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The market surveillance tech firm is seeing increased
interest from the buy-side as firms prepare for regulatory
changes to sweep the market.
Capital markets compliance company, b-next, is supporting
firms in managing risk and meeting their regulatory
requirements under reforms and directives which can call for
fundamental changes in how firms do business, with its
CMC:eSuite of trading surveillance and compliance tech systems
to help meet the new regulatory dawn.
Attention on market surveillance and compliance tech has
jumped since the beginning of 2016, with companies working to
ensure readiness for the impending market abuse regulation
(MAR) in July, as well as sweeping European reform programme
Mifid II in January 2018.
The rules represent expanded compliance requirements for
many firms, b-next chief executive officer Wolfgang Fabisch
told FOW, requiring planning and preparation.
"We are now so close to MAR coming into force but not all
firms will be ready. While the FCA is aware of the challenge
firms have faced in preparing for the rules – and so
may show leniency to those that miss the July 3 deadline
– companies will still need a demonstration of where
they are in their preparation programmes," said Fabisch.
"That being said, I think significantly more than 10% will
ultimately miss the deadline," he added.
While the rush to readiness can be a trying time for firms,
b-next is also seeing a shift in interested parties. "We are
seeing the buy-side become increasingly interested in MAR
– in fact, we are moving to around 40% of inquiries
coming from the buy-side, up from less than 10% a decade ago,
so our potential client pool is expanding in line with the
expanded regulatory requirements."
Founded in 1989 by chief executive officer Fabisch, the firm
is also working on its own expansion plans. As first reported
by FOW, later this year it plans to launch operations in
Singapore, adding to company headquarters in Herford, northern
Germany and operations in London and New York.
When considering another looming regulatory focus, sweeping
European directive Mifid II is set to be a game-changer for the
derivatives market. "It remains clear that many market
participants do not fully understand just how much attention
they must pay to data under Mifid. Beyond reporting, there will
be a huge amount of data that requires analysis, all under a
more stringent regime of order requirements," said the CEO.
"We are facing an ocean of data so are subsequently
dedicating a lot of time with the industry on the 'big
data’ problem; it will hit all firms across the
market in one way or another," added Fabisch.
Under Mifid II, companies will be required to have a greater
insight into their counterparties and business
partners’ compliance activities. In line with
increased data requirements, this is a potential stumbling
block, warns Fabisch, with firms set to be "flooded with
It remains clear that many market participants do not fully understand just how much attention they must pay to data under Mifid.
This comes against a back-drop of big trading firms having
to make decisions over the technology they want to help them
weather the regulatory storm, though this is where firms such
as b-next can help. "It doesn’t make sense for
huge organisations to build their own systems – they
are unlikely to have specific expertise needed and have a big
price tag. Standardised systems are part of the solution to
this conundrum, especially as such tools can be tailored to
meet exact business operations; this will only help to increase
safety for firms as they get to grips with their new compliance
checklists," said the b-next head.
In line with tapping specific expertise for specific
problems, the firm has partnered with a number of tech firms to
meet certain issues. b-next works with Verint globally,
utilising its voice and messaging analytics tech, and with
Thomson Reuters - which provides content through Elektron - to
support market manipulation monitoring tech.
Looking ahead the chief exec is positive that the market
surveillance space will continue to be a compelling market to
operate in, with technology set to play a key role. "There will
be a number of exciting developments in the future; when
considering the cloud, for example, the flexibility and
cost-savings that this can offer is already compelling -- watch
B-next is a specialist Capital Markets Trading Surveillance and Compliance solution provider. Our vision is to enable you to meet regulatory obligations fully and to optimally manage your trading risk. Our powerful, scalable solutions cover the total spectrum of compliance requirements for capital markets, enabling you to identify suspicious trading while raising overall efficiency and driving competitive advantage.