Compliance Software: Detect Market Abuse and Insider Dealing
Compliance requirements include monitoring stock market trades in order to prevent market abuse and insider trading. The MAID system identifies unusual trading patterns, such as chronological connections with customer orders.
Market Abuse: Which Scenarios Can Be Monitored?
Statutory requirements (Market Abuse Directive 2003/6/EC or the SFBC Market Abuse Newsletter) as well as the company’s internal rules can be monitored:
- Front and parallel running
- Abusive practices such as churning and parking
- Manipulation, such as wash trades, matched orders, snake trading
- Trading restrictions for analysts or corporate customer consultants
- Trading prohibitions for all employees
The MAID (Market Abuse/Insider Dealing Detection) software solution can be used as a stand-alone or integrated in the MLDS Money Laundering Detection System.
Monitoring Employee Stock Exchange Transactions
When employees have access to insider information, conflicts of interest can possibly ensue. Banks must monitor their employees' trading activities and stock market transactions.
Prevent Conflicts of Interest
Rules for monitoring employee trades may include:
- Compliance with minimum holding periods/prohibition of day trading
- Limits on the maximum number of transactions per unit of time
- Compliance with restrictions on certain employees
- Monitoring general trading prohibitions, such as interests in the company.
The MAID (Market Abuse/Insider Dealing Detection) software solution monitors employee stock trades with the help of Visual Rules technology and highlights transactions that do not correspond to the rules.
