This article was originally published in Finance Feeds. You can find the original article here.
Cross-border compliance and market abuse - a rising challenge
In February 2024, eflow published their report “Global trends in market abuse and trade surveillance”. The purpose of this report was to analyse market abuse enforcement and perpetration over the past several years to identify recurring themes and better understand how regulators are responding.
Three key trends emerged:
- Global shocks
- Market evolution
- Convergence
These trends will be discussed in this article.
AI and geopolitics driving compliance issues
Global shocks such as the pandemic, supply chain disruptions, geopolitical conflicts, an inflation crisis, banking sector turmoil, and the advent of artificial intelligence (AI) and digital assets have reshaped the terrain of market abuse and regulation. Notably, global instability and the use of AI are seen as the primary drivers of compliance issues in the coming year.
The report also sheds light on the difficulties of cross-border compliance, with 74% of firms acknowledging it as a challenge and 60% struggling to adapt to evolving regulations. In response, 90% of compliance managers are seeking to invest in borderless technology solutions to address these challenges.
The report concludes that nearly all compliance professionals (96%) plan to invest in technology to address future compliance issues. With the financial sector becoming more transparent and regulatory pressure increasing, the demand for innovative solutions to navigate the complex, interconnected global market is more critical than ever.
“Bad actors are exploiting technological advancements to bypass regulatory measures”
Ben Parker, CEO and Founder of eflow Global, commented: “In recent years, the financial sector has undergone significant transformation, necessitating the adoption of innovative tools by businesses to address them. Central to these changes is the role of technology. On one hand, bad actors are exploiting technological advancements to bypass regulatory measures, while on the other, regulatory bodies are leveraging technology to uphold industry stability. Within this dynamic landscape, businesses need to equip themselves with the most effective tools to remain compliant.”
Dr. Sian Lewin, an expert in regulation, risk & Regtech, said: “The modern financial landscape is becoming ever-more digitized and interconnected, leading to the accelerated adoption of technology, increasing data-led regulatory scrutiny, and a greater need for global collaboration. This has fundamentally transformed market dynamics, information flow, and the nature of market abuse. This intricate web demands a re-evaluation of how participants engage and combat misconduct.”
