Bovill announces new Market Abuse Surveillance Service to SMEs to help them meet the Market Abuse Regulation compliance challenge
1 March 2018
Bovill today announces that it has developed a new outsourced Market Abuse Surveillance Service. Aimed at small and medium sized firms, the service has been developed alongside Bovill’s clients and combines technology with human expertise to provide a cost effective and robust solution to undertaking trade surveillance and remaining compliant with Market Abuse regulation (MAR).
MAR came into effect in July 2016. It aims to increase market integrity and investor protection, enhancing the attractiveness of securities markets for capital raising. It strengthens the previous UK market abuse framework by extending its scope to new markets, new platforms and new behaviours, and contains prohibitions of insider dealing, unlawful disclosure of inside information and market manipulation, and provisions to prevent and detect these. The regime has been bought sharply into focus with the increasing obligations on Transaction Reporting under MIFID II.
Breaches of MAR can attract unlimited fines, or even prohibit regulated firms or approved persons from undertaking regulated activity. Criminal prosecution for insider dealing and market manipulation can incur sentences of up to 7 years. But for many smaller firms they are forced to choose between time consuming manual checks or cost prohibiting IT solutions and neither provide an optimal approach.
Leading the initiative, Damon Batten, Managing Consultant, Bovill comments:
‘With the introduction of MiFID II the regulator has access to more and more new data from transaction reporting and the broadening instrument scope is providing new challenges for firms to meet. We have been working with firms to understand these challenges and to develop a solution to trade surveillance that satisfies the regulator’
‘Although evolving fast, trade surveillance systems are still unable to understand unusual trading behaviour beyond exception based rules and cluster analysis – this is why they typically only form the first line of defence against potentially abusive behaviours. Trading behaviours are infinitely complex and vary based on asset class, strategy, time, and market. This is why the human element of this process is important – having well trained staff with expertise in the asset classes and instruments traded, and with a sufficient level of authority to escalate issues, is fundamental to effective trade surveillance.’
Bovill are partnering with Cinnober Surveillance, previously Ancoa Software limited, the market leaders in automated trade surveillance. Working with them Bovill’s experienced team will provide the human element to offer a fully integrated outsourced solution.