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

by Ranjana Pieris,  Anshuman Jaswal, PhD, May 21, 2015
Product Trends/ Reviews
Global

Abstract

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.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

3

 

Key Research Questions

4

Modern Surveillance Systems

5

 

Seeing Is Believing

6

 

Important to Weave Patterns

7

 

Legion of Upgrades

8

Decisions

10

 

Humans Still Decide

10

 

The Sell Side Still Dominates Surveillance

11

Prospects for Machine-Driven Surveillance

12

 

The Thought Police Are Here

12

 

Do Robots Count Electronic Losses?

13

 

We Are in the Age of Consolidation

13

Conclusion

14

Leveraging Celent’s Expertise

15

 

Support for Financial Institutions

15

 

Support for Vendors

15

Related Celent Research

16

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