Improving Surveillance Quality and Reducing Costs

Introduction

The Markets in Financial Instruments Directive (MiFID II) dominated compliance activity in 2016 - 2017, with the result that many institutions employed stop gap, employee-heavy solutions to meet Market Abuse Regulation (MAR) demands. With approaches to MiFID II relatively under control, attention is increasingly shifting towards the improvement of trade, e-communications, voice, and mobile surveillance, most often in that order.

To meet regulatory demands for quality, Opimas expects total market spending on surveillance IT to steadily increase up to US$1.4B in 2021. If investment across the surveillance channels is made appropriately, the spending to improve the quality of surveillance can also greatly reduce the number of alerts currently requiring manual attention. Likewise, the automation of trade reconstruction and investigations will enable institutions to shrink their dependence on people-intensive approaches – providing the opportunity to more productively refocus these resources.

Carefully addressed, the all-too-common approach of simply banning challenging and expensive communication channels, like mobile, and only spot checking a small percentage of other voice interactions will also become a feature of the past.

In this research note we will highlight some of the key areas on which to focus advancement efforts as well as challenges they present: false alert reduction, investigation improvement, and the move towards full communication channel coverage. The crucial shared characteristic across these topics is a move towards cohesive and rationalized surveillance across siloed channels. We will close by introducing the landscape of vendors positioning themselves to address the discussed requirements.

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