Navigating the storm: shocks, tech evolution, and the regulatory maze.

The global financial landscape is currently battling a variety of simultaneous shocks that have made it vulnerable to market abuse. From events such as the pandemic, supply chain crises, geopolitical upheavals, and economic volatility, to the developments in AI and digital assets, these events have altered the state of play in regulation. Collectively, they are providing criminals with a variety of new tools and methods to harness, and businesses with new regulatory problems to solve.

Despite these challenges, regulatory professionals have cited global economic instability as the second most likely cause of compliance issues in the next 12 months, after the use of AI. With so many factors at play, regulators face the dilemma of underreacting or overreacting, and this environment is leading to a wide range of regulatory changes spanning different countries.

The financial landscape has changed significantly over the past five years due to these global shocks. Volatility and instability have become the natural state of the market, and market abuse is now more challenging to detect than ever. Rapid and unpredictable price movements can camouflage manipulative activities, particularly in commodities markets that are vulnerable to abuse. Technological immaturity and interconnectedness further expose the market to exploitation and manipulation.

Regulators are adapting to the new landscape by increasing their collaboration with national authorities, enforcement agencies, and the private sector. They are utilizing AI and SupTech to improve monitoring and combat market abuse, setting a new standard for market oversight.

For regulated firms, technology has become a necessity to fulfill their regulatory responsibilities. Efficient and streamlined compliance processes are required, and outdated reporting systems are no longer acceptable. Businesses need advanced technology to ease the burden of compliance and stay ready for upcoming regulations.

A lack of technology can no longer be an excuse for non-compliance, as regulators expect firms to adopt advanced technology to meet requirements. Those who fail to adopt it may face fines and reputational damage.