ESG AI & Analytics Unstructured Data Trade Surveillance DLT and Digital Assets
< back to consulting services

Trade Surveillance

Technical progress such as machine learning and artificial intelligence (AI) are opening up new possibilities in trade surveillance.

In the coming years, supervisory authorities around the world will pay increasing attention to how banks deal with these new technologies. At the same time, new solutions enable banks to increase efficiency and reduce expensive manual processes.

The implementation of a Trade Surveillance solution is only the first step towards an efficient and compliant monitoring.
Due to regulatory requirements such as the Market Abuse Regulation (MAR) in the European Union, banks and operators of trading venues are obliged to monitor trading activities in order to detect manipulative behavior such as insider dealing, front running, wash trades, layering, spoofing etc. Institutions and the tool kits they apply in trade surveillance must constantly evolve and keep pace with technical progress and regulatory requirements. After all, new technology affects the way of trading (e.g. electronic trading, high frequency trading) which opens up new possibilities for manipulation.

The implementation of a professional software for trade surveillance is only the basis for regulatory compliance. Many systems suffer from a lack of data, sub-optimal parametrization of alert rules, and insufficient coverage of assets classes (e.g. equity, fixed income, credit, foreign exchange, and commodity), products, markets, regions or manipulative patterns. These problems often lead to a high number of false positives requiring investigation and thus tying up resources in the Compliance Departments. Meanwhile false negatives pose reputational risks and may carry severe consequences in terms of high regulatory penalties for insufficient or inadequate surveillance.

A sophisticated trade surveillance setup requires a thorough understanding of the respective business model, which forms the basis for an individual risk assessment, analysis of the regulatory requirements in all relevant jurisdictions and the implementation of appropriate systems and processes. LPA is perfectly equipped to help you master these challenges by offering a unique combination of deep capital markets knowledge, regulatory expertise and IT competence.

Our expertise in the area of Advanced Analytics and Machine Learning can help you optimize legacy surveillance systems or support you during the implementation of state-of-the-art technologies. For more details, please have a look at our whitepaper on “Machine Learning in Trade Surveillance” which can be downloaded here.

Trade Surveillance

We support you in projects like

Requirements analysis

Gathering and documenting functional and non-functional requirements for your trade surveillance solution

Business and IT conception

Design of to-be solution in consideration of all relevant technical, regulatory, and business-related requirements

Improvement of surveillance models

Improvement of alert quality by optimization of alert rules and their parametrization using advanced analytics

Optimization of existing processes and IT systems

Increasing effectiveness and efficiency of surveillance processes and IT systems used

Vendor Selection

Support in the entire process ranging from creating a longlist, issuing an RFI / RFP and evaluating responses, organizing presentations with vendors, up to the final decision

IT system implementation

Successful system implementation with our combination of trade surveillance experience and technical knowledge, as well as project and test management expertise

Your contact person for Trade Surveillance

Günther Neurohr

Joel Ennen

Philipp Faulstich

Download brochure

Download our brochure for all the details