Analyst - Intern ","url":"https://video-page-fix--eflow-website.netlify.app/careers/intern-data-analyst/","summary":"\u003ch3 id=\"role-summary\"\u003eRole Summary\u003c/h3\u003e\n\u003cp\u003eThis is an outstanding opportunity to join a fast-growing company and discover what a career with us is all about. You’ll find out first hand if the career of Data Analysis is for you. Do well and you could be offered a graduate job.\u003c/p\u003e\n\u003cp\u003eThe Internship is ideal for an enthusiastic third year or postgraduate student to work alongside specialists and client projects to give you the best insight into the role and the company. You’ll have the opportunity to build networks with your colleagues and peer group.\u003c/p\u003e\n\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs a Data Analyst, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eWorking on projects from briefs and requirements\u003c/li\u003e\n\u003cli\u003ePulling data from internal and external sources and do hands on analysis with statistical modelling tools\u003c/li\u003e\n\u003cli\u003eBasic querying of SQL databases\u003c/li\u003e\n\u003cli\u003eWorking with a variety of trading and back-office systems within financial services\u003c/li\u003e\n\u003cli\u003eUtilising Microsoft Excel up to an advanced level with macros\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"skills-and-experience\"\u003eSkills and Experience\u003c/h3\u003e\n\u003cp\u003eExperience isn\u0026rsquo;t essential, but we do require lots of enthusiasm and a passion for our business. You\u0026rsquo;ll need to be adaptable with a thirst for knowledge\u003c/p\u003e\n\u003cp\u003eSkills that will help include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eBasic knowledge of Windows and generally computer literate\u003c/li\u003e\n\u003cli\u003eSelf-motivated with ability to work with minimal supervision\u003c/li\u003e\n\u003cli\u003eAbility to write basic SQL queries to pull data\u003c/li\u003e\n\u003cli\u003eAbility to use initiative to source data required to meet project briefs\u003c/li\u003e\n\u003cli\u003eEducation within Sciences or Maths\u003c/li\u003e\n\u003cli\u003eConfident and a quick learner\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"EMIR Refit","url":"https://video-page-fix--eflow-website.netlify.app/emir-refit/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"End-to-End MiFIR Reporting Solution | eflow’s TZTR Platform","url":"https://video-page-fix--eflow-website.netlify.app/tztr-mifir-reporting/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"European Market Surveillance Report","url":"https://video-page-fix--eflow-website.netlify.app/european-trends-in-market-abuse-and-trade-surveillance-form/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"European Market Surveillance Report Download","url":"https://video-page-fix--eflow-website.netlify.app/european-trends-in-market-abuse-and-trade-surveillance-download/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Form Submission Acknowledgement","url":"https://video-page-fix--eflow-website.netlify.app/contact-form-acknowledgement/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Full Page Test","url":"https://video-page-fix--eflow-website.netlify.app/full-page-test/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Hedge Funds","url":"https://video-page-fix--eflow-website.netlify.app/hedge-funds/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Model Developer","url":"https://video-page-fix--eflow-website.netlify.app/careers/model-developer-1/","summary":"\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs a Model Developer, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSoftware development using technologies including, but not limited to: C, C++, C#, ASP.NET, HTML and JavaScript\u003c/li\u003e\n\u003cli\u003eModel development using eflow\u0026rsquo;s in-house toolkit to provide tailored new \u0026lsquo;White-Lavel\u0026rsquo; ventures\u003c/li\u003e\n\u003cli\u003eReporting directly to the Chief Technology Officer\u003c/li\u003e\n\u003cli\u003eWorking with SQL databases\u003c/li\u003e\n\u003cli\u003eWeb development and deployment\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"requirements\"\u003eRequirements\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eBasic knowledge of Windows and generally computer literate\u003c/li\u003e\n\u003cli\u003eSelf-motivated with the ability to work with minimal supervision\u003c/li\u003e\n\u003cli\u003eExperience programming in C/C++/C#\u003c/li\u003e\n\u003cli\u003eAbility to use initiative to source data required to meet project briefs\u003c/li\u003e\n\u003cli\u003eConfident and a quick learner\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"other-duties\"\u003eOther Duties\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eAssisting as and where required across the business within the capabilities of the individual\u003c/li\u003e\n\u003cli\u003eHelpdesk duties\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Model Developer","url":"https://video-page-fix--eflow-website.netlify.app/careers/model-developer/","summary":"\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs a Model Developer, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSoftware development using technologies including, but not limited to: C, C++, C#, ASP.NET, HTML and JavaScript\u003c/li\u003e\n\u003cli\u003eModel development using eflow\u0026rsquo;s in-house toolkit to provide tailored new \u0026lsquo;White-Lavel\u0026rsquo; ventures\u003c/li\u003e\n\u003cli\u003eReporting directly to the Chief Technology Officer\u003c/li\u003e\n\u003cli\u003eWorking with SQL databases\u003c/li\u003e\n\u003cli\u003eWeb development and deployment\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"requirements\"\u003eRequirements\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eBasic knowledge of Windows and generally computer literate\u003c/li\u003e\n\u003cli\u003eSelf-motivated with the ability to work with minimal supervision\u003c/li\u003e\n\u003cli\u003eExperience programming in C/C++/C#\u003c/li\u003e\n\u003cli\u003eAbility to use initiative to source data required to meet project briefs\u003c/li\u003e\n\u003cli\u003eConfident and a quick learner\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"other-duties\"\u003eOther Duties\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eAssisting as and where required across the business within the capabilities of the individual\u003c/li\u003e\n\u003cli\u003eHelpdesk duties\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Model Developer - Intern","url":"https://video-page-fix--eflow-website.netlify.app/careers/senior-technical-support-copy/","summary":"\u003ch3 id=\"role-summary\"\u003eRole Summary\u003c/h3\u003e\n\u003cp\u003eThis is an outstanding opportunity to join a fast-growing company and discover what a career with us is all about. You’ll find out first hand if the career in Model Developing is for you. Do well and you could be offered a graduate job.\u003c/p\u003e\n\u003cp\u003eThe Internship is ideal for an enthusiastic third year or postgraduate student to work alongside specialists and client projects to give you the best insight into the role and the company. You’ll have the opportunity to build networks with your colleagues and peer group.\u003c/p\u003e\n\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs a Model Developer, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSoftware development using technologies including, but not limited to: C, C++, C#, ASP.NET, HTML and JavaScript\u003c/li\u003e\n\u003cli\u003eModel development using eflow\u0026rsquo;s in-house toolkit to provide tailored new \u0026lsquo;White-Lavel\u0026rsquo; ventures\u003c/li\u003e\n\u003cli\u003eReporting directly to the Chief Technology Officer\u003c/li\u003e\n\u003cli\u003eWorking with SQL databases\u003c/li\u003e\n\u003cli\u003eOverseeing help desk duties\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"skills-and-experience\"\u003eSkills and Experience\u003c/h3\u003e\n\u003cp\u003eExperience isn\u0026rsquo;t essential, but we do require lots of enthusiasm and a passion for our business. You\u0026rsquo;ll need to be adaptable with a thirst for knowledge\u003c/p\u003e\n\u003cp\u003eSkills that will help include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eBasic knowledge of Windows and generally computer literate\u003c/li\u003e\n\u003cli\u003eSome knowledge of programming in C/C++/C#\u003c/li\u003e\n\u003cli\u003eAbility to use initiative to source data required to meet project briefs\u003c/li\u003e\n\u003cli\u003eConfident and a quick learner\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Our clients","url":"https://video-page-fix--eflow-website.netlify.app/clients/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Partners","url":"https://video-page-fix--eflow-website.netlify.app/partners/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"PATH - Data integration","url":"https://video-page-fix--eflow-website.netlify.app/path-data-integration/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"PATH - Data Management ","url":"https://video-page-fix--eflow-website.netlify.app/path-data-management/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"PATH - Data reconciliation ","url":"https://video-page-fix--eflow-website.netlify.app/path-data-reconciliation/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"PATH - Report generation ","url":"https://video-page-fix--eflow-website.netlify.app/path-report-generation/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"PATH - Workflow automation","url":"https://video-page-fix--eflow-website.netlify.app/path-workflow-automation/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Privacy Policy","url":"https://video-page-fix--eflow-website.netlify.app/privacy-policy/","summary":"\u003cp\u003eEffective date: October 4th, 2021\u003c/p\u003e\n\u003cp\u003eeflow ltd (“us”, “we”, or “our”) operates the \u003ca href=\"https://eflowglobal.com/\" title=\" https://eflowglobal.com/\"\u003ehttps://eflowglobal.com/\u003c/a\u003e website (hereinafter referred to as the “Service”). This page informs you of our policies regarding the collection, use and disclosure of personal data when you use our Service and the choices you have associated with that data.\u003c/p\u003e\n\u003cp\u003eWe use your data to provide and improve the Service. By using the Service, you agree to the collection and use of information in accordance with this policy. Unless otherwise defined in this Privacy Policy, the terms used in this Privacy Policy have the same meanings as in our Terms and Conditions, accessible from \u003ca href=\"https://eflowglobal.com/\" title=\"https://eflowglobal.com/\"\u003ehttps://eflowglobal.com/\u003c/a\u003e.\u003c/p\u003e\n\u003ch3 id=\"definitions\"\u003eDefinitions\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eService – Service is the \u003ca href=\"https://eflowglobal.com/\" title=\"https://eflowglobal.com/\"\u003ehttps://eflowglobal.com/\u003c/a\u003e website operated by eflow ltd\u003c/li\u003e\n\u003cli\u003ePersonal Data – Personal Data means data about a living individual who can be identified from those data (or from those and other information either in our possession or likely to come into our possession).\u003c/li\u003e\n\u003cli\u003eUsage Data – Usage Data is data collected automatically either generated by the use of the Service or from the Service infrastructure itself (for example, the duration of a page visit).\u003c/li\u003e\n\u003cli\u003eCookies – Cookies are small files stored on your device (computer or mobile device).\u003c/li\u003e\n\u003cli\u003eData Controller – Data Controller means the natural or legal person who (either alone or jointly or in common with other persons) determines the purposes for which and the manner in which any personal information are, or are to be, processed. For the purpose of this Privacy Policy, we are a Data Controller of your Personal Data.\u003c/li\u003e\n\u003cli\u003eData Processors (or Service Providers) – Data Processor (or Service Provider) means any natural or legal person who processes the data on behalf of the Data Controller. We may use the services of various Service Providers in order to process your data more effectively.\u003c/li\u003e\n\u003cli\u003eData Subject (or User) – Data Subject is any living individual who is using our Service and is the subject of Personal Data.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"information-collection-and-use\"\u003eInformation Collection and Use\u003c/h3\u003e\n\u003cp\u003eWe collect several different types of information for various purposes to provide and improve our Service to you.\u003c/p\u003e\n\u003ch3 id=\"types-of-data-collected\"\u003eTypes of Data Collected\u003c/h3\u003e\n\u003ch4 id=\"personal-data\"\u003ePersonal Data\u003c/h4\u003e\n\u003cp\u003eWhile using our Service, we may ask you to provide us with certain personally identifiable information that can be used to contact or identify you (“Personal Data”). Personally identifiable information may include, but is not limited to:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eEmail address\u003c/li\u003e\n\u003cli\u003eFirst name and last name\u003c/li\u003e\n\u003cli\u003ePhone number\u003c/li\u003e\n\u003cli\u003eAddress, State, Province, ZIP/Postal code, City\u003c/li\u003e\n\u003cli\u003eCookies and Usage Data\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWe may use your Personal Data to contact you with newsletters, marketing or promotional materials and other information that may be of interest to you. You may opt out of receiving any, or all, of these communications from us by following the unsubscribe link or the instructions provided in any email we send.\u003c/p\u003e\n\u003ch4 id=\"usage-data\"\u003eUsage Data\u003c/h4\u003e\n\u003cp\u003eWe may also collect information on how the Service is accessed and used (“Usage Data”). This Usage Data may include information such as your computer’s Internet Protocol address (e.g. IP address), browser type, browser version, the pages of our Service that you visit, the time and date of your visit, the time spent on those pages, unique device identifiers and other diagnostic data.\u003c/p\u003e\n\u003ch4 id=\"location-data\"\u003eLocation Data\u003c/h4\u003e\n\u003cp\u003eWe may use and store information about your location if you give us permission to do so (“Location Data”). We use this data to provide features of our Service, to improve and customise our Service\u003c/p\u003e\n\u003cp\u003eYou can enable or disable location services when you use our Service at any time by way of your device settings.\u003c/p\u003e\n\u003ch4 id=\"tracking--cookies-data\"\u003eTracking \u0026amp; Cookies Data\u003c/h4\u003e\n\u003cp\u003eWe use cookies and similar tracking technologies to track the activity on our Service and we hold certain information.\u003c/p\u003e\n\u003cp\u003eCookies are files with a small amount of data which may include an anonymous unique identifier. Cookies are sent to your browser from a website and stored on your device. Other tracking technologies are also used such as beacons, tags and scripts to collect and track information and to improve and analyse our Service.\u003c/p\u003e\n\u003cp\u003eYou can instruct your browser to refuse all cookies or to indicate when a cookie is being sent. However, if you do not accept cookies, you may not be able to use some portions of our Service.\u003c/p\u003e\n\u003cp\u003eExamples of Cookies we use:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSession Cookies. We use Session Cookies to operate our Service.\u003c/li\u003e\n\u003cli\u003ePreference Cookies. We use Preference Cookies to remember your preferences and various settings.\u003c/li\u003e\n\u003cli\u003eSecurity Cookies. We use Security Cookies for security purposes.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"use-of-data\"\u003eUse of Data\u003c/h3\u003e\n\u003cp\u003eeflow ltd uses the collected data for various purposes:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eTo provide and maintain our Service\u003c/li\u003e\n\u003cli\u003eTo notify you about changes to our Service\u003c/li\u003e\n\u003cli\u003eTo allow you to participate in interactive features of our Service when you choose to do so\u003c/li\u003e\n\u003cli\u003eTo provide customer support\u003c/li\u003e\n\u003cli\u003eTo gather analysis or valuable information so that we can improve our Service\u003c/li\u003e\n\u003cli\u003eTo monitor the usage of our Service\u003c/li\u003e\n\u003cli\u003eTo detect, prevent and address technical issues\u003c/li\u003e\n\u003cli\u003eTo provide you with news, special offers and general information about other goods, services and events which we offer that are similar to those that you have already purchased or enquired about unless you have opted not to receive such information\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"legal-basis-for-processing-personal-data-under-the-general-data-protection-regulation-gdpr\"\u003eLegal Basis for Processing Personal Data under the General Data Protection Regulation (GDPR)\u003c/h3\u003e\n\u003cp\u003eIf you are from the European Economic Area (EEA), eflow ltd legal basis for collecting and using the personal information described in this Privacy Policy depends on the Personal Data we collect and the specific context in which we collect it.\u003c/p\u003e\n\u003cp\u003eeflow ltd may process your Personal Data because:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eWe need to perform a contract with you\u003c/li\u003e\n\u003cli\u003eYou have given us permission to do so\u003c/li\u003e\n\u003cli\u003eThe processing is in our legitimate interests and it is not overridden by your rights\u003c/li\u003e\n\u003cli\u003eTo comply with the law\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"retention-of-data\"\u003eRetention of Data\u003c/h3\u003e\n\u003cp\u003eeflow ltd will retain your Personal Data only for as long as is necessary for the purposes set out in this Privacy Policy. We will retain and use your Personal Data to the extent necessary to comply with our legal obligations (for example, if we are required to retain your data to comply with applicable laws), resolve disputes and enforce our legal agreements and policies.\u003c/p\u003e\n\u003cp\u003eeflow ltd will also retain Usage Data for internal analysis purposes. Usage Data is generally retained for a shorter period of time, except when this data is used to strengthen the security or to improve the functionality of our Service, or we are legally obligated to retain this data for longer periods.\u003c/p\u003e\n\u003ch3 id=\"transfer-of-data\"\u003eTransfer of Data\u003c/h3\u003e\n\u003cp\u003eYour information, including Personal Data, may be transferred to — and maintained on — computers located outside of your state, province, country or other governmental jurisdiction where the data protection laws may differ from those of your jurisdiction.\u003c/p\u003e\n\u003cp\u003eIf you are located outside United Kingdom and choose to provide information to us, please note that we transfer the data, including Personal Data, to United Kingdom and process it there.\u003c/p\u003e\n\u003cp\u003eYour consent to this Privacy Policy followed by your submission of such information represents your agreement to that transfer.\u003c/p\u003e\n\u003cp\u003eeflow ltd will take all the steps reasonably necessary to ensure that your data is treated securely and in accordance with this Privacy Policy and no transfer of your Personal Data will take place to an organisation or a country unless there are adequate controls in place including the security of your data and other personal information.\u003c/p\u003e\n\u003ch2 id=\"disclosure-of-data\"\u003eDisclosure of Data\u003c/h2\u003e\n\u003ch3 id=\"legal-requirements\"\u003eLegal Requirements\u003c/h3\u003e\n\u003cp\u003eeflow ltd may disclose your Personal Data in the good faith belief that such action is necessary to:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eTo comply with a legal obligation\u003c/li\u003e\n\u003cli\u003eTo protect and defend the rights or property of eflow ltd\u003c/li\u003e\n\u003cli\u003eTo prevent or investigate possible wrongdoing in connection with the Service\u003c/li\u003e\n\u003cli\u003eTo protect the personal safety of users of the Service or the public\u003c/li\u003e\n\u003cli\u003eTo protect against legal liability\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"security-of-data\"\u003eSecurity of Data\u003c/h3\u003e\n\u003cp\u003eThe security of your data is important to us but remember that no method of transmission over the Internet or method of electronic storage is 100% secure. While we strive to use commercially acceptable means to protect your Personal Data, we cannot guarantee its absolute security.\u003c/p\u003e\n\u003ch3 id=\"your-data-protection-rights-under-the-general-data-protection-regulation-gdpr\"\u003eYour Data Protection Rights under the General Data Protection Regulation (GDPR)\u003c/h3\u003e\n\u003cp\u003eIf you are a resident of the European Economic Area (EEA), you have certain data protection rights. eflow ltd aims to take reasonable steps to allow you to correct, amend, delete or limit the use of your Personal Data.\u003c/p\u003e\n\u003cp\u003eIf you wish to be informed about what Personal Data we hold about you and if you want it to be removed from our systems, please contact us.\u003c/p\u003e\n\u003cp\u003eIn certain circumstances, you have the following data protection rights:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThe right to access, update or delete the information we have on you. Whenever made possible, you can access, update or request deletion of your Personal Data directly within your account settings section. If you are unable to perform these actions yourself, please contact us to assist you.\u003c/li\u003e\n\u003cli\u003eThe right of rectification. You have the right to have your information rectified if that information is inaccurate or incomplete.\u003c/li\u003e\n\u003cli\u003eThe right to object. You have the right to object to our processing of your Personal Data.\u003c/li\u003e\n\u003cli\u003eThe right of restriction. You have the right to request that we restrict the processing of your personal information.\u003c/li\u003e\n\u003cli\u003eThe right to data portability. You have the right to be provided with a copy of the information we have on you in a structured, machine-readable and commonly used format.\u003c/li\u003e\n\u003cli\u003eThe right to withdraw consent. You also have the right to withdraw your consent at any time where eflow ltd relied on your consent to process your personal information.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003ePlease note that we may ask you to verify your identity before responding to such requests.\u003c/p\u003e\n\u003cp\u003eYou have the right to complain to a Data Protection Authority about our collection and use of your Personal Data. For more information, please contact your local data protection authority in the European Economic Area (EEA).\u003c/p\u003e\n\u003ch3 id=\"service-providers\"\u003eService Providers\u003c/h3\u003e\n\u003cp\u003eWe may employ third party companies and individuals to facilitate our Service (“Service Providers”), provide the Service on our behalf, perform Service-related services or assist us in analysing how our Service is used.\u003c/p\u003e\n\u003cp\u003eThese third parties have access to your Personal Data only to perform these tasks on our behalf and are obligated not to disclose or use it for any other purpose.\u003c/p\u003e\n\u003ch3 id=\"analytics\"\u003eAnalytics\u003c/h3\u003e\n\u003cp\u003eWe may use third-party Service Providers to monitor and analyse the use of our Service.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eGoogle Analytics – Google Analytics is a web analytics service offered by Google that tracks and reports website traffic. Google uses the data collected to track and monitor the use of our Service. This data is shared with other Google services. Google may use the collected data to contextualise and personalise the ads of its own advertising network.You can opt-out of having made your activity on the Service available to Google Analytics by installing the Google Analytics opt-out browser add-on. The add-on prevents the Google Analytics JavaScript (ga.js, analytics.js and dc.js) from sharing information with Google Analytics about visits activity.For more information on the privacy practices of Google, please visit the Google Privacy \u0026amp; Terms web page: \u003ca href=\"https://policies.google.com/privacy?hl=en\"\u003ehttps://policies.google.com/privacy?hl=en\u003c/a\u003e\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"links-to-other-sites\"\u003eLinks to Other Sites\u003c/h3\u003e\n\u003cp\u003eOur Service may contain links to other sites that are not operated by us. If you click a third party link, you will be directed to that third party’s site. We strongly advise you to review the Privacy Policy of every site you visit.\u003c/p\u003e\n\u003cp\u003eWe have no control over and assume no responsibility for the content, privacy policies or practices of any third party sites or services.\u003c/p\u003e\n\u003ch3 id=\"childrens-privacy\"\u003eChildren’s Privacy\u003c/h3\u003e\n\u003cp\u003eOur Service does not address anyone under the age of 18 (“Children”).\u003c/p\u003e\n\u003cp\u003eWe do not knowingly collect personally identifiable information from anyone under the age of 18. If you are a parent or guardian and you are aware that your Child has provided us with Personal Data, please contact us. If we become aware that we have collected Personal Data from children without verification of parental consent, we take steps to remove that information from our servers.\u003c/p\u003e\n\u003ch3 id=\"changes-to-this-privacy-policy\"\u003eChanges to this Privacy Policy\u003c/h3\u003e\n\u003cp\u003eWe may update our Privacy Policy from time to time. We will notify you of any changes by posting the new Privacy Policy on this page.\u003c/p\u003e\n\u003cp\u003eWe will let you know via email and/or a prominent notice on our Service, prior to the change becoming effective and update the “effective date” at the top of this Privacy Policy.\u003c/p\u003e\n\u003cp\u003eYou are advised to review this Privacy Policy periodically for any changes. Changes to this Privacy Policy are effective when they are posted on this page.\u003c/p\u003e\n\u003ch3 id=\"contact-us\"\u003eContact Us\u003c/h3\u003e\n\u003cp\u003eIf you have any questions about this Privacy Policy, please fill out the contact form below or call us on +44 (0) 207 101 4493.\u003c/p\u003e\n\u003ch3 id=\"complaints\"\u003eComplaints\u003c/h3\u003e\n\u003cp\u003eIf you think your data has been misused you should contact us at \u003ca href=\"mailto:dataprotectionofficer@eflowglobal.com\"\u003edataprotectionofficer@eflowglobal.com\u003c/a\u003e and tell us.\u003c/p\u003e\n\u003cp\u003eIf you’re unhappy with our response or if you need any advice you should contact the Information Commissioner’s Office (ICO).\u003c/p\u003e\n\u003cp\u003eICO\u003cbr\u003e\n\u003ca href=\"mailto:casework@ico.org.uk\"\u003ecasework@ico.org.uk\u003c/a\u003e\u003cbr\u003e\nTelephone: 0303 123 1113\u003cbr\u003e\nTextphone: 01625 545860\u003cbr\u003e\nMonday to Friday, 9am to 4:30pm\u003c/p\u003e\n\u003cp\u003eInformation Commissioner’s Office\u003cbr\u003e\nWycliffe House Water Lane\u003cbr\u003e\nWilmslow\u003cbr\u003e\nCheshire\u003cbr\u003e\nSK9 5AF\u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Proprietary Trading Firms","url":"https://video-page-fix--eflow-website.netlify.app/proprietary-trading-firms/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Quality Assurance Analyst","url":"https://video-page-fix--eflow-website.netlify.app/careers/quality-assurance-analyst-1/","summary":"\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs a Model Developer, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eDeveloping an in-depth knowledge of eflow\u0026rsquo;s market and prodct set\u003c/li\u003e\n\u003cli\u003eReviewing and analysing system specifications\u003c/li\u003e\n\u003cli\u003eExecuting manual as well as automated test cases and analysing results\u003c/li\u003e\n\u003cli\u003eCollaborating with QA Engineers for the purpose of developing effective test plans and strategies\u003c/li\u003e\n\u003cli\u003eEvaluating product code in accordance with the specifications\u003c/li\u003e\n\u003cli\u003eConducting post-release or post-implementation testing\u003c/li\u003e\n\u003cli\u003eIdentifying and troubleshooting bugs as soon as they arise, escalating where necessary\u003c/li\u003e\n\u003cli\u003eDocumenting test results for the benefit of internal stakeholders up and down the development chain\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"requirements\"\u003eRequirements\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\n\u003cp\u003eBachelor\u0026rsquo;s degree or higher in Sofrware Engineering, Computer Science, or other related fields\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003ePrior experience in QA testing is preferable but not essential\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eExperience with SQL and test management software is preferable but not essential\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eFamiliarity with regression testing and agile frameworks is preferable but not\u003c/p\u003e\n\u003cp\u003eessential\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eAbility to identify and troubleshoot bugs/errors as soon as they arise\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eStrong communication skills and a keen eye for details\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eAn analytical mind with problem-solving attitude\u003c/p\u003e\n\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Quality Assurance Analyst","url":"https://video-page-fix--eflow-website.netlify.app/careers/quality-assurance-analyst/","summary":"\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs a Model Developer, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eDeveloping an in-depth knowledge of eflow\u0026rsquo;s market and prodct set\u003c/li\u003e\n\u003cli\u003eReviewing and analysing system specifications\u003c/li\u003e\n\u003cli\u003eExecuting manual as well as automated test cases and analysing results\u003c/li\u003e\n\u003cli\u003eCollaborating with QA Engineers for the purpose of developing effective test plans and strategies\u003c/li\u003e\n\u003cli\u003eEvaluating product code in accordance with the specifications\u003c/li\u003e\n\u003cli\u003eConducting post-release or post-implementation testing\u003c/li\u003e\n\u003cli\u003eIdentifying and troubleshooting bugs as soon as they arise, escalating where necessary\u003c/li\u003e\n\u003cli\u003eDocumenting test results for the benefit of internal stakeholders up and down the development chain\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"requirements\"\u003eRequirements\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\n\u003cp\u003eBachelor\u0026rsquo;s degree or higher in Sofrware Engineering, Computer Science, or other related fields\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003ePrior experience in QA testing is preferable but not essential\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eExperience with SQL and test management software is preferable but not essential\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eFamiliarity with regression testing and agile frameworks is preferable but not\u003c/p\u003e\n\u003cp\u003eessential\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eAbility to identify and troubleshoot bugs/errors as soon as they arise\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eStrong communication skills and a keen eye for details\u003c/p\u003e\n\u003c/li\u003e\n\u003cli\u003e\n\u003cp\u003eAn analytical mind with problem-solving attitude\u003c/p\u003e\n\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Regulatory Compliance Solutions for Brokerage Firms - eflow","url":"https://video-page-fix--eflow-website.netlify.app/brokers/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Regulatory Reporting for Fund Managers - eflow","url":"https://video-page-fix--eflow-website.netlify.app/fund-managers/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Regulatory Reporting for Investment Banks - eflow","url":"https://video-page-fix--eflow-website.netlify.app/investment-banks/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Regulatory technology solutions for US financial institutions","url":"https://video-page-fix--eflow-website.netlify.app/eflow-us/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Sales Development Representative - Intern","url":"https://video-page-fix--eflow-website.netlify.app/careers/sales-development-representative-intern/","summary":"\u003ch3 id=\"role-summary\"\u003eRole Summary\u003c/h3\u003e\n\u003cp\u003eThis is an outstanding opportunity to join a fast-growing company and discover what a career with us is all about. You’ll find out first hand if a career in Sales is for you. Do well and you could be offered a graduate job.\u003c/p\u003e\n\u003cp\u003eThe Internship is ideal for an enthusiastic third year or postgraduate student to work alongside specialists and client projects to give you the best insight into the role and the company. You’ll have the opportunity to build networks with your colleagues and peer group.\u003c/p\u003e\n\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs a Data Analyst, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003ePartaking in lead generation and sales campaigns\u003c/li\u003e\n\u003cli\u003eProviding internal support to the Sales team\u003c/li\u003e\n\u003cli\u003ePerforming follow-up activities for Business Development Director\u003c/li\u003e\n\u003cli\u003eAnswering inbound sales enquiries and liasing with the relevant salesperson\u003c/li\u003e\n\u003cli\u003eProviding support for external events and exhibitions\u003c/li\u003e\n\u003cli\u003eSupporting in production of sales reports\u003c/li\u003e\n\u003cli\u003eData cleansing and support for CRM\u003c/li\u003e\n\u003cli\u003eSupporting the development of sales literature and documents for information, advise and guidance\u003c/li\u003e\n\u003cli\u003ePre-sales marketing support\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"skills-and-experience\"\u003eSkills and Experience\u003c/h3\u003e\n\u003cp\u003eExperience isn\u0026rsquo;t essential, but we do require lots of enthusiasm and a passion for our business. You\u0026rsquo;ll need to be adaptable with a thirst for knowledge\u003c/p\u003e\n\u003cp\u003eSkills that will help include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eExcellent written and verbal communication skills\u003c/li\u003e\n\u003cli\u003eComfortable talking on the phone\u003c/li\u003e\n\u003cli\u003eResults driven and ambitious\u003c/li\u003e\n\u003cli\u003eTeam player/relationship building\u003c/li\u003e\n\u003cli\u003eGood IT, organisational and time management skills\u003c/li\u003e\n\u003cli\u003eAbility to work in dynamic environment and in a small team\u003c/li\u003e\n\u003cli\u003eCommercially aware\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Senior Product Manager","url":"https://video-page-fix--eflow-website.netlify.app/careers/senior-product-manager/","summary":"\u003ch3 id=\"role-summary\"\u003eRole Summary\u003c/h3\u003e\n\u003cp\u003eThis is an outstanding opportunity for a Senior Product Manager to join a fast-growing company.\u003c/p\u003e\n\u003cp\u003eThe Product Manager will help design, strategise and execute customer focused solutions. You will work with an in-house development team to deliver customer focused solutions, using innovative proprietary and industry standard products.\u003c/p\u003e\n\u003cp\u003eThis role has the potential to grow into a more senior role and eventually to reach the position of Chief Product Officer across the whole product set at eflow, a role which is currently performed by the Chief Strategy Officer.\u003c/p\u003e\n\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs Senior Product Manager, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eBeing responsible for helping to shape the creation of future RegTech products\u003c/li\u003e\n\u003cli\u003eDelivering the vision of the Chief Strategy Officer and CEO\u003c/li\u003e\n\u003cli\u003eFinding the best solution for our Regtech product clients, acting as a Subject Matter Expert\u003c/li\u003e\n\u003cli\u003eConducting market and competitor research to ensure eflow has a market leading product\u003c/li\u003e\n\u003cli\u003eWorking with the Head of Development and their team of talented product-minded engineers to achieve a common growth goal\u003c/li\u003e\n\u003cli\u003eLeading Sprint planning and maintaining the product direction based on the team\u0026rsquo;s roadmap and priorities\u003c/li\u003e\n\u003cli\u003eProviding walk-throughs as part of user acceptance, to both delivery and clients, and ensures documentation is updated\u003c/li\u003e\n\u003cli\u003eReporting to the Chief Strategy Officer\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"requirements\"\u003eRequirements\u003c/h3\u003e\n\u003cp\u003eApplicants for this role should meet the following requirements:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eHave 6+ years of experience building a mobile or web app products, preferably with direct experience in Regtech/Fintech/ wealth product/s across UK and Europe\u003c/li\u003e\n\u003cli\u003eBe a fintech and finance enthusiast.\u003c/li\u003e\n\u003cli\u003eBe able to manage a team of engineers, speak their language and are able to communicate business needs in a constructive \u0026amp; timely way.\u003c/li\u003e\n\u003cli\u003eBe able to transmit your enthusiasm to your team and make sure you are all working effectively towards your goal.\u003c/li\u003e\n\u003cli\u003eBe excited to work in an established business already disrupting Regtech in the financial industry and see it grow.\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Senior Technical Support","url":"https://video-page-fix--eflow-website.netlify.app/careers/senior-technical-support/","summary":"\u003ch3 id=\"role-summary\"\u003eRole Summary\u003c/h3\u003e\n\u003cp\u003eThis is an important role within the Business. The holder of this role has a responsibility to understand every facet of the eflow\u0026rsquo;s Regulatory Compliance product TZ, including its creation in development and delivery as a service to the client.\u003c/p\u003e\n\u003cp\u003eIt is expected that the holder will interact with the key areas of Support (BAU and Onboarding), Infrastructure, Programmes, Core Development and Model Dev, but they will report directly to the Head of Programmes and eventually the Support Manager.\u003c/p\u003e\n\u003ch3 id=\"primary-responsibilities\"\u003ePrimary Responsibilities\u003c/h3\u003e\n\u003cp\u003eAs Senior Technical Support, your role will involve:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThe categorisation, prioritisation, assignment of support tickets from clients\u003c/li\u003e\n\u003cli\u003eRegular communication on progress of support work\u003c/li\u003e\n\u003cli\u003ePerforming investigations on tickets, collecting data and reports from numerous systems, departments and individual stakeholders to find a resolution\u003c/li\u003e\n\u003cli\u003eCreating briefing papers yourself and preparing all briefing papers to be discussed at product meetings\u003c/li\u003e\n\u003cli\u003eAssisting as technical advisor to Support Manager/Data Analysts/Business Analysts on client system handovers\u003c/li\u003e\n\u003cli\u003eProviding training if necessary\u003c/li\u003e\n\u003cli\u003eProviding support and assistance under the instructions of the infrastructure team where necessary, including on:\n\u003cul\u003e\n\u003cli\u003eDaily loads\u003c/li\u003e\n\u003cli\u003ehardware and software challenges that may arise\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003cli\u003eProviding assistance internally to Data Analysts and Model Developers that may arise in the course of their individual roles\u003c/li\u003e\n\u003cli\u003eThe accurate and timely execution of critical procedural tasks using eflow\u0026rsquo;s, and it\u0026rsquo;s partners\u0026rsquo;, system administration tools.\u003c/li\u003e\n\u003cli\u003eSetting up client system environments with eflow\u0026rsquo;s Cloud infrastructure\u003c/li\u003e\n\u003cli\u003eSupporting major incident management and problem management processes as required\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"reporting-lines\"\u003eReporting Lines\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eDirect reporting lines to Systems Architect, Product Managerm CTO, Programmes Manager and Support Manager\u003c/li\u003e\n\u003cli\u003eAll tasks and avctivities to be directed from and processed through Programmes\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"requirements\"\u003eRequirements\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eAbility to manage your own time, meeting internal deadlines\u003c/li\u003e\n\u003cli\u003eAbility to maintain and improve your knowledge in relation to the product and the markets to which it applies, i.e. TZ and regulatory compliance in financial markets respectively\u003c/li\u003e\n\u003cli\u003eAbility to communicate effectively, liasing with business managers and end users to understand business requirements, ensuring that system deliverables are met in line with these\u003c/li\u003e\n\u003cli\u003eWorking with client development and infrastructure teams to communicate business objectives and requirements, and making decissions on delivery options\u003c/li\u003e\n\u003cli\u003eAbility to communicate with eflow Model and Development teams to make recommendations for system improvements\u003c/li\u003e\n\u003cli\u003eAbility to understand dependencies between projects and advise colleagues on these as appropriate\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"performance-measurements\"\u003ePerformance Measurements\u003c/h3\u003e\n\u003cp\u003eGiven that all company functions will be passing through programmes, we will be measuring all of the company metrics from Programmes. Ability to hit deadlines and organising will be the two most important metrics. More details around these will be delivered as part of your regular reviews.\u003c/p\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"Surveillance Report Download","url":"https://video-page-fix--eflow-website.netlify.app/global-trends-in-market-abuse-and-trade-surveillance/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Surveillance Report Form","url":"https://video-page-fix--eflow-website.netlify.app/global-trends-in-market-abuse-and-trade-surveillance-form/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"Terms of Use","url":"https://video-page-fix--eflow-website.netlify.app/terms-of-use/","summary":"\u003ch3 id=\"eflowglobalcom-terms-of-use\"\u003eeflowglobal.com Terms of Use\u003c/h3\u003e\n\u003cp\u003eWelcome to our website. If you continue to browse and use this website, you are agreeing to comply with and be bound by the following terms and conditions of use, which together with our privacy policy govern eflow ltd.’s relationship with you in relation to this website. If you disagree with any part of these terms and conditions, please do not use our website.\u003c/p\u003e\n\u003cp\u003eThe term ‘eflow ltd.’ or ‘us’ or ‘we’ refers to the owner of the website whose registered office is Citypoint, Temple Gate, Bristol, England, BS1 6PL. Our company registration number is 5066228. The term ‘you’ refers to the user or viewer of our website.\u003c/p\u003e\n\u003cp\u003eThe use of this website is subject to the following terms of use:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eThe content of the pages of this website is for your general information and use only. It is subject to change without notice.\u003c/li\u003e\n\u003cli\u003eThis website uses cookies to monitor browsing preferences. If you do allow cookies to be used, the following information may be stored by us for use by third parties:\n\u003cul\u003e\n\u003cli\u003ePages visited\u003c/li\u003e\n\u003cli\u003eUnique user ID\u003c/li\u003e\n\u003c/ul\u003e\n\u003c/li\u003e\n\u003cli\u003eNeither we nor any third parties provide any warranty or guarantee as to the accuracy, timeliness, performance, completeness or suitability of the information and materials found or offered on this website for any particular purpose. You acknowledge that such information and materials may contain inaccuracies or errors and we expressly exclude liability for any such inaccuracies or errors to the fullest extent permitted by law.\u003c/li\u003e\n\u003cli\u003eYour use of any information or materials on this website is entirely at your own risk, for which we shall not be liable. It shall be your own responsibility to ensure that any products, services or information available through this website meet your specific requirements.\u003c/li\u003e\n\u003cli\u003eThis website contains material which is owned by or licensed to us. This material includes, but is not limited to, the design, layout, look, appearance and graphics. Reproduction is prohibited other than in accordance with the copyright notice, which forms part of these terms and conditions.\u003c/li\u003e\n\u003cli\u003eAll trademarks reproduced in this website, which are not the property of, or licensed to the operator, are acknowledged on the website.\u003c/li\u003e\n\u003cli\u003eUnauthorised use of this website may give rise to a claim for damages and/or be a criminal offence.\u003c/li\u003e\n\u003cli\u003eFrom time to time, this website may also include links to other websites. These links are provided for your convenience to provide further information. They do not signify that we endorse the website(s). We have no responsibility for the content of the linked website(s).\u003c/li\u003e\n\u003cli\u003eYour use of this website and any dispute arising out of such use of the website is subject to the laws of England, Northern Ireland, Scotland and Wales.\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"0001-01-01T00:00:00+0000"},{"title":"The PATH ecosystem","url":"https://video-page-fix--eflow-website.netlify.app/the-path-ecosystem/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"TZBE Best Execution And Transaction Cost Analysis Software","url":"https://video-page-fix--eflow-website.netlify.app/tz-best-execution-and-transaction-cost-analysis/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"TZEC - A leading eComms Surveillance solution from eflow","url":"https://video-page-fix--eflow-website.netlify.app/tz-ecomms-surveillance/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"TZTR Transaction Reporting | EMIR \u0026 MiFIR Compliance","url":"https://video-page-fix--eflow-website.netlify.app/tztr-transaction-reporting/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"TZTS Market Abuse \u0026 Trade Surveillance software","url":"https://video-page-fix--eflow-website.netlify.app/tz-market-abuse-trade-surveillance/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"US Surveillance Report Download","url":"https://video-page-fix--eflow-website.netlify.app/us-trends-in-market-abuse-and-trade-surveillance/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"US Surveillance Report Form","url":"https://video-page-fix--eflow-website.netlify.app/us-trends-in-market-abuse-and-trade-surveillance-form/","summary":"","date_published":"0001-01-01T00:00:00+0000"},{"title":"White Paper Download","url":"https://video-page-fix--eflow-website.netlify.app/white-paper-download/","summary":"","date_published":"0001-01-01T00:00:00+0000"}]}