Data, Not Technology, is Key to Improve Market Surveillance, Says CMCRC

According to the CMCRC's latest research, advancements in technology are not enough to improve market surveillance, and the centre suggests firms should focus more on collecting good quality data than accumulating new technology systems.

"The upshot of the lack of data means that the levels of insider trading, market manipulation and broker-client conflict cannot be reasonably estimated and no amount of technology can solve this problem, "says Professor Michael Aitken, CEO of the CMCRC. "If you can't identify the person behind an order or a trade, there's little chance you'll be successful in identifying insider trading or market manipulation - irrespective of what technology you use. This explains the abundance of false positives identified by surveillance systems today."

But Aitken says things are heading in the right direction, highlighting an initiative from the Australian Securities and Investments Commission to require client identifiers on all orders and meaningful information when brokers are trading as principle or agent as of October 2014.

"I predict this information will see the number and range of market infractions identified rise precipitously in Australia—importantly not because of new technology—and in the process, provide a salutary lesson to other markets on securing appropriate data for the important task of market surveillance."