|
Ensuring the fair treatment of customers and the maintenance of orderly markets is more than a statutory mandate for an exchange – it's an essential ingredient for their ultimate success. In our view, the key to an effective trade practice and market surveillance program is to:
- identify the abusive practices which the exchange wishes to deter;
- define the factors which could indicate the presence of the problem;
- design programs to sift through trading data and generate certain core exception reports when the factors are found and which have the flexibility to tailor additional reports to particular circumstances; and
- have experienced and capable staff in place to monitor trading activity, to review data from exception reports, to conduct any necessary inquiries, and to report any findings to the appropriate exchange committee.
NFA's current trade practice programs include creating exception reports to identify the following: trading ahead of customers, direct crossing, prearranged trading, wash trading, money passing, counterparty trade percentages, stop order fishing, marking the close, error account and transfer trade activity and off exchange transactions. NFA also utilizes profiling of markets and individual traders to dynamically assess market participants trading patterns for unusual activity. In addition, the market surveillance process includes the monitoring of market activity in terms of price and volume and the monitoring of concentrations of ownership through large trader reports.
Visit the eMarket Services section of this Web site for more information on the programs and services NFA can provide to new electronic exchanges.
|
