20 October 2017
Register now

Regulatory changes to spur brokers' market surveillance spending - Tabb

25 February 2011  |  8474 views  |  0 cash

With regulatory reform on the horizon on both sides of the Atlantic, brokers across the US and Europe are set to spend over $200 million on new market surveillance programs this year, according to research from Tabb Group.

The financial services industry faces an overhaul under the Dodd-Frank ACT in the US and MiFID II in Europe. To comply, brokers will fork out $206 million on market surveillance in 2011 and - with hundreds of laws yet to be written and rules to be implemented - spending will grow at a CAGR of 14% to $268 million in 2013.

In addition, tight budgets and short timelines will lead brokers to increase their reliance on outside vendors, with spending on external systems expected to grow from 28% in 2011 to 35% of total expenditure in 2013.

The report's author, Miranda Mizen, says that changes to market structure and new regulations mean conventional techniques need to be thrown out in favour of surveillance programs that match the markets' dynamism.

"It falls on the brokers as the primary intermediary between investors and exchanges to assist regulators in making sure that market surveillance catches up to the real-time dynamics of the market," she argues.

To meet the onslaught of new requirements and regulations, Tabb says brokers are faced now with three gargantuan challenges: collecting, collating, analysing, storing and retrieving data; ensuring practices and procedures prove their processes are robust and defensible; and expanding the list of details they need to watch for.

By focusing on three key components of market surveillance - detection, prevention and deterrence - Mizen contends that brokers can gain real-time and historical analysis and oversight to detect anomalies; controls and processes to prevent errant order flow from reaching the markets by applying broker-owned risk controls; and real-time monitoring, control and, acting as deterrents, heavy penalties.

Mizen concludes: "Different from the past, brokers are now facing serious regulatory changes across the US and European markets, with Asia not far behind. This time it's a major overhaul and because surveillance is critical, it is in the spotlight."

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Industry clamour over MiFID II proposals grows louder

Industry clamour over MiFID II proposals grows louder

03 February 2011  |  11461 views  |  0 comments
HFT makes up 77% of UK market - Tabb

HFT makes up 77% of UK market - Tabb

24 January 2011  |  10058 views  |  0 comments
EC publishes MiFID II consultation

EC publishes MiFID II consultation

08 December 2010  |  12556 views  |  0 comments
CESR signals MiFID overhaul

CESR signals MiFID overhaul

29 July 2010  |  13111 views  |  0 comments
Transparency and price discovery suffering under MiFID - CFA

Transparency and price discovery suffering under MiFID - CFA

07 December 2009  |  9127 views  |  0 comments

Related company news


Related blogs

Create a blog about this story (membership required)
visit www.fivedegrees.nlRegister nowvisit www.vasco.com

Top topics

Most viewed Most shared
Ripple looks to drive bank adoption with $300m XRP rebate programmeRipple looks to drive bank adoption with $...
16076 views comments | 12 tweets | 4 linkedin
satelliteGates Foundation backs Ripple collaboratio...
8325 views comments | 13 tweets | 10 linkedin
HSBC partners Bud for open banking trialHSBC partners Bud for open banking trial
7894 views comments | 21 tweets | 26 linkedin
IBM uses blockchain to improve cross-border payments processingIBM uses blockchain to improve cross-borde...
7308 views comments | 9 tweets | 17 linkedin
Sibos 2017: API or the highwaySibos 2017: API or the highway
6640 views comments | 10 tweets | 21 linkedin

Featured job

Find your next job