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Frankfurt am Main Office Head Office

Grosse Gallusstr. 9
Frankfurt
60311
DE

LPA - Lucht Probst Associates Singapore Office

80 Robinson Road, 80RR
Singapore
#08-00 68898
SG

LPA - Lucht Probst Associates Paris Office

16-18 Rue de Londres
Paris,
75009
FR

Telephone

0049/69/9714850

Contact

Christopher Garner
[email protected]

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.

 

We support you in project 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

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