Whatever happened to the surveillance beast?
When level 1 of the Market Abuse Directive (MAD)
II was discussed two years ago there was talk of
Esma potentially establishing a massive centralised database for cross-market
monitoring, aka the surveillance beast.
Interestingly, this idea didn’t make it into the final MAR text.
Instead it calls on each regulator to have in place the necessary tools for
effective cross-market order book surveillance and to co-operate with each
other.
Also, the European Commission has to submit a report by June
2019 on the possibility of establishing a Union framework for cross-market
order book surveillance. In other words, legislators will not consider the
surveillance beast for the next five years.
In the meantime, Esma focuses on harmonising the record
keeping standards under Mifir which
will certainly simplify any exchange of data amongst competent authorities.
That certainly sounds
much cheaper than the US
CAT system, estimated in the region of $530 million (down from previous
estimates of $4bn).
Whether Europe sticks with a decentralised but standardised
regime, or moves towards a more centralised monitoring system, remains to be
seen, but given the continuous stream of new consultations published by Esma
this is a discussion that we can thankfully postpone.
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