NASDAQ OMX Group Inc.(NDAQ) said Thursday it has launched new
tool to help banks monitor their staff's currency-trading
activities--an area that has come under rigorous scrutiny over the
past year because of market manipulation.
Dubbed "Smarts FX Trade Surveillance," the technology from the
exchanges group allows banks to more easily identify any possible
efforts at manipulating currencies benchmarks, or any other unusual
patterns in trading.
The firm said the technology has been developed in cooperation
with six forex dealing banks, which it doesn't name.
"We took a decision to develop a surveillance model for [non
exchange-traded] markets 18 months ago, after the scandals in fixed
income markets," said Michael O'Brien, head of Smarts Broker at the
company. The pressure from clients to add foreign exchange to the
asset classes covered by the technology increased after the launch
of probes on the possible manipulation of foreign exchange rates a
year ago, he added.
Since mid-2013 authorities in the U.K., U.S., Europe and Asia
have been probing the $5.3 trillion a day currencies industry
market looking for evidence of possible efforts at market
manipulation.
The investigations have led to the suspension of at least 30
traders and a salesperson at top dealing banks, and also some staff
dismissals.
(http://blogs.wsj.com/moneybeat/2014/04/29/lines-get-blurred-in-the-fx-probe/)
Smarts will help banks to compare their trading activities
against a feed based on multiple market data providers, to spot any
deviations from the wider market, particularly around
benchmarks.
So far, the technology has been developed mostly for top dealing
banks, but presentations in London attracted more than 50
participants representing smaller banks and interdealer brokers,
Mr. Land added.
-Write to Chiara Albanese at chiara.albanese@wsj.com
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