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  • Why Firms Trading In The Energy Market Need To Monitor Compliance More Closely Today  0 comments
    Jan 21, 2014 10:27 AM

    In 2008, the world underwent a serious economic crisis. This crisis was in the form of a global economic recession. Industries were hit quite severely and countries had their economies stalled to the point of collapse. The sectors of the economy that were hit the most were the financial sector and the energy sector. The economic crisis has been traced back to improper trading actions and a lack of proper financial regulation in key sectors such as the financial sector and energy trading. As the world reeled from the effect of this economic meltdown, it dawned on governments that the next crisis would be even worse unless stern action was taken.

    At this point, the previously liberalized markets were discovered to be in significant need of regulation and close monitoring. A number of laws concerning the conduct of trading activity in the financial and energy sectors have been passed since then. These new regulations have placed these markets as well as companies and firms that operate in them under closer scrutiny to prevent market abuse activity. Here is why companies and firms that trade in the energy sector need to monitor their trading activity even more closely.

    Capital markets compliance

    Before companies and firms are allowed to compete in the energy sector, there is a new stricter set of rules with which they have to comply. The firms that operate in this market segment will be expected to show that they have fully complied before they can get their licenses. This is especially important for firms that use funds derived from hedge funds to invest in energy futures.

    Capital markets compliance will now be strictly enforced as well as closely monitored to ensure that there is no illegal market abuse activity taking place. Firms are also expected to show compliance on every trade that they execute. Failure to comply will not only attract stiffer penalties, but it can also lead to the suspension of a firm.

    Energy trading surveillance

    Energy is at the center of modern progress and industry. As such, countries are closely monitoring the firms that operate in this segment so as to ensure that transparency and market integrity are maintained. Furthermore, the regulators have been empowered to deploy technology systems to ensure that energy trading surveillance is executed effectively. These systems are capable of fleshing out information about illegal trading activity that companies may try to hide.

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