News

FSA sharpens up Sabre II fraud-detection system

Arif Mohamed

The Financial Services Authority (FSA) is updating its fraud-detection system with complex event processing (CEP) software to monitor transactions and detect insider trading and other market abuses as they occur.

The Surveillance and Automated Business Reporting Engine (Sabre) II is being designed, built and managed by IT-services firm Detica under a contract worth £17m over seven years.

The FSA will use the system to monitor trading on UK markets and check transactions reported under the Markets in Financial Instruments Directive (Mifid).

Sabre II will use Progress Software’s Apama event-processing platform, which will give the FSA real-time graphical dashboard tools that will alert staff to potential financial abuses.

A graphical CEP development tool, Apama Event Modeller, will allow the FSA to rapidly develop abuse-detection rules, and respond quickly to the changing demands of Mifid.

The regulator has said that it is keen to improve its record on cleaning up financial markets. An FSA report from March 2006 found that “some informed trading may have taken place” before 29% of takeover announcements.

At the time, FSA managing director Hector Sants said, “The analysis shows that there was no improvement in market cleanliness in the period after the introduction of the FSA’s new powers. This suggests that visible enforcement action may be the key tool in our work to reduce market abuse.”

Simon Asplen-Taylor, head of market and regulatory services at Detica, said, “The big difference between the old and new platforms (apart from the data) is that the system will be real-time. Progress Apama gives the ability to develop new rules quickly and modify them for new types of abuse. Using the same trading technology as the clients means there is a greater chance of catching criminals.”

The Sabre II system consists of Sun Ultrasparc 4+ servers running SAS Enterprise Intelligence Platform, AMD Opteron servers running Progress Software’s Apama for Alerting, and Oracle and KX Systems’ KDB+ relational databases.

Thinktank highlights five ways to MiFID compliance >>

Don’t let Mifid catch you unprepared >>

LSE outlines MiFID support >>

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