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Conquering MAR: how compliance teams can meet the demands of the Market Abuse Regulation

 

The buy-side is facing a compliance challenge unlike any it has faced before. Market Abuse Regulation (MAR) no longer allows firms to rely on the control provided by their brokers. Instead they must operate compliance policies to monitor and detect market abuse themselves.

MAR demands nothing less than a complete change to the way in which market trades and transactions are monitored and reported.

So, how does this change impact you and how can you best mitigate these impacts?

Not only are you now expected to report on exponentially more trades and orders, but your liability has increased too. If a broker reports an instance of market manipulation that you failed to pick up, you or your firm will be penalised.

In summary, you and your firm are now responsible for:

  • Collecting, monitoring and analysing a range of different data structures and formats against the market and other reference data for cases of potential market manipulation or insider dealing.
  • Understanding and adhering to regulatory guidelines and rules governing trading conduct.
  • Monitoring and detecting behaviour across multiple exchanges and asset classes, including EFTs, benchmarks, indices and portfolio rebalancing activities.
  • Working within existing systems to avoid any operational disruption or interference.
  • Future-proofing your management system for any changes in regulatory requirements.

Understandably, these responsibilities are causing a great deal of concern amongst the industry, as everyone gets to grips with that they mean – both on a personal level and a business one.

Adding to this concern is the fact that, without allowing time for proper analysis and without the right processes in place, many firms are struggling to correctly address the changes required. And, the truth of the matter is, they are now out of time. MAR came into force in July this year, meaning any firm without the required processes and system in place risks falling foul of the regulator.

RIMES is working closely with the buy-side to help firms meet the demands of MAR.

In conversations with a number of compliance teams, we understand that a key challenge is achieving an overarching view of all MAR regulatory obligations in order to act quickly and confidently.

There is an urgent requirement to develop a solution that collects, standardises and analyses a range of different data structures and formats against the market and other references data for cases of potential market manipulation or insider dealing.

Outsourcing the task of monitoring, detecting and reporting enables firms to avoid much of the cost associated with the otherwise necessary overhaul of their IT.

Earlier this month we launched ‘RegFocus’, the first buy-side monitoring and detection solution designed to meet regulatory obligations under MAR and many other surveillance regulations. Built by compliance officers, for compliance officers, RegFocus ensures that you can keep pace with regulatory and technology change. Jeremy Garland, appointed to RIMES following his role as Global Head of Monitoring & Surveillance at Macquarie Group, leads the RegFocus team and reports to Bruno Piers de Raveschoot, COO of RIMES’ Compliance Division.

The solution uses powerful algorithms and analytics to deliver a comprehensive review of all trading activity. It monitors and detects behaviour across multiple exchanges and asset classes, including EFTs, benchmarks, indices and portfolio rebalancing activities. A fully managed solution, it is delivered on the cloud will all reference data available in order to enable you to make accurate and efficient decisions.

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