April 11, 2023 | Stamford, CT — More than half of financial market firms in the U.S. think their trade surveillance technology is due for an upgrade.

Growing investments and innovations driven by the global pandemic-fueled need for expansion in surveillance capabilities. Work from home and hybrid employee environments resulted in the emergence of new communication channels and exacerbated the ongoing explosion of data - inspiring the creation and adoption of enhanced analytics.

However, even as technology and capabilities improve, market participants experience surveillance “gaps.” These gaps arise from a host of factors, including increased market volatility, growing trading volumes, new communication modalities used by regulated employees, operational uncertainty, and regulatory and reputational concerns.  

“Both buy-side and sell-side firms see the need to improve trade surveillance capabilities with investments in technologies like cloud computing, artificial intelligence and machine learning,” says Audrey Blater, Senior Analyst for Coalition Greenwich Market Structure & Technology and author of The Future of Trade Surveillance. 

Participants in a recent research study say their progress in improving trade surveillance platforms is guided by long-term goals and strategy given prominent and persistent challenges. Approximately 60% of respondents named setup costs as a significant barrier to regtech adoption and more than 50% identify data storage and management as an ongoing challenge. The advantages of complete systems and interoperability were mentioned as solutions to lowering total cost of ownership and mitigating shorter-term bumps in the road. 

“Firms will continue investing in technology solutions to overcome these challenges—because they have to,” says Audrey Blater. “Markets are only getting more complex, regulations more onerous, and the reputational risk that comes with a surveillance misstep more gigantic. Thankfully, technology is keeping up with business requirements, and regtech providers are pushing to implement the latest technology, ensuring markets and their participants remain safe and compliant.”

The Future of Trade Surveillance presents the full results a recent study with market participants and service providers in the U.S. about their trade surveillance capabilities, needs, spending levels, capability requirements, and future strategies.