Buyer’s Guide: Trade Surveillance Systems

Protecting Against Internal Violations of Trading Rules

This report reviews six third-party technology vendor trade surveillance systems utilised by both buyside and sellside markets participants. The vendor solutions featured in the report are:

  • eflow’s TZ;
  • Fidessa’s Market Abuse Monitor;
  • First Derivatives’ Kx for Surveillance;
  • LiquidMetrix’s Market Surveillance;
  • OneMarketData’s OneTick Trade Surveillance; and
  • Sybenetix’s Compass.

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The practice of trade surveillance has gained increasing importance in 2017, as regulators now require financial firms to proactively perform trade surveillance by monitoring the trading activities of employees in order to identify potential trading rule violations. The revised EU Market Abuse Regulation combined with the EU Directive on Criminal Sanctions for Market Abuse (CSMAD) were implemented in July 2016, replacing the previous regime on insider trading and market manipulation that had been in force since 2003.

The revisions to the regulations were made to ensure that the rules keep pace with increasingly complex and globally interconnected financial markets. Significantly, a more punitive approach will be taken to market abuse, and regulatory infringements will be subject to substantial fines. In order to help buyside and sellside firms adhere to the regulatory requirements, and avoid injurious outcomes, a plethora of vendor-provided solutions have emerged.

As such, a picture is forming of the ideal trade surveillance system, which is one that is a global multi-asset comparison and surveillance solution that incorporates a broader range of surveillance data and using advanced analytical techniques such as behavioural analytics and artificial intelligence to identify genuine incidents with no false positives.

Buyer’s Guide: Trade Surveillance Systems – Table of Contents

  • 1.0 Introduction
    • 1.1 Regulatory Context
    • 1.2 Trade Surveillance Scope
  • 2.0 Trade Surveillance Systems Considerations
    • 2.1 Data Sources and Systems Integration
    • 2.2 Real-time, End-of-day and Historical Data Analysis
    • 2.3 Pre- and Post-trade Surveillance
    • 2.4 Configurable Alerting and Reducing False Positives
    • 2.5 Incident Workflow Management
  • 3.0 Trade Surveillance Systems Survey
    • 3.1 Vendor Analysis
    • 3.2 eflow
    • 3.3 Fidessa
    • 3.4 First Derivatives
    • 3.5 LiquidMetrix
    • 3.6 OneMarketData
    • 3.7 Sybenetix
  • 4.0 Appendices
    • 4.1 Glossary of Terms
    • 4.2 Table of Figures