Market Surveillance for Sell Side and Buy Side: Driving Strategic Insights

This report looks at the features of modern surveillance systems and the drivers for their use among buy side and sell side firms.

Market surveillance is not an easy job, and the boundaries of what the surveillance systems are expected to include are being pushed further outwards on a regular basis. The continuing market fragmentation is leading to a growing volume of data from trading venues, communication methods, and regulatory requirements. The surveillance professional is overwhelmed just trying to keep up. However, this is not a burden that they carry alone; the vendors of surveillance systems have been working to solve their requirements.

It can be worrying to think about the plethora of technologies that are now involved in market surveillance. However, we should remember that trade surveillance at its basic level simply involves monitoring the demand and supply of an asset class, and being able to account for the underlying motivations and reasons for the actions of the market participants. Similarly, in spite of all the technology in place, the human element remains central for decision-making. Hence, the technology is only the means and not an end in itself.

“The future of surveillance will be changing because there is growing relevance for technology such as machine learning to improve the predictive power of the system and reduce the number of false positives that the system generates,” says Dr. Anshuman Jaswal, a senior analyst with Celent’s Securities and Investments practice and coauthor of the report. “This will not only mean that firms adopt these technologies, but will also result in changes within the cultural DNA of the firms.”