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NICE Enhancing Markets Surveillance Solution

MiFID II, which went into effect on January 3, requires firms to monitor communications and transactions for market abuse and sets a higher bar for high frequency trading, requiring such trading activity to be monitored at the microsecond level. Firms that do not comply with this stipulation risk fines, or worse, reputational damage if market abuse goes undetected.

To address this, NICE Actimize has enhanced its market surveillance solution to help firms comply with the MiFID II microsecond requirement, while improving firms’ ability to detect and mitigate market abuse.

High frequency trading (HFT), a type of trading that uses computers to execute large volumes of orders at very fast speeds, is prone to market manipulation because programs and algorithms can be easily altered by a single ‘bad actor’ with malicious intentions. While the volume and velocity of high-speed, automated trading can make market abuse more difficult to detect, the resulting impact can be extremely damaging. Small price manipulations can net enormous profits for an unscrupulous individual over condensed time periods. MiFID II’s microsecond requirement was created to address this very problem. NICE Actimize’s markets surveillance solution enables firms to adhere to the MiFID II microsecond requirement by:

  • Ingesting transactional and trade records from order management and execution management systems at the microsecond level for all high frequency trades, and;
  • Analyzing high frequency trading data at the microsecond level to detect market abuse. The solution uses NICE Actimize’s best-in-class detection analytics (e.g., for insider trading, ramping, spoofing, layering, quote stuffing, momentum ignition, front running etc.), and because the analytics are run on data captured at the microsecond level, detection accuracy is increased while false positives are reduced.

“Because high frequency trading is executed in extremely high volumes at extremely rapid speeds, it really demands greater granularity and precision with respect to monitoring transactions,” said Chris Wooten, Executive Vice President, NICE, “With NICE Actimize’s market surveillance solution, firms can have complete confidence in their ability to comply with the MiFID II microsecond requirement around monitoring high frequency trades, while safeguarding their firms’ reputations from the scourge of market abuse.”

 

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