World playing catch-up with tech to curb growing market manipulation
Stephen Grootes talks to Nasdaq's Tony Sio, in SA to attend the Market Surveillance Conference.
Stack of coins, trading, stock market, stocks. Image: 123rf.com
This week sees the new SA Market Surveillance Code of Conduct being launched at a conference hosted by Investec.
It’s a significant step in building transparency, trust and long-term resilience in the financial markets we all depend on, says the banking group.
As the power of technology grows, trading venues are becoming more automated, fed by more sophisticated systems that generate greater trading volumes at greater speeds.
This makes it more and more difficult to monitor transactions, as the Financial Sector Conduct Authority (FSCA) points out.
In turn, the market surveillance value chain needs to become more effective at detecting irregular patterns and behaviours.
On the sidelines of the conference, Stephen Grootes talked to Tony Sio, head of Regulatory Strategy and Innovation at Nasdaq's Anti-Financial Crime (AFC) division.
Sio also emphasized the impact of technology and how it's changed the way the world trades.
He highlights the increasing number of market manipulation schemes being perpetrated through social media and via digital assets.
"The regulatory environment is not quite as clear I think because tech is moving so quickly and there's still a bit of regulatory catchup to happen here."
Tony Sio, Head: Regulatory Strategy and Innovation - Nasdaq AFC
At the same time, he adds, the sophistication capabilities are also growing on the part of regulatory exchanges and platforms.
Sio says Nasdaq itself is introducing artificial intelligence (AI) into the way they monitor markets.
"It's a great use case of AI if you think that trying to find the fraud problems that we do is like looking for a needle in a haystack with a minutiae of detail, and AI is great for looking for that needle in the haystack."
Tony Sio, Head: Regulatory Strategy and Innovation - Nasdaq AFC
Sio mentions just one interesting case where a firm was offering market manipulation for hire!
"The problem is big but we've got to take it one step at a time. One thing that has improved over the past few years as a result of increased international fraud is the interconnectedness of the financial markets and growing cooperation and use of best practices across nations. This is one of the reasons why Nasdag is here in South Africa right now."
Tony Sio, Head: Regulatory Strategy and Innovation - Nasdaq AFC
Scroll up to the audio player to listen to the conversation