Cross-Border Challenges in Financial Markets Monitoring and Surveillance

32 Pages Posted: 10 Dec 2012 Last revised: 23 Dec 2012

See all articles by David Diaz

David Diaz

Universidad de Chile - Escuela de Economia y Negocios

Babis Theodoulidis

affiliation not provided to SSRN

Date Written: January 10, 2012

Abstract

Financial markets have grown in size and significance for the world economy over the last thirty years and at the same time, their structure has changed substantially primarily due to the use of information and communication technologies in areas such as algorithmic trading and connectivity between markets and investors on a global scale. On the other hand, market manipulation increases the cost of trading, reduces liquidity and can make firms and individuals unwilling to get involved in the financial markets. The challenges relating to market monitoring and surveillance relate to various aspects including regulatory frameworks and data sharing and they are especially important in the case of cross-border transactions.

This paper discusses the issues of concern in relation to regulations applicable to cross-border trading and the existing market monitoring and surveillance mechanisms. On the basis of this, the paper proposes a framework for cross-border market monitoring and surveillance that is defined as a service system that considers the global scope of the financial markets nowadays. Furthermore, the paper discusses and evaluates the deployment of the framework in a cross-border case study scenario that is based on one of the few SEC cross-border prosecuted cases.

Finally, the paper contributes to the understanding of how market monitoring and surveillance could be best examined as an IT-enabled service system and highlights the complexity involved in dealing with cross-border scenarios in terms of coordination and data sharing through the case study and the implications for regulatory frameworks, authorities and other stakeholders.

Keywords: financial markets, market manipulation, fraud detection, monitoring and surveillance, cross-border, social networks, data mining

Suggested Citation

Diaz, David and Theodoulidis, Babis, Cross-Border Challenges in Financial Markets Monitoring and Surveillance (January 10, 2012). Available at SSRN: https://ssrn.com/abstract=2187598 or http://dx.doi.org/10.2139/ssrn.2187598

David Diaz

Universidad de Chile - Escuela de Economia y Negocios ( email )

Diagonal Paraguay 257
oficina 1102
Santiago, RM 0000
Chile
5629783373 (Phone)

Babis Theodoulidis (Contact Author)

affiliation not provided to SSRN

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