ASIC's new market surveillance system is in operation.

Known as MAI (Market Analysis Intelligence), the system enables ASIC to better detect, investigate and prosecute trading breaches.

Commissioner Cathie Armour said that MAI provides sophisticated data analytics to identify suspicious trading in real time and across markets, as well as greater levels of detection of insider trading.

‘MAI is built around algorithmic trading technology, and gives ASIC the ability to analyse trade data for patterns and relationships.

‘This provides ASIC with even greater means to catch insider trading, and more broadly, detect market misconduct’, Ms Armour said.

Senior Executive Leader of Market and Participant Supervision, Greg Yanco, said that MAI was purpose built and designed to handle the dynamism of financial markets.

’It [the system] will be able to handle the continued increase in high-frequency trading and algorithmic trading, and improves on technology that was previously designed for a single market.

‘The new system enables ASIC to interrogate very large data sets and monitor market activity, consistent with the increased use of technology in day-to-day trading. It can also handle the continued increase in trade and message data, which could reach 1 billion messages per day’, Mr Yanco said.

The new system is designed, built and hosted by First Derivatives, and is based on its Delta Stream+ Market Surveillance solution – based on technology used in financial markets for market data capture, alerts and analytics and high frequency and algorithmic trading.

Background

The new surveillance system is the first of four key deliverables made possible from the federal Government's budget commitment of $43.7 million in May 2012, which gives ASIC the ability to plan for increased trade and message traffic, new and dynamic trading technologies and techniques, as well as increased competition between trading venues and the continued globalisation of capital markets.

The other deliverables are advanced analytic and investigative capabilities, a new portal to boost collaboration and communication with market participants, and the development of a workflow system that will assist ASIC to improve the management of its cases from the moment ASIC receives an alert, complaint or enquiry, to the end of an enforcement action.

This first phase of the program has been delivered on schedule and with cost savings of approximately $5m against budget. This saving has enabled ASIC to reduce the amount it needs to recover from the industry.