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SteelEye
SteelEye, a London-headquartered surveillance provider used by financial firms worldwide, has launched Cross-Product Detection for trade surveillance. This feature protects institutions against what the business says is a growing threat of cross-product market manipulation.

This manipulation occurs when bad actors place orders or trades in one financial instrument to affect the price of another illicitly, either on the same trading platform or a separate one. For example, a trader could place a large trade order for an equity to positively impact the price of a related derivative contract.

The practice often leaves subtle footprints that are difficult for firms to detect, creating difficulties for compliance departments tasked with identifying wrongdoers, SteelEye said in a statement. 

In December 2021, a unit of UK-based NatWest Group, agreed to pay about $35 million and pleaded guilty to wire and securities fraud in relation to a long-running scheme by some of its traders to manipulate US Treasury debt markets.

“Regulatory authorities are growing increasingly wary of cross-product market manipulation. Over the last decade, several enforcement cases related to cross-product manipulation have been filed in the US and UK,” SteelEye said. 

SteelEye said its solution uses algorithms to analyze trading activity and spot cross-product manipulation patterns. By recognizing suspicious correlations between trades in different instruments, the tool helps uncover hidden relationships that might otherwise go unnoticed.

Once flagged, the system generates a potential market abuse alert. Compliance teams can determine whether an alert is a true concern or a legitimate market activity influenced by cross-product dynamics.

“Cross-product surveillance is no longer a ‘nice-to-have’ – it’s an essential tool for protecting market integrity. Watchdogs will remain laser-focused on this issue, and firms that fail to adapt run the risk of intense regulatory scrutiny and hefty penalties,” Matt Storey, chief product officer at SteelEye, said.

As reported earlier this week, global regulators imposed more fines on financial institutions in the first half of 2024 for various compliance lapses than was the case a year earlier. 

Besides its UK headquarters, SteelEye – founded in 2017 – has offices in North America, Portugal, and India.