Regulatory initiatives in the U.S. and Europe are driving demand for technology and software that aims to supply solutions.

“Today’s market structure is in constant flux,” Matthew Coupe, sales director of Redkite Financial Markets, told Markets Media. Aside from new rules, the need for firms to know more about their trading flows is also buoying demand, Coupe said.

“Exchanges, of course, need to ensure that their platforms remain innovative whilst maintaining consistency with evolving regulations,” Coupe said. “They need to ensure they have technology in place to monitor the changing strategies and higher performance strategies for abusive patterns and that they have appropriate control over their execution venue.”

“Financial institutions also need the appropriate technology in place to monitor market abuse,” Coupe continued. “At present, most firms have a MA detection on a T+1 basis, which is not appropriate in the current environment. The latest (European Securities and Markets Authority) consultation paper stipulates that firms must now have flexible technology in place to make sure they can keep up with the changing legislation easily.”

London-based Redkite sells market surveillance and compliance products such as Redeye, its flagship product that provides real-time analytics to detect market abuse. According to Coupe, Redeye can handle large message volumes, is based on an asset class agnostic platform, and is easy to integrate with new integration points including market data, order and execution flow, and transaction reports.

Rule makers themselves need to stay abreast of these changes and adapt as needed, Coupe said. “Last week’s ESMA consultation paper, for example, seeks to do exactly this, ahead of MiFID II and the Market Abuse Directive,” Coupe said. “Regulators also need to have the right systems in place to be able to adapt to and understand the changing environment of increased message volume, fragmentation, as well as the more complex micro strategies.”