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The knowledge platform for the financial technology industry

A-Team Insight White Papers

Minimising Market Manipulation False Positives: The Trick is in the Data

The focus on market manipulation has probably never been higher. In the wake of the Financial Crisis of 2008, with its multiple market manipulation scandals, regulators have ratcheted up compliance requirements for firms. The media has also sharpened its focus – the cost of a controls failure in this area can be catastrophic in terms of reputational damage.

Yet, firms still struggle to detect and prevent market manipulation within their organization. Part of the problem is that many firms continue to be swamped by false positives – when their systems tell them that a transaction is a potential sign of market manipulation, but it’s not.

There are many reasons for the high levels of false positives, but a key one can be the way a system analyses the trade data. Some systems do not look at this data in enough depth, and as a result, make incorrect assumptions about the relationships of transactions. The result can be catastrophic for compliance teams – either they are inundated with false positives, or they tune their systems so that almost nothing is detected. This second option is now a focus of regulatory enforcement too, with fines being handed out for poor tuning.

This white paper explores how firms are beginning to take a more intelligent approach to fighting market manipulation through the use of technology today. The paper also discusses the ways in which Rimes helps its clients accurately detect and prevent market manipulation happening within their firms.

Download the whitepaper to find out more about:

  • What kinds of risks do an excess of false positives create for financial services firms?
  • Where are the biggest challenges for firms as they try to detect and prevent market manipulation?
  • How are regulators ramping up their supervision of market manipulation prevention activities at firms?
  • Why is data such a critical component of the detection of problematic trades?