Eventus, a leading provider of trade surveillance and financial risk solutions, in partnership with Datos Insights, has released a comprehensive new report titled “The Trade Surveillance Revolution: Compliance Shifts and Cutting-Edge Tech Shake-Up Transforming the Surveillance Function.” Drawing on detailed interviews with senior leaders from 20 major banks and broker-dealers worldwide, the study sheds light on how financial institutions are modernizing surveillance with AI, adaptive data strategies, and cross-asset integration to tackle growing compliance pressures.
1. High False Positives and Alert Fatigue Challenge
- Over 70% of firms report false positive rates above 25%, increasing manual workload and risk of missed threats.
- Alert fatigue is a significant compliance risk, causing critical signals to be overlooked.
2. Data Quality and Integration Remain Critical Obstacles
- Trade surveillance relies on accurate, timely data from diverse sources like order management systems, market feeds, and execution records.
- Issues with inaccurate timestamps, missing data, and fragmented systems undermine surveillance effectiveness.
- Ensuring clean and complete data is essential for reliable detection of suspicious patterns.
3. AI and Automation Drive a Paradigm Shift
- Firms are moving from traditional rules-based models to AI-powered, data-driven frameworks with adaptive filtering and real-time analysis.
- Automation aims to reduce alert volume while enhancing precision, but human validation remains key to maintain accuracy and regulatory compliance.
4. Cross-Asset and Global Surveillance Complexity
- Integration across equities, derivatives, fixed income, and digital assets presents challenges due to data fragmentation and jurisdictional requirements.
- Legal and operational complexities often lead to segmented surveillance models across regions, requiring tailored compliance measures.
5. Workforce Evolution and Strategy Reassessment
- Surveillance teams increasingly include data scientists, behavioral analysts, and ex-traders to handle growing operational complexity.
- Firms are re-evaluating build-versus-buy decisions, often combining vendor platforms with custom internal tools to meet unique needs.
6. Practical Tools for Benchmarking and Improvement
- The report features a Trade Surveillance Maturity Model and self-assessment tool to help firms evaluate capabilities and identify next steps to enhance their surveillance functions.
The Eventus and Datos Insights report reveals a dynamic transformation underway in trade surveillance. By embracing AI, improving data quality, and adopting integrated, adaptive frameworks, financial institutions are better positioned to manage compliance risks, reduce false positives, and respond to evolving regulatory demands. The path forward requires a balanced blend of technology innovation and human expertise to create resilient, efficient, and transparent surveillance systems fit for today’s complex financial markets.
