Andrew Waters is Global Head of Regulatory Affairs, TradingHub.
What surprised you in 2024?
While 2024 didn’t bring any major surprises, it was a year where market manipulation and fraud continued to be prominent concerns for the industry. This was underscored by two headline-grabbing events: JP Morgan’s $450 million in fines for data governance failures and the conviction of Archegos’s Bill Hwang. These cases highlighted the increasingly aggressive stance U.S. regulatory and enforcement agencies are taking to address market manipulation and abuse.
In addition, both the SEC and FINRA were notably active in introducing new rules designed to combat market abuse. These regulatory efforts are set to gain more traction into next year. One of the most significant developments was the SEC’s new rule targeting short sale activity in equity markets. The rule aims to curb high-risk behavior and manipulative practices, enhance transparency and efficiency in the securities lending market, and equip the SEC to better analyze unusual market events. Agencies also backed up their tough talk on trade surveillance recordkeeping and reporting, as evidenced by the series of penalties laid onto Goldman Sachs related to oversight to prevent market manipulation.
What are your expectations for 2025?
Looking ahead to 2025, I expect we’ll see a continuation of regulatory agencies emphasizing trade manipulation and fraud as supervision focus areas. However, financial and compliance executives remain uncertain about how regulatory priorities might evolve under the new administration taking office on January 20. Over the past several years, the U.S. has demonstrated a clear commitment to pursuing cases of manipulation and fraud. For instance, during Trump’s first term, the CFTC notably focused on spoofing and other emerging manipulation activities, issuing over $400 million in enforcement actions during fiscal year 2018. Similarly, the SEC set records for enforcement fines related to spoofing between 2018 and 2019.
That said, the ultimate direction of oversight priorities will depend on the personnel and policies established by the incoming administration, which will shape trends in the years ahead.
What trends are getting underway that people may not know about but will be important?
One key trend we’re watching closely at TradingHub is the growing emphasis on data governance. The JP Morgan case brought this issue into sharp focus, as the enforcement action revealed the firm’s failure to oversee billions of client orders due to missing data
from 30 trading venues—a massive failure in data configuration and ingestion. This case has sparked a significant re-evaluation across the investment community regarding the state of their data management capabilities. Consequently, we’re seeing a surge in data transformation initiatives, which we expect to reverberate throughout the sector for at least the next 18 to 24 months.
Another key trend we’re monitoring is the surge in nefarious activity in asset classes like commodities. Investment bank professionals are coming to grips with a significantly more diverse and advanced commodities manipulation environment. As the temptation to squeeze prices for large futures contracts ahead of agreements surges, the OTC commodities market will only continue to grow riper for manipulation, not less so. And this is coming at a time when regulators have shown they are willing to flex their muscles when it comes to enforcement.
