The Role of Visual Analysis in the Regulation of Electronic Order Book Markets

This paper describes how regulators can use visualization techniques to make sense of the growing and complex financial data that they need to monitor. These techniques could be used to analyze financial stability risks such as excessive market concentration and interconnectivity.

Abstract

Electronic markets and automated trading have resulted in a drastic increase in the quantity and complexity of regulatory data. Reconstructing the limit order book and analyzing order flow is an emerging challenge for financial regulators. New order types, intra-market behavior, and other exchange functionality further complicate the task of understanding market behavior at multiple levels. Data visualizations have proven to be a fundamental tool for building intuition and enabling exploratory data analysis in many fields. In this paper, we propose the incorporation of visualizations in the workflow of multiple financial regulatory roles, including market surveillance, enforcement, and supporting academic research.

Keywords: Visualization, Visual Databases, Financial Markets, Law Enforcement