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I attended Nasdaq Smarts Trade Surveillance symposium last week. IT was a useful and well-constructed seminar, with valuable insights from Kinetic Partners, KPMG, Tabb Group and of course the Smarts team.

Upon reflection the key takeaways were

  1. There is still no established “best practice” in in the world of surveillance
  2. Many financial institutions (buy and sell side) are only ahead of the game in the sense that they have some surveillance capabilities already in place, but this is often limited to trade execution feeds.   They are challenged (budget, methodology, technology) to access and consolidate the pre-trade audit trail of orders, phone calls and chat expected by ESMA, let alone KYC type information and social media.
  3. There is some excitement stirred by innovative FinTech vendors entering the space with new capabilities for dealing with data integration, volumes, and unstructured data processing, but … refer to 1 above.
  4. The astronomic levels of fines and settlements, and the publication of the FCA case studies strongly underpin the business case for action on this front, driven by the almost ‘prove yourself innocent’ regulatory stance.

With the REMIT requirement for surveillance in place, and MiFID2/MAR deadlines moving rapidly towards us, there is a lot to be lost by doing nothing, and notwithstanding lack of clarity on the end-game, much that can be done usefully without regret.