Saturday, April 14, 2012
On lack of monitoring
Recent financial news indicate that the Financial Industry Regulatory Authority has fined one of the analysts firms for failing to supervise equity research analyst communications with traders and clients and for failing to adequately monitor trading in advance of published research changes to detect and prevent possible information breaches by its research analysts. This is interesting, since it seems that the regulator now expects firms to monitor the consequences of their actions. This calls for real-time monitoring, monitor causalities between various events, and eliminate increased trading based on unpublished information. Recently, I have participated in a meeting with stock exchange people in a certain country, and heard about their efforts to detect undesired phenomena in trade. They also were looking at real-time monitoring, and even proactive behavior, trying to detect undesired phenomena before they happen. I guess that we'll see more of these applications from different sides - regulators, traders, and in this case analysts.