FSA upgrades tech to improve MiFID monitoring

The Financial Services Authority (FSA) is significantly upgrading the technology it uses to monitor the UK financial markets and to identify potential market abuses.

The UK financial regulator has so far invested around £16m on upgrading the Sabre transaction monitoring system to improve market abuse detection and cover several new types of trades that need to be monitored under MiFID.

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Following the introduction of MiFID on 1 November this year, the FSA will also be required to monitor commodity and interest rate derivatives trading, which Sabre II will cover.

At present the Sabre system stores transaction reports from UK investment organisations which are then used to spot potential market abuses – such as insider trading.

An FSA spokesman told silicon.com the problem with the current system is it doesn't "interrogate" data – making it harder for the FSA's Transaction Monitoring Team to pick up any potential abuses.

The spokesman added Sabre II is intended to flag up issues that arise and actually tap into live financial market news feeds to alert the FSA of any unusual or significant business developments that could trigger trading activity.

The project to upgrade Sabre started more than two years ago and the FSA has been helped by technology consultancy Detica, using technology from SAS and Progress Software. The impact of MiFID was part of the project from the start but it has only recently become clear exactly what it requires.

The information is also used to provide market information that can, for example, be used to look at the growth or decline of certain trading methods.