Clarity Surveillance is a product developed by Securities Trading Technology, the alert engine runs in real time to raise any alerts for market abuse or irregular trading practices. Alerts can be investigated using an end to end analysis module which shows graphically all trading activity by a broker in the context of the rest of the market.
The solution provides surveillance for all asset classes including spot instruments and derivatives.
Detecting and Preventing Possible Insider Trading
Clarity Surveillance Prohibits members from dealing on behalf of their clients in securities when they know that the client is an insider who is in possession of inside information that relates to the security in question.
Detecting and Preventing Possible Prohibited Trading Practices
Prohibited trading practices are those that a person knowingly, whether directly or indirectly, enters into and which have the effect of creating a false or deceptive appearance of the demand for, supply of or trading activity in a security; or which may lead to the creation of an artificial price for that security.
The solution provides a customisable Surveillance Front End, which presents this data with a series of the following core components:
- Simulate and/or change parameters on historic trade data in order to arrive at the most effective set of parameters for the different alerts.
- The use of this feature is key in reducing any amount of false positives.
Watchlist Graph, Trading Graph and Broker Graph
- Trading Graph provides a graphical view of the market based on snapshots taken of buys sells trades/volumes traded.
- Broker Trading Graph provides a graphical view of the market based on snapshots taken of buys / sells / trades / volumes traded as they relate to your entity.
- Be able to step through a trading day on a customizable list of securities, with the ability to view full market depth on the order book with the use of various analytical windows
Best Execution Alerts
- Best execution is a legal mandate that requires brokers to provide the most advantageous order execution via execution venues (exchanges) or OTC, for their customers given the prevailing market environment.
- Internationally, The second Markets in Financial Instruments Directive (MiFID II) aims at achieving extensive transparency over investment firms’ order execution modalities. Moreover, investment firms are soon required to install thorough reporting and monitoring mechanisms in order to evaluate whether the execution quality achieved corresponds to the quality promised in their best execution policies.
- Clarity Surveillance provides Best execution alerts.
Control Room Surveillance
- One of the objectives is for markets to operate effectively, and markets need to be fair and efficient, and investors must have trust and confidence in their operation. The proper handling of Material Non Public Information (MNPI) and management of conflicts promotes market integrity and efficiency and increases investor confidence. Members are thus required to have appropriate arrangements to handle situations where staff (including research analysts) come into possession of MNPI. To prevent MNPI being handled inappropriately, including by being passed to the sales desks or to preferred clients, members must make adequate use or supervision of restricted lists and information barriers. Clarity Surveillance provides the following:
- Control Room Surveillance Alerts
- Blackout Period Alerts and Reports
- Watchlists and Restricted List Alerts
Investment Portfolio Monitoring
- Front-running is when a broker or other entity enters into a trade because they have foreknowledge of a big non-publicised transaction that will influence the price of the asset, resulting in a likely financial gain for the broker. It also occurs when a broker or analyst buys or sells shares for their account ahead of their firm's buy or sell recommendation to clients. Front-running is also known as tailgating. Front-running is illegal and unethical because it takes advantage of MNPI that is not available to the public. If a big transaction is made public, then buy or selling ahead of it is not illegal. Clarity Surveillance provides Front-running alerts to mitigate against the above risk.
Broker Event Analysis
- Highlight key trading activities (order inserts, order amendments, order cancellations, trades), with a mapping back to the Day’s Trading Graph, so you contextualize the brokers activity in actual market conditions.
Broker Trade analysis
- List of all the brokers’ trades on the given list of securities, with the mapping back to the Day’s Trading Graph, to view where the broker traded against the market. This core of the Surveillance Front End, provides a comprehensive analysis of a broker’s activity in the market, as well as providing a means for any surveillance or compliance function to monitor and analyse
- Alerts – A set of alerts can be set to trigger breaches in configurable benchmarks or thresholds.
This product can be used by any Surveillance or Compliance desk to analyze the trading activity of a broker.