Trade Surveillance and Regulatory Compliance Solutions | eflow

eflow client base surges 23% as trading complexity intensifies surveillance demands

sales@eflowglobal.com (eflow) — Tue, 20 Jan 2026 05:38:00 +0000

London, UK: Tuesday 20th January 2026: eflow, 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 eflow’s modular compliance software as financial institutions modernise monitoring capabilities in response to rapidly evolving market dynamics.

The 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.

Addressing the surveillance gap

In response to these challenges, eflow launched PATH AI 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.

eflow also enhanced its TZEC suite 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.

Adoption surges amid regulatory scrutiny

eflow’s 2025 client wins included Finalto, a global liquidity provider, and Mirae Asset Securities UK, both of which selected eflow’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’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.

The company strengthened its technology capabilities through strategic partnerships with EXANTE, enhancing market data depth, and AI specialist DHI, enabling the integration of AI-generated risk scoring into its surveillance technology. 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.

Ben 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.”

eflow enters 2026 focused on expanding its presence in Europe, North America and Asia-Pacific whilst advancing its position in AI-powered, explainable surveillance technology.

FINRA Market Oversight Report 2026 – What you need to know

sales@eflowglobal.com (eflow) — Tue, 06 Jan 2026 14:16:00 +0000

The Financial Industry Regulatory Authority (FINRA) has published its 2026 Annual Regulatory Oversight Report (the Report).

Member 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.

Manipulative trading deficiencies

Deficient WSPs highlighted again

Weak supervisory procedures for identifying manipulative trading once again featured prominently in FINRA’s findings, with much of the language mirroring last year’s report.

At 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.

What 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.

As 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.

Trade surveillance deficiencies remain a problem

FINRA 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.

Common issues include:

Gaps in coverage for specific manipulation typologies (layering, spoofing, wash trades, marking the close, and odd-lot manipulation are named examples).
Thresholds that are either too narrow or too blunt to identify meaningful activity.
Failure to reassess controls as business models, customer bases, or market conditions change.

What’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.

This 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:

Limited time horizons: 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.
Siloed customer reviews: where potential prearranged or coordinated trading across multiple accounts is missed.

Alert-by-alert analysis: 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.

What FINRA is seeing in small-cap manipulation

FINRA has observed an evolution in small-cap pump-and-dump schemes involving exchange-listed equities:

Shift in timing: Schemes are moving away from the IPO date, often occurring months later or repeating multiple times for the same stock.
Nominee & omnibus accounts: Bad actors use “nominee” accounts to control the stock during the IPO, then funnel shares to foreign omnibus accounts to hide the true concentration of ownership.
Secondary offering abuse: Companies may sell large blocks of shares privately to foreign investors without proper disclosure. These shares are then “dumped” into the U.S. market via brokerage accounts.
Account takeovers: A newer, aggressive tactic where scammers hack legitimate investor accounts, sell their actual holdings, and use the cash to buy the manipulated stock.
Social engineering: Scammers use “Investment Clubs” on social media and text apps to trick victims into buying at specific times, creating the “pump” that allows the bad actors to sell at a profit.

Best practice for trade surveillance

While much of FINRA’s guidance on effective practices remains consistent with prior years, subtle wording shifts in the 2026 Report signal a higher bar for how firms design and operate their controls.

Tailored “control parameters and thresholds”

FINRA 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.

Monitoring across platforms

FINRA has expanded its expectations for multi-platform monitoring by explicitly including platforms that “support trading”, 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.

The 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.

The role of Generative AI

FINRA’s commentary on GenAI is deliberately broad. It offers a snapshot of how FINRA-regulated firms are currently using the technology across their businesses.

The dominant theme among the use cases identified is efficiency, 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.

The most common use case cited is summarization and information extraction: “condensing large volumes of text and extracting specific entities, relationships or key information from unstructured documents.”

Importantly, 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.

Generative AI use cases in surveillance

Some 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, “AI in Trade Surveillance”.

FINRA category	Surveillance application
“Conversational AI and Question Answering: Providing interactive, natural language responses to user queries. Delivered through chatbots, virtual assistants, and voice interfaces”	LLM-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.
“Sentiment Analysis: Assessing whether text is positive, neutral, or negative”	LLMs 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.
“Workflow Automation and Process Intelligence: Optimizing business processes through intelligent routing, automation, and agent-based workflows”	GenAI 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.

Holistic surveillance is the name of the game

FINRA’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.

eflow expands TZEC platform with new eComms archiving and surveillance modules

sales@eflowglobal.com (eflow) — Wed, 03 Dec 2025 08:34:00 +0000

London, UK: Wednesday 3rd December 2025: eflow, a leading provider of regulatory compliance technology, today announced further enhancements to its TZEC platform, a comprehensive suite of eComms archiving and surveillance tools to help financial institutions meet their global regulatory obligations.

The 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.

In recent years, financial regulators worldwide have intensified scrutiny of eComms recordkeeping, with enforcement penalties exceeding $3.2 billion in the last five years alone 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.

To 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.

For 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.

“Financial institutions are under growing pressure to monitor and archive communications across multiple digital channels,” said Ben Parker, CEO and founder at eflow. “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.”

By 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.

For more information, visit the TZEC product pages.

How to prepare for regulatory audits

sales@eflowglobal.com (eflow) — Tue, 28 Oct 2025 09:51:00 +0000

No 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 a full-scope review from the FCA, 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.

Yet 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.

Thankfully, 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.

Understanding the scope of your audit

Effective 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:

Regulatory audits by bodies like the FCA or ESMA
Thematic audits focused on specific risks (e.g. market abuse, trade surveillance)
Internal audits by compliance or risk departments
Third-party audits simulating pre-regulatory reviews

Audits typically fall into one of two categories:

Full-scope audits: These span multiple regulations and business areas, examining systems, governance, reporting accuracy, and data integrity.
Issue-specific audits: 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.

Clarifying scope allows teams to prioritise relevant data, 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.

Practical Examples

Transaction Reporting Audit: Focus on RTS 22 timeliness, data lineage, report logic, and submission logs.
Market Abuse Surveillance Review: Assess alert thresholds, escalation logs, MAR policy compliance, and review workflows.

The better you understand your audit’s scope, the more efficient and defensible your response will be.

Centralise and consolidate your compliance data

A 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.

Key compliance-relevant data sources often include:

Order Management Systems (OMS) and Execution Management Systems (EMS)
Trade platforms and regulatory reporting systems (e.g. MiFIR RTS 22 reports on transaction reporting obligations)
Communication platforms such as email, Teams, WhatsApp, and Bloomberg chat
Voice and call recording systems
Market data feeds and external reference points
Surveillance tools generating alerts under regulations like MAR

Preparing 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.

This 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).

By 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.

Review your surveillance and reporting controls

As 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.

Are your trade surveillance thresholds up to date?

Your 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.

Have any rules been overridden or manually adjusted?

Regulatory 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.

Market abuse scenarios and MAR obligations

Logging 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.

Audit trail and documentation readiness

When 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.

Why audit trails matter

Regardless 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.

Key elements of a strong audit trail

At a high level, essential components of an effective audit trail include:

Timestamps: Every alert review, change, and system update should be timestamped
Immutable logs: Audit records and timelines should be non-editable once created
Version histories: Track changes to policies, thresholds, and system logic over time
User actions: Clear attribution of actions using user IDs and access-level control

A 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.

Run a mock audit or simulation

Conducting 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:

Stress-test internal processes in a controlled, low-risk environment
Identify compliance vulnerabilities and procedural gaps
Build team confidence by rehearsing audit roles and response timelines
Benchmark readiness against industry and regulatory expectations

Mocks can be led by internal compliance teams or conducted with the help of an external third party to provide an objective assessment.

Common Gaps Identified

The 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.

Ensure team readiness and accountability

Testing 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.

This 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.

While 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.

Management of changing regulations

Regulatory frameworks constantly evolve, and audit readiness depends on your ability to adapt quickly. From EMIR Refit and ongoing MAR updates, to MiFID II adaptations post-Brexit, firms must ensure their systems reflect the latest rules, not last year’s requirements.

A 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.

This 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.

With 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.

Prepare your response protocol

In 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.

Assign 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.

Establish a clear timeline for response, covering:

Initial audit queries
Submission of requested evidence
Follow-up clarifications
Any remediation reporting required

Without 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.

Conclusion

Regulatory 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.

At 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.

Whether you’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.

Contact eflow today to find out how we can help you stay audit-ready, compliant, and confidently prepared for whatever regulators bring next.

Q3 2025 Enforcement Update

sales@eflowglobal.com (eflow) — Tue, 07 Oct 2025 08:42:00 +0000

Q3 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.

In Q3, we saw 49 enforcement actions:

Across 5 jurisdictions:

Totaling $122.4 Million

ANZ’s record penalty for trade reporting failures

The standout case of the quarter came from ASIC’s AUD $240 million penalty against ANZ, with AUD $125 million tied to markets and trading misconduct (the AUD $115 million levied for “retail matters” is excluded from this quarter’s data, given it is not connected with market conduct). The regulator found that ANZ had engaged in “unconscionable conduct” 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.

Compounding 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.

ASIC’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.

The CFTC’s “Enforcement Sprint”

In Washington, Acting CFTC Chair Caroline Pham unveiled an “enforcement sprint”; 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.

The strategy was visible in Q3 outcomes. Minor fines against banks for eComms surveillance failures (Santander, BNY Mellon, SMBC) and trade reporting errors (US Bank, Citi) 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 “exemplary cooperation.”

Drowning in false positives: calibration is king

In September, FINRA fined Velocity Clearing $1 million for widespread surveillance failures.

Between 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.

Velocity 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.

Technology alone doesn’t solve the problem. As we highlighted in our 2024 surveillance trends report, 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 “poorly calibrated tools” 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.

Market gatekeeper failures persist in 2025

Regulators 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.

Société Générale Securities 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.

Gatekeeper responsibilities demand calibrated tools, resourced teams, and robust escalation frameworks. Without them, firms risk being next in line for enforcement.

FCA shows tech-enabled agility in enforcement

The FCA has been working toward faster, more decisive enforcement. That approach came into focus with its case against Sigma Broking. An independent review in February 2025 found that 924,584 reports (nearly 100% of transactions handled between December 2018 and December 2023) were inaccurate.

Deficiencies stemmed from a misconfigured reporting system and weak oversight processes, leaving the FCA without reliable data to detect and investigate market abuse.

What 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.

Cases 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.

The bottom line

The 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.

Looking ahead to the remainder of 2025 and into 2026, firms should expect regulators to:

Turn greater attention to market abuse and manipulation, now that smaller cases have been triaged and cleared.
Escalate penalties for gatekeeper failures, where firms neglect frontline responsibilities in monitoring, escalation, or reporting.
Demand demonstrable evidence that surveillance systems are calibrated, resourced, and effectively detecting misconduct.

Enforcement is becoming faster, more unforgiving, and more data-driven, and the firms that fail to adapt risk being next in line.

For more information on how eflow’s regulatory technology can help your firm to mitigate these risks, book your no-obligation consultation call today.

Top three compliance challenges for CFD Brokers in 2025 and beyond

sales@eflowglobal.com (eflow) — Wed, 10 Sep 2025 08:00:00 +0000

Contracts 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.

Balancing investor protection with growth

Regulators 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.

Know your target market

The 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.

Test for genuine understanding

Regulators 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.

Guardrails and risk warnings

Consumers 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.

Evolving business models, new conduct risks

From 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.

Regulators are scrutinising social posts and influencer marketing to ensure promotions are balanced, prominent, and firm-specific.

Finfluencers

37% of US Gen Z retail investors cite influencers as a major factor in their investment decisions (IOSCO). The FCA has begun targeting unlawful promotions by ‘finfluencers’, particularly in high-risk areas like CFDs. FINRA’s penalties, exemplified by the M1 Finance case, show growing scrutiny of influencer-led marketing campaigns.

Market abuse and financial crime

CFDs 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.

Where are the risks showing up?

Opaque flows (OOAAs): Obfuscated overseas aggregated accounts hide ultimate beneficial owners and can reintroduce previously off-boarded clients.
Copy and social trading: IOSCO now frames copy trading as a regulated activity. Firms must vet “signal providers,” monitor performance claims, and ensure suitability checks for copiers.
Single-stock and illiquid assets: 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.
DMA + cross-product links: the order-book nudge happens via DMA in the underlying asset, while the profit is crystallised in CFDs, sometimes at a different venue/broker.

What are brokers finding difficult?

Our 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.

The 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.

What does “good” look like?

Surveillance that proves itself: Clean data pipelines, model testing/tuning, cross-product coverage, and timely, high-quality STORs.
Risk assessment aligned to reality: Cover all asset classes and execution methods, and explicitly include behaviours like spread-narrowing.
End-to-end reporting: Reconcile trade capture through to repository acknowledgements, and investigate breaks. ESMA and ASIC are raising expectations here.
Social features under control: KYC “lead traders,” monitor correlated follower profit and loss, and switch off copying where red flags appear.

Operational resilience: what’s new, what’s specific to CFDs

Global 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.

What’s required?

Identify and map important business services. 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.
Test resilience in practice. 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.
Strengthen third-party oversight. 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).
Be incident-ready. Plans must deliver timely regulatory reporting, tested workarounds, and continuity arrangements that adapt as your services and vendor stack change.

The 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.

Our experience of working with CFD Brokers

eflow 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 - book a consultation with the team today.

CySEC’s new sanctions regime: What investment firms must do to stay compliant

sales@eflowglobal.com (eflow) — Wed, 20 Aug 2025 07:40:00 +0000

The 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:

Cypriot Investment Firms
Administrative Service Providers
UCITS Management Companies
Internally Managed UCITS
Alternative Investment Fund Managers
Internally Managed AIFs
Internally Managed AIFLNPs
Special Purpose Entities managing AIFLNPs
Sub-threshold AIFMs under Law 81(I)/2020
Crypto-Asset Service Providers

Cypriot 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.

In the following sections, we outline the key provisions and provide a practical blueprint for compliance.

The three laws at a glance

1. Criminalisation of sanctions breaches:^[1] Implements EU Directive 2024/1226, making it a criminal offence to:

Provide funds or resources to designated persons
Fail to freeze sanctioned assets
Breach trade/service bans or licence terms
Facilitate sanctioned individuals’ entry or transit
Conceal ownership/control or circumvent sanctions

^[1] These offences apply inside and outside Cyprus if there’s a Cypriot link.

2. National Sanctions Implementation Unit (NSIU): 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.

3. Whistleblower protection for sanctions breaches: Expands whistleblowing laws to cover sanctions violations, including attempts and facilitation. Firms must protect whistleblowers and handle disclosures appropriately.

Why CFD brokers are in the crosshairs

CFD 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 FATF warns are exploited to obscure beneficial ownership, bridge jurisdictional gaps, and evade sanctions.

Add 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.

Sanctions compliance checklist

CySEC’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.

Onboarding and screening

Screen customers, beneficial owners, intermediaries against EU/UN/US sanctions lists before onboarding.
Embed risk-based continuous screening. Trigger fresh checks when ownership, jurisdiction, or payment channels change.
Apply screening to all relevant relationships: counterparties, service providers, and introducers, not just direct applicants.
Maintain evidence of screening results, including false positives in management logs.

Transaction monitoring

Monitor all financial flows (deposits, withdrawals, payments, trades, transfers) in real time or near real time where activity volume is high (e.g. CFDs).
Detect direct and indirect exposure including via ownership/control structures, intermediaries, and proxy arrangements.
Block and flag transactions involving prohibited goods, services, or crypto-assets covered by EU restrictive measures.
Integrate sanctions monitoring into AML and market abuse surveillance, so potential breaches are reviewed in the wider financial crime context.
Document thresholds, alerts, and escalation pathways in policies/procedures.

Suspicious activity reporting

Define clear internal thresholds and triggers for sanctions-related suspicious activity.
Monitor circumvention attempts like PSP layering, sudden jurisdictional shifts, nominee/proxy arrangements.
Maintain complete records of alerts, investigations, and decisions, including “no-report” outcomes.
Train staff to recognise sanctions red flags, tailored to business activity (e.g. trading, crypto, payments).

Escalation processes

Establish time-bound escalation channels for compliance, senior management, and the board.
Define escalation routes to NSIU and CySEC for suspected or actual breaches.
Ensure escalation is immediate once a potential match is confirmed - delays can be treated as non-compliance.
Align escalation channels with whistleblowing procedures, so both internal and third-party reports are captured.
Protect staff and external reporters under whistleblower protection laws.

The penalty profile

The enforcement risks under the new sanctions regime are substantial:

Individuals: Up to five years’ imprisonment and fines of up to €100,000
Legal entities: Up to 5% of global turnover or €40 million, whichever is higher
Other measures: Licence withdrawal, business bans, exclusion from public contracts, and even liquidation in severe cases
Asset freezes/confiscations: Apply even if the assets are not deemed criminal proceeds

Notably, dual enforcement by the NSIU and CySEC means that a single breach could trigger both criminal and administrative sanctions, amplifying the risk for firms.

CySEC has already demonstrated a clear willingness to intervene when firms fail to meet their obligations. In July 2025, the Cyprus Stock Exchange suspended trading in three listed companies after they failed to submit key financial reports - a move taken following a directive from CySEC.

What’s next?

Leverage your risk assessment

Exposure 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.

Strengthen controls and governance

CySEC’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.

Invest in advanced monitoring

Compliance 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.

If you’d like to discuss your regulatory requirements in further detail, feel free to book a consultation or get in touch using a contact form.

Regulation in 2025 - Our take on what we've seen so far this year

sales@eflowglobal.com (eflow) — Tue, 05 Aug 2025 10:19:00 +0000

Over 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.

Along with our annual research report, 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.

AI - How is it impacting market abuse surveillance?

At 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?

Their response? Not a single firm did.

Despite 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.

However, 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.

Perhaps, then, the response of the 20 firms we asked says more about how firms understand 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.

The regulatory viewpoint

The adoption of AI by the regulators’ themselves has been perhaps more significant than that of regulated firms.

Across 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.

In 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 TechSprints (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”.

The FCA has also set up an AI-powered “Supercharged Sandbox”, giving firms the opportunity to experiment with AI not just in compliance, but across other business functions as well,

This 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.

Collaboration vs. enforcement - what is the role of the regulator?

When 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.

We 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 FINRA Annual Conference, CEO Robert Cook stated that “member firm engagement is critical to what [they] do.”

In the UK, we’ve seen similar views espoused by the FCA. Their recent Five Year Strategy 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.”

Enforcement, 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.

How important is it to invest in trade surveillance technology?

The 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.

However, what still causes some confusion amongst regulated firms is exactly what your surveillance system should be able to do and, by extension, how much you need to work with trade surveillance technology.

Increasingly, the regulatory view is that compliance is no longer a tick box exercise. Trade surveillance must meet two clear requirements:

A 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
Compliance teams must understand their surveillance systems’ calibration and be able to demonstrate and explain its effectiveness should a regulator request it

The 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.

In 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.

What the future holds

These 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.

Anxiety 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.

If you’d like to discuss your regulatory requirements in further detail, feel free to book a consultation or get in touch using a contact form.

A new era of accountability in Asia’s capital markets

sales@eflowglobal.com (eflow) — Tue, 29 Jul 2025 15:31:00 +0000

Asia’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.

Growth 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.

Supervisors 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.

Jane Street Group: How SEBI caught a billion-dollar index manipulation

India’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.

Here’s the strategy Jane Street used:

In the morning: 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.
In the afternoon: 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.

How SEBI Tracked the Manipulation:

SEBI 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).

SEBI flagged two core tactics:

“Intra-day Index Manipulation”: the morning-pump, afternoon-dump
“Extended Marking the Close”: pressuring the index right up to close

Even 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.

South Korea launches “one-strike-out” rule to crack down on illegal stock trading

South 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.

A 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.

The 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.

Reflecting on 2025 so far

Elsewhere, 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.

Key developments from our recent quarterly updates include:

High-profile insider trading cases: Hong Kong authorities have pursued several headline cases, including one where a chauffeur’s tip-off led to an investigation and penalties.
Ongoing crackdown on market manipulation: 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.
Wash trading and masking risks: Hong Kong’s SFC continues to ban individuals for practices such as wash trading, often used to disguise margin call risks.
Data integrity and trade reporting: Regulators across the region are focusing on data quality and accurate trade reporting, with enforcement targeting failures in recordkeeping and reporting systems.

A New Standard for Market Participants

Supervisors 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.

We identify five key implications for firms:

Advanced analytics are essential: Robust surveillance systems are required to detect, prevent, and evidence potential misconduct before it escalates to regulatory attention.
Compliance must be end-to-end: Beyond analytics, firms need well-documented procedures, timely reporting, and proactive self-disclosure.
Cooperation and transparency matter: Asia’s Regulators reward early self-reporting and demonstrable remediation, often with reduced penalties.
Zero tolerance is the new normal: 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.
Investor trust is at stake: Maintaining strong standards is fundamental to sustaining global investor confidence and ensuring continued growth for Asia’s markets.

At 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, book a consultation or explore our solutions here.

Q2 2025 enforcement update: New signals emerge from the new administration

sales@eflowglobal.com (eflow) — Wed, 09 Jul 2025 10:27:00 +0000

After 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.

In Q2 2025, there were 18 enforcement actions:

Across six jurisdictions:

Totalling $4.7 million

Keep your eyes on family ties, insider trading enforcements persist

The 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.

Two brothers exploited insider information from brokers to profit from share dealings in several AIM-listed companies.
An asset management analyst orchestrated a complex scheme involving his sister and associates to profit from confidential deal insights, netting around £1 million via Contracts for Difference (CFDs).

The French AMF took a firm stance with multi-party actions involving individuals and corporations. Fines totalling 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 penalties for insider trading and unlawful recommendations:

Ms 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.

Market manipulation and spoofing: Individuals and firms face stiff sanctions

Market 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.

Spotlight: Global crackdown on finfluencers

In June, the FCA led a coordinated international crackdown 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.

Asia-Pacific regulators were equally active. Hong Kong’s SFC banned a former representative for three years after uncovering a pattern of wash trading designed to mask margin call risks. In Australia, ASIC secured guilty pleas from participants in a Telegram-based pump-and-dump ring:

Over three weeks, the group coordinated nine “pump” announcements to artificially boost share prices, then sold their holdings for profit.
Each 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.

Systems and controls: U.S. brokers penalised for surveillance failures

FINRA handed down multiple penalties 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.

These cases reveal a persistent gap, first highlighted in our “Global trends in market abuse and trade surveillance” report: even as surveillance technology improves, resourcing and calibration remain weak points, sometimes with only a single employee reviewing thousands of alerts.

FINRA 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.

The big picture

Across 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.

Beyond the numbers: What’s going on in the U.S.?

Following a record-breaking Q1 - in which the SEC and CFTC issued over $100 million 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.

Much 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.

Looking ahead, the SEC has signalled a “back to basics” approach.

At 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.

Meanwhile, the CFTC has adopted a new approach to enforcement:

April 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.

The bottom line

The 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.