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Compliance, Market Monitoring, and Internal Trade Surveillance

The Brattle Group regularly assists companies in communicating to their traders and compliance personnel meaningful guidance as to behavior that may violate the agencies’ anti-manipulation rules and provide in-depth assistance in the creation and maintenance of meaningful compliance programs. We also help create screens for the detection and analysis of potentially manipulative behavior, and assist in the implementation and auditing of these screens to minimize the likelihood of false positives and false negatives and the resulting waste of compliance resources. Likewise, we have assisted government agencies and market monitors in the creation of market monitoring systems and in implementing their broader anti-manipulation surveillance efforts.

Engagements
REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our Compliance, Market Monitoring, and Internal Trade Surveillance practice.

Compliance-based risk optimization strategy
We assisted a commodity trading firm that is wrestling with the decision as to how to expand its activity and trade a more diverse set of physical and financial products while remaining compliant with various anti-manipulation rules. This assessment considered the client’s efforts to incorporate a trade surveillance system as an opportunity for expanding its trading platform, such that the costs of the increased compliance capabilities are potentially offset by the increased profitability of its trading business.
Internal investigation of suspicious trading activity
The Brattle Group assisted a large physical market participant in assessing its potential liability with respect to specific trading strategies that potentially altered the value of related physical index and financial derivatives positions. We performed this analysis in cooperation with the client’s external counsel to provide a clear, consistent understanding of the behavior that could be of concern and meaningful perspectives as to how the client could improve compliance on a go-forward basis.
Seminars for a multinational oil trading company
We have delivered presentations to the traders, risk managers, and compliance personnel of a global energy trading firm. These presentations focused on avoiding the types of trading behavior that have been and are likely to be found to be manipulative under U.S. and EU manipulation and antitrust laws.
Assessment of electricity market surveillance methodologies
Prior to joining The Brattle Group, Dr. Shaun Ledgerwood worked for the FERC’s Division of Energy Market Oversight and led a pilot project to identify the marginal benefits and costs associated with obtaining, compiling, and analyzing data from a variety of existing and new sources available to the Commission. This required mapping the linkages that exist between data of varying transparencies, values, and costs. These findings led to the development of simple screens to detect manipulative behavior, ultimately leading to a prioritization of the surveillance efforts that the FERC should pursue.
Assistance to a Canadian electricity market monitor
We are currently working for the market monitoring unit of a Canadian provincial regulator to assist it with the implementation of its anti-manipulation rules. The project involves application of the framework to various scenarios cited by the market monitor as potential violations of the rules, as well as the development of processes and procedures to monitor for and detect manipulative activity and enforce the rules if violations are confirmed.
Assistance to the Italian natural gas market monitor
Brattle was retained by the Italian electricity and natural gas market monitor to conduct a study to assist that agency in implementing its data surveillance responsibilities under REMIT and other applicable European competition laws. The study presented a comprehensive evaluation of the data that is and will be available to the market monitor, the types of manipulative and/or anticompetitive behavior that the market monitor should seek to detect, and the tools the market monitor can employ to screen the available data for the types of behavior identified.
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