Full Title: Building an Effective Trade Surveillance System: A Framework-Based Approach using Guidance from Two Recent FERC White Papers
Author(s): Shaun Ledgerwood & John Tsoukalis
Publisher(s): The Brattle Group
Publication Date: March 1, 2017
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Description (excerpt):
In this paper, we summarize the FERC guidelines, then provide an example of a logical approach to building such systems using a framework that we have developed for analyzing manipulative behavior. Our recommended approach is consistent with the “effective practices” outlined in staff’s white papers and can be implemented to develop trading compliance procedures in line with those recommended by the FERC.
This approach is designed to be implemented in phases, focusing initially on easily identifiable behavior that poses the most enforcement risk. This allows a trading company to learn best practices in compliance and develop a broader system as time and resources will allow. Further, because our approach follows the cause-and-effect of manipulative acts and their resulting benefit to the actor, this approach is broadly applicable to other trade surveillance applications, such as for the Commodity Futures Trading Commission (CFTC).