January 23, 2018

Surveillance sharing
When regulation as colossal as the European Union’s new trading tome hits financial markets, natural rivals sometimes decide that cooperation can be the easiest way out of a bind. The Fintech Files can reveal that UBS MTF — the Swiss bank’s alternative trading venue for equities — has turned to a competitor, Aquis Exchange, to make sure it has the tools to detect market abuse and ensure it’s helping firms get the best value for clients when trading. The contract is a definite plus for Alasdair Haynes, CEO of Aquis, as his disruptor looks to diversify its revenues.

The challenge
Big banks like UBS that run trading platforms must ensure they do not fall foul of new surveillance rules under the Market Abuse Regulation and Markets in Financial Instruments Directive, which includes a host of risk control measures that firms must adhere to. But doing so comes at an administrative and financial cost — not to mention a technological one — and using tools provided by third-parties can be a popular choice for many. This has created a wealth of opportunity for firms providing the tech for the job.

Fintech Files’ View
It’s certainly not uncommon for one stock market operator to provide services to another, especially in surveillance and compliance. But Aquis, a relative newcomer to the scene, will take heart that its technologies arm appears to be taking off. And it’s a lesson to other financial innovators, particularly those focused on regulatory tech: the biggest customers aren’t out of reach, especially if you can help them steer around the Mifid II juggernaut.

To succeed in this arena, regtechs must do battle against much larger incumbents, including the US exchange giant Nasdaq, which has been growing the SMARTS surveillance business it bought in 2010. But Magnus Almqvist, head of technology sales at Aquis, said he is “very much enjoying the challenge” and that’s an attitude that other small firms will do well to adopt in their efforts to win big clients.

Read the article here