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Tech Challenges To Market Surveillance: IOSCO Reports

The International Organisation of Securities Commissions (IOSCO) published an addendum to its May 2000 report on Investigating and Prosecuting Market Manipulation.  The addendum provides reference  material reflecting present day financial market conditions and details how new methods of market manipulation have emerged.  Additionally a connected report makes recommendations to help market authorities develop regulatory tools for addressing the technological challenges with respect to:

  • improving surveillance capabilities on a cross-market and cross-asset basis; and
  • making the data collected for surveillance purposes more useful to market authorities.   

The report identifies a number of areas for national authorities to consider including:

  • recordkeeping obligations that require the retention of audio tapes, in addition to audit trail records;
  • acquisition of “message data” or “order data” for unexecuted orders that may have impacted markets;
  • trader identification and monitoring actual position size across markets;
  • increases in the volume of data that should be reviewed to detect market manipulation;
  • difficulties in tracing orders and transactions and in reconstructing important trading events;
  • ensuring that sufficient investment is made in market surveillance tools to properly monitor and supervise large quantities of transactions; and
  • ensuring that regulators have highly skilled staff to conduct analysis of market conditions.

The report calls for increased regulatory cross-border cooperation





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