ASIC developing ‘holistic’ model for cryptocurrency surveillance

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The Australian Securities and Investments Commission (ASIC) is undergoing a technological transformation in order to effectively monitor crypto assets and other emerging markets.

ASIC Commissioner, Cathie Armour, says the corporate regulator is working to incorporate machine learning and natural language processing into its ‘frontline surveillance’ model.

Ms Armour revealed the details in a keynote speech at the International Swaps and Derivatives Association AGM in Hong Kong on Wednesday.

“In a world of new technological advancements, it is vital for regulators to supervise innovation in the market, but also to utilise advances in technology for our frontline market surveillance,” said the Commissioner.


cryptocurrency surveillance
ASIC Commissioner Cathie Armour (@asicmedia)

“We have broadened the range of markets that we proactively supervise across to Fixed Income Currency and Commodities markets and crypto assets and are developing a holistic future state surveillance model across these new areas.

“Our development will aim to extend our current capabilities to incorporate innovative approaches such as Machine Learning and Natural Language Processing that can be readily deployed to gain insights from structured and unstructured data sets.

Throughout 2018, ASIC was active in suspending multiple Initial Coin Offerings which it deemed illegal, misleading or lacking sufficient investor protections.

Foreign exchange businesses cop onsite visits

While ASIC is relying on technological advancements for cryptocurrency surveillance, the regulator is taking a more hands-on approach to foreign exchange (FX).

Ms Armour says ASIC recently commenced ‘onsite reviews’ into the management of conflicts of interest and confidential information in Australian wholesale FX businesses.

“The onsite reviews are an opportunity to review the conduct and operational practices of several firms,” she said.

“These reviews form part of a broader strategic program of work on wholesale FX markets, including collaboration with our international regulatory counterparts, to review last look practices, margins and mark-ups, high-frequency trading, and close monitoring of the implementation of commitments made in previous court enforceable undertakings by several firms.

“We also enhanced our approach to supervising the most significant market intermediaries, to gain a deeper understanding of their business models, cultures and behavioural drivers, and to engage directly and at the most senior levels to facilitate early detection of potential harms and foster constructive and timely behavioural change.”