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FCA eyes market surveillance SaaS refresh with £3.5m contract

The FCA is spending £120m in three years to modernise its systems

The UK's Financial Conduct Authority (FCA) is going to market with a £3.5 million tender for updated market surveillance software that it hopes will give it "near real-time" visibility into the activities of listed companies.

The financial markets watchdog currently pulls in 200 million order messages for 10,000 listed products and 30 million transaction reports every day to a cloud-hosted tool (understood to be from Nasdaq) for analysis.

See also: NYSE President Stacey Cunningham on how data is transforming markets

The FCA market surveillance system pushes out alerts on potential market abuse and flags trends for further investigation by analysts, but in a contract notice posted on October 4, the FCA said it would like to "extend current capabilities beyond secondary market activity into the near real-time world of issues affecting listed companies."

Tenders need to be in by November 1, 2021.

(An earlier public notice highlights that the FCA would like to further exploit... rich markets datasets by enabling teams to utilise data engineering/data science techniques to generate greater insight.")

fca market surveillance capabilities are being upgraded
FCA case movements, Aprili 2020 - April 2021. Source: FCA enforcement data.

The move is part of £120m investment programme over three years to support its data strategy that, the FCA notes in a July 2021 paper, will see it move "fully into a cloud environment" and all of its data (increasingly including unstructured data, e.g. scraped from social channels to spot potential scams) into a data lake.

The contract notice comes after the FCA hired five new senior leaders in February 2021 to head up an overhaul of its digital strategy, including BlackRock veteran Stephanie Cohen, appointed as COO; and former eBay senior finance and analytics director Jessica Rusu, who was hired as the FCA’s first Chief Data, Information and Intelligence Officer as part of an aggressive effort to modernise systems and improve insight.

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Like regulators around the world -- which have workforces puny in comparison to the entities they are overseeing -- the FCA is increasingly reliant on technology to identify market abuse. It's not alone in tackling the challenge: as FCA CEO Nikhil Rathi noted in a November 2020 speech, “we are... working closely with peer regulators around the world, many of whom are embarking on their own digital transformations.

"It’s fair to say that for all of us, there is a significant journey ahead.”

With its £3.5 million market surveillance contract, the FCA is taking just one more of the many steps it needs to on that complex journey.

See also: LIBOR laggards win a “synthetic” reprieve. Wait, AI didn't fix it for banks?