About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Technology Catches Up To Regulators’ Monitoring Demands

Subscribe to our newsletter

Conducting a simple real-time statistical analysis of financial market activity does not necessarily require “sophisticated AI or machine learning,” says Guy Warren, CEO of ITRS, an application performance management and big data analytics provider.

The purpose of conducting such an analysis is to determine when a circuit breaker kicks in to catch and stop algorithmic trading activity that has exceeded volatility limits, whether that halt of trading was warranted, or what caused it. ITRS real-time monitoring and analytics tools let it act directly on a client’s behalf, triggering a “kill switch” or “pause,” so people can manually investigate relevant trading and market data, Warren explains.

Regulators are trying to get greater control and specificity around the use of such sudden stops of market activity, adds Warren.

“Regulators are right to push for firms to have the ability to catch fluctuations and pause activity,” he says. “They increased the number of liquidity venues subject to a requirement to catch fluctuations — in response to a very large OTC presence which they thought might be manipulated.”

The regulatory push is driving more interest in implementing circuit breakers, but regulators’ wishes appear to now be better timed. Technological capabilities now make it possible to monitor ticks for 1 million instruments coming from different asset classes and regions, in a manner that was impossible four years ago. As a result, the position of some regulators that firms ought to be able to monitor all the instruments they are dealing with is now feasible when it wasn’t before, Warren explains.

Better technology makes it possible for computers to check market news that is triggering extreme price changes and evaluation if those fluctuations are genuine, he observes. “Telling if what’s happening is right can be done cost-effectively,” says Warren. “That’s not only on liquidity venues, because they have a matching engine or it’s not too hard to build one in, but on trading venues, it is possible. Most regulation will come in on trading venues, because that’s the safest place to try to catch [an unjust fluctuation]. The trading venues are trying to stop participants from putting bad trades or rogue data into the marketplace.”

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Trade the Middle East & North Africa: Connectivity, Data Systems & Processes

In Partnership With As key states across the region seek alternatives to the fossil fuel industries that have driven their economies for decades, pioneering financial centres are emerging in Egypt, United Arab Emirates (UAE), Saudi Arabia and beyond. Exchanges and market intermediaries trading in these centres are adopting cutting-edge technologies to cater to the growing...

BLOG

DORA: Preparing the Pathway to Enhanced Operational Resilience

By David Turmaine, Head of International at Broadridge Consulting Services, and Maria Siano, Head of International Strategy at Broadridge. Today’s digital world is increasingly complex, characterised by interconnected systems and data that is stored, and widely shared, online. Looking through a financial services lens, cyber threats and incidents are becoming more sophisticated, posing significant risks...

EVENT

TradingTech Summit MENA

The inaugural TradingTech Summit MENA takes place in November and examines the latest changes and innovations in trading technology and explores how technology is being deployed to create an edge in sell side and buy side capital markets financial institutions in the region.

GUIDE

Institutional Digital Assets Handbook 2024

Despite the setback of the FTX collapse, institutional interest in digital assets has grown markedly in the past 12 months, with firms of all sizes now acknowledging participation in some form. While as recently as a year ago, institutional trading firms were taking a cautious stance toward their use, the acceptance of tokenisation, stablecoins, and...