Best e-Surveillance Solution Provider: b-next

The benchmark scandal fallout and MAR powers demand for surveillance and monitoring, despite the cost

Wolfgang Fabisch: "Volumes are important – helps to understand if someone is trying to manipulate the market"

Timing, they say, is everything. In business this means having a solution at a time when demand for just that thing skyrockets – electronic surveillance solutions provider b-next is enjoying its time in that sweet spot.

B-next, the winner of the Best e-Surveillance Solution Provider category at this year's FX Week e-FX Awards, has two things working in its favour: firstly, the fallout from the benchmark manipulation scandals kick-started a queue for monitoring solutions; and, secondly, regulations such as the EU Market Abuse Regulation (MAR) and Markets in Financial Instruments Directive II.

While the MAR regime came into effect on July 3, b-next's chief executive, Wolfgang Fabisch, is still receiving calls from organisations that are in no way ready. He recounts how a Tier 2 firm asked for a quick-fix solution just two weeks before the regime came into force.

"I would say that 50% of the market is in a position to say they are MAR ready, where they have all the systems in place," says Fabisch. "Another 50% have started to think about it and started to develop some policies to be MAR-ready in the not too distant future."

Pressure is high on the industry. Starting this July, some of the new rules will make it a crime to not be ready
Wolfgang Fabisch, b-next

But, ensuring systems are in place for compliance with MAR takes a minimum of six months, rather than two weeks, Fabisch says. This is because the relevant interfaces need changing and the client's needs must be understood to deliver the right quality of data, plus all of the surveillance and case-management processes need to be in place.

"Pressure is high on the industry," he says. "Starting this July, some of the new rules will make it a crime to not be ready – not only for traders, but also for those doing the surveillance and even board members. That's why some people are really nervous."

One reason that is tempering companies' willingness to rush out and implement monitoring systems is cost. While running and maintaining a surveillance system is relatively painless, the initial outlay is considerable, at a time when technology budgets are stretched to the limits by the onslaught of regulatory initiatives.

Common standards

To cut overall costs, industry participants have started identifying common standards that would make it cheaper to roll out surveillance solutions.

"All companies in the market face similar problems and since regulation is similar around the globe, I expect common standards will come about in the future," says Fabisch.

In FX, the challenge is the market's fragmented structure. This means systems need to analyse more incoming data than they would in equity markets and they have to do it faster.

"A big challenge is also the availability of market data, because we don't have access to traded volumes," says Fabisch. "Volumes are important because this helps to understand if someone is trying to manipulate the market with small orders that push the market price in one direction, with low risk for its own books. From a market data perspective, it's a challenge."


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