WHITE PAPERGetting Control of Access to Key Market Services

Why Are Financial Institutions Struggling to Control Access to External Trading Portals and Platforms?

Against the backdrop of the rapid adoption of electronic trading across key cash assets classes that aren’t typically traded on exchanges, financial institutions are struggling to control access to external trading portals and platforms and other markets-related services. This phenomenon is presenting a particular challenge in fixed income and foreign exchange markets, where single dealer portals that allow banks to trade assets on behalf of their clients are growing in popularity and use.

An issue is control over access to these portals, due to practices like password-sharing. Lax security around the trading portals can leave firms vulnerable to potential market abuse, vendor penalties, security breaches and regulatory censure.

“By ensuring access to any given trading portal or broker platform is cut after a specified time, firms diminish the chances of possibly illegal trading by unauthorized personnel within their own organizations.”

In particular, firms risk non-compliance with the SEC’s wide-ranging Systems Compliance & Integrity (SCI) regulation, which was drafted in recognition of the potential security issues, unauthorized access and use of trading portals represent. Indeed, among SCI’s areas of coverage is access to trading systems and market data, and outlines substantial penalties for noncompliance.

This white paper looks at how firms are currently using single dealer portals, and identifies shortfalls in practices that could potentially lead to breaches of Regulation SCI or worse. It explains the potential risks of failing to control access to key market services, as well as the benefits of establishing best practices around access control. Finally, it offers guidance on possible measures to ensure your firm complies with the SEC’s SCI requirements.




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