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Shortlisting Trade Surveillance Solutions Anna Griem September 2018 This authorized reprint was prepared for NICE Actimize, but the analysis has not been changed, and the report was not sponsored by NICE Actimize. For more information on the report, please contact Opimas (www.opimas.com or info@opimas.com).
SHORTLISTING SURVEIL LANCE SOLUTIONS
TABLE OF CONTENTS
TABLE OF CONTENTS.............................................................................................................. 1 GMEX TECHNOLOGIES – FORUMDETECT ................................................................. 35
EXECUTIVE SUMMARY ........................................................................................................... 2 IRISIUM .................................................................................................................................. 36
INTRODUCTION ........................................................................................................................ 4 ITIVITI - ANALYST ............................................................................................................... 38
CONSIDERATIONS FOR SUCCESSFUL SELECTIONS ...................................................... 7 KX SYSTEMS – KX FOR SURVEILLANCE ...................................................................... 39
BUY SIDE / SELL SIDE / MARKET OPERATOR SURVEILLANCE NEEDS................. 7 LIQUIDMETRIX .................................................................................................................... 41
HOLISTIC SURVEILLANCE .................................................................................................. 8 LSEG TECHNOLOGY – MILLENNIUM SURVEILLANCE ............................................ 42
ARTIFICIAL INTELLIGENCE ..............................................................................................10 NASDAQ SMARTS SURVEILLANCE................................................................................ 44
ADDITIONAL BUSINESS INSIGHTS ................................................................................11 NICE ACTIMIZE – HOLISTIC SURVEILLANCE.............................................................. 45
COMPARING SURVEILLANCE VENDORS ........................................................................12 ONEMARKETDATA – ONETICK TRADE SURVEILLANCE ........................................ 47
COMPETITION AMONGST SURVEILLANCE SOLUTIONS........................................12 RIMES TECHNOLOGIES – REGFOCUS MARKET SURVEILLANCE AND MAR .... 49
SOLUTION PROFILES .............................................................................................................18 SCILA – SCILA SURVEILLANCE........................................................................................ 51
ACA - DECRYPTEX ..............................................................................................................18 SIA - SIA EAGLE SURVEILLANCE .................................................................................... 52
AQUIS TECHNOLOGIES – AQUIS MARKET SURVEILLANCE (AMS) ......................20 SOFTWARE AG – APAMA EAGLEEYE ........................................................................... 53
B-NEXT – CMC:ESUITE ......................................................................................................22 THE TECHNANCIAL COMPANY - JANUS SUITE ........................................................ 55
BAY STREET TECH ..............................................................................................................24 TRADINGHUB - MARKET ABUSE SURVEILLANCE TOOL (MAST) ......................... 57
BEHAVOX..............................................................................................................................26 TRAPETS – INSTANTWATCH MARKET & OUTSOURCED TRADING
SURVEILLANCE.................................................................................................................... 59
BLOOMBERG – BTCA AND BVAULT .............................................................................28
TRILLIUM SURVEYOR ........................................................................................................ 61
EFLOW – TZ MARKET ABUSE .........................................................................................31
LOOKING FORWARD ............................................................................................................ 63
FIS GLOBAL – PROTEGENT MARKET ABUSE .............................................................33
Copyright © 2018 Opimas LLC 1
SHORTLISTING SURVEIL LANCE SOLUTIONS
EXECUTIVE SUMMARY
M ar ket a b us e s ur veil l a nce re q ui re me nt s va ry su rv eill a nce f or w ar d ac r oss t he bo a r d. Es ta bl is he d
sig n if ica n tl y b y ty p e of m a r ket p a rt icip a nt , ap p l ic a ble sol uti o ns h av e, i n s e ver al c as es, a d op t e d i n n ov ati ve
re g ula tio n s, a n d t he tr a di n g st ra te gie s e m p loye d . To ap p ro ac he s t h at we re fi rst i ntr o d uce d b y ne wc o me rs t o
as sis t w it h tr a de s ur veil l a nce v en d o r sel e ctio n s, t his be tte r t ar get ale rt s , u n de rs ta n d t r a de r b e ha vi or , su r fa ce
rep or t de ta il s t he l e a d in g m a rk et s ur veill a nc e p ro vi de rs b us in es s i ns ig ht s, me e t b r oa d er re g ul at or y o bli g ati o ns,
– as w el l as a d diti o n a l o bl i g ati o ns t hey ar e cap a ble o f a n d a ut o ma te i nve sti g ati o ns .
as sis ti ng wi t h, i ncl u di n g: e -c o m m un ic ati o ns m on it or in g,
voic e s ur veil l a nc e, tr a de rec o nst r uct io n r e q ui re me n ts, Loo ki n g at t he fi el d o f s olu ti on s a d dr es si ng t r a de a n d
a n d bes t e xe cu ti on r ep or ti ng. T hi s r ep o rt al so hi g hli g hts or d er s u rve ill an ce r e q ui re me n ts , t he re ar e onl y a f e w
no vel w ay s in w hic h sol uti o ns a re i mp ro vi n g ale rti n g th at p ro d uc e al er t s ac r oss b ot h t r a de and
me th o d ol o g ie s, a s wel l as p r ov i di ng a d d iti o n al b us in es s co m mu n ic ati o ns da t a , i ncl u di n g NICE A cti miz e ,
in si gh ts fo r t he m a r ket p a rtic ip a n ts t he y s er v e . Re a de rs Bloo m b er g, a n d Be h av ox , a n d t o a m or e li m i te d e xt en t
ar e e nc o ur a ge d t o us e t his rep o rt i n o r de r t o q uic kly So ft w ar e A G, Scil a, b- ne xt , T r ap et s, a n d I ri si u m. At t hi s
cre at e a s ho rtl ist o f t h e ve n d o rs su ite d fo r fu rt h er sta ge onl y N I CE Acti m i z e an d B eh a vo x p r o d uc e ale rts f o r
co nsi d er at io n. voic e c o m mu n ic ati o ns al o ng si de t ra d e and e-
co m mu n ic ati o ns s u rve i lla nce .
Eve n wit h N a s da q S M AR T S a n d N I CE Ac ti mi z e to get h er
ow n in g ov er h al f o f t h e U S $2 8 4 mn sp e n d on tr a de a n d Bec au se t he e xp a nsi o n o f re ce nt r eg ul ati o n s , i ncl u di ng
or d er s ur veil l a nce so ft wa re , ne w e nt ra n ts ar e the M ar ke t A b u se Di r ectiv e ( M AD ) a n d t he M ar ket s i n
ag g re ssi vel y vy i ng f or b u si ne ss. W hil e t he m ar ke t will Fi na nc i al In st r um e nts Di rec tiv e ( M iF ID II ) , h a s i nc re as e d
likel y e xp e ri e nce f ur t he r c o ns oli d ati o n i n t he ne x t 1 2 - the b uy si d e’s t ra de s u rve ill an ce and re p o rti n g
18 mo n th s, n e w sol ut io ns ar e p us h in g t he q u alit y of o bli ga ti on s , s eve r al ve n do r s h av e sp e cif ic all y m a rk et e d
Copyright © 2018 Opimas LLC 2
SHORTLISTING SURVEIL LANCE SOLUTIONS
the m selv es t o a sse t m a na ge rs a n d he d ge fu n d s. A C A as t h e f ir st li ne o f de fe n se i nv est ig at i ng ale rts f or
Tec h nol o gy , R IM ES Tec h n ol o gie s , Be h av o x, N I CE m ar ke t p ar ticip a nt s w h o ar e t oo s mall t o hi re a full -ti m e
Act im iz e, T r a di n g Hu b , a n d Sy b e neti x (p u r ch as e d by co mp li a nce o ff ice r, o r w ho n ee d t o a ug me nt t hei r
N as d a q S MA R TS i n th e s u m me r o f 20 1 7) , h a ve all m a de ex ist in g te a m.
a c o nce rte d p u s h t o wi n b uy si d e cli en ts t ra n sit io ni n g
a wa y from r el i a nce on t hei r b ro ke rs and ma n u al Ac ro ss th e e n ti re t r a d e a n d o r de r su rv eill a n ce s ol uti o n
p ro ces ses for m ar k et a b use and i nsi d er tr a di n g la n dsc ap e , va ri ety r ul es. W he n s elect i ng a sol uti o n to
su rv eill a nce . in st all, a u gm e nt, or re p lac e c u r re nt s u rve illa nc e
ap p ro ac he s, fi r ms wi ll ne e d t o be s ur e th at t hey
A f e w y o un g fi r ms l ik e A q uis S u rve illa nc e an d Bay St re et ap p rop ri at ely s h o rtli st t he ve n d or s be st p o siti o ne d t o
Tec h ha ve p osi tio n e d t he m selv es to s u p p or t t he me et t he ir n ee ds. I n t hi s rep or t, Op i m a s p ro vi de s
su rv eill a nce nee d s o f e xc h a ng es , a g r ou p c u rr en tly m ap p i n g to ols a n d ve n do r p ro fil es t o h elp the re a de r
ser ve d p re do m i na ntl y by N as d a q S M AR TS a n d Sc il a. q uic kly i de nt if y t he so luti o ns th a t mo st w ar r a nt fu rt he r
in ves ti ga tio n.
Ot h er s ol uti o ns ha ve m a de i n r oa d s in sp e cif ic
ge og r ap hie s. b- ne xt h as be en a le a de r i n G er m a ny f o r
well ove r t wo d eca d e s. Ne u re ns ic ( rec en tly p u rc ha se d by
Tr a di n g T ec hn ol og ies ) , Tr il l i u m , an d A C A Tec h n ol o gy
h ave th u s f a r f oc us e d t he ir at t e nti o n p ri m a rily o n t he
U nite d St ate s. In A si a, t he T ec h na nc ial Co mp a ny
p ro vi de s co mp eti ti on t o m a r ket le a de r N as d a q SM A RT S .
Sc an d i na vi a i s se rve d by a h ost o f l oc al p l ay er s,
incl u d in g Sc il a, T ra p et s, a n d I tiv iti.
In a d d iti o n to on -p re mi se and ho ste d dep l oy m en t
op ti o ns, a fe w v en d o rs al s o o f fe r s ur ve ill a nce B P O .
Tr ap e ts , A q uis , a n d A C A Te ch n olo gy b ot h o ff er t o st a n d
Copyright © 2018 Opimas LLC 3
SHORTLISTING SURVEIL LANCE SOLUTIONS
INTRODUCTION hit ti n g a b r oa d er s w a th of m a rk et p a rtic ip a nts. M a ny
p lay er s h av e g otte n a w ay , f or s o me t im e, w it h
ap p ro ac he s t o h a n dli n g t he se r e qu ir e me nt s t h at rel y o n
m a nu al, sil oe d p r oce sse s. T h is h as q ui ck ly b ec o me
Re gul at io n s des ig n e d t o p rev en t ma r ket a b use h av e in su f fici e nt.
be co me mo re str i ng e nt a r o un d t he wo rl d , de m an d i ng
th at cap it al m ar k ets p a rti cip a nts p ro ac tiv ely
de m o nst r ate ef f or ts t o mo ni to r a n d p rev e n t b e ha vi or Market abuse fines have become more frequent and are
p utt i ng t he st a bil ity o f the ma r ket s a n d in ves t or s at ri s k. hitting a much broader group of market participants.
Th e M a rk et A b u se D ire ctiv e ( M AD ), t he M ar ket s i n
Fi na nc i al I n str u m en ts Di rec tiv e ( Mi F ID II ) , ES M A
W hile vis u aliz at io n a n d a us er -f ri en dl y c as e m a na ge m en t
Gui d eli ne s, t he Dodd Fr a n k A ct, t he H on g Ko n g
syst e m w er e selli n g p oi nts of s u rv eill an c e s olu ti on s i n
Sec u rit ies a n d F ut ur e s Or d i na nc e, a n d t he Si n ga p o re
the r ece nt p ast, t he f o cus f o r m ar ke t p ar tici p a nts is no w
M ar ket Mi sco n d uc t R egi m e , c u mul at ivel y a lso r e q ui re
fi r mly ce nt e re d o n re d uci n g c ost s by b ette r t ar ge t i n g
m or e ma r ket p a rt icip a nt s t h an ev er bef o re t o s u rve il fo r
ale rts , b ro a d en i ng s u r veill a nce a cr os s silo e d ch a n nel s,
m ar ke t a b use an d i n si de r t r a di n g, a n d ap p rop ri at ely
a n d a uto m at i ng i nve st ig ati o ns . Op i m as e xp e cts ov er all
rep or t a n d h a n dl e a n i n ci de nt w he n it occ u rs. O f co u rs e ,
IT sp e n di n g o n s u rve i lla nce t o r ise – r e ac hi n g U S$ 1. 4
m ar ke t p a rtic ip a nts the m sel v es ha ve a n u m be r of
bill io n by 2 02 1. Fo r an in - dep th a n aly si s of th is
inc e ntiv es t o s ta mp ou t t hr ea te ni n g t ra d i n g co n d uct:
inc re a se d sp e n d in g, e x p ecte d i mp act on he a d co un t, a n d
steep re g ul at or y fi n es, rep ut at io n al da m ag e, and
ch alle n ges as so ci ate d wit h eac h st re a m o f s u rve illa nc e,
av oi di n g l o sse s , to n a me a fe w.
p lea se r efe r t o Op i m as’ F ig h ti ng Ma r ket A b use : A I,
Th e a bil i ty to a nt ici p ate a n d r esp o n d t o re g ul ato ry Beh a vio u r al, and H olis tic S u rve illa nc e Ap p ro ac he s
in q ui ri es ce nte re d on m a rk et a b u se is o f p a ra m o un t rep or t.
imp o rt an ce . W hil e 20 15 r ep res en te d t he hi g h p oi nt i n
Th is rep o rt e x a mi ne s ve n do rs in t he t r a de s u rve illa nc e
rec en t ye ar s – wit h f i n es re ac h in g al m os t U S $9 bill io n -
sp ac e . Wh ile m os t o f t he p r of ile d ve n do rs o n ly p r ov i de
m ar ke t a b u se f i nes h a ve bec o me mo re f re q u ent a n d ar e
Copyright © 2018 Opimas LLC 4
SHORTLISTING SURVEIL LANCE SOLUTIONS
tr a de and o r de r mo nit o ri n g , a ha n d f ul als o o ffe r M ar ket a b us e s ur veill a nce re q ui re me nt s va ry
co m mu n ic ati o ns s u rve il l a nce. I n tr a d e s ur ve illa nce , t he sig n if ica n tly b y ty p e of m a r ket p a rt icip a nt, ap p l ic a ble
m ar ke t s h a re l e a de r s, f ar a n d a w ay, a re Na s d a q S MA RT S re g ula tio n s, a n d t he t ra d i ng s tr at eg ies em p l oye d. Th is
a n d NI C E Acti m iz e. H o we ve r, s ol uti o ns fo cu s ed o n v er y rep or t de ta ils t he le a d in g m a rk et s ur veill a nc e p ro vi de rs
ta rg ete d al e rt cr ea ti o n , l i ke T r a di ng H u b , a re q uic kly – a s well as ot he r o bli ga ti on s t he y a re cap a ble of
wi n ni n g cl ie nt s. co mp lyi n g wi t h, i ncl u di ng : e -co m m u nic ati o ns
m on it or in g, v oic e su rv eill a nce, MiF I D II tr a de
FIGURE 1. IT SPENDING ON TRADE AND
COMMUNICATIONS SURVEILLANCE IT AND rec o nst r uct io n r e qu ir e me nt s, a n d R T S 2 7 a n d 2 8 b est
HEADCOUNT 2017 - 2021 ex ec uti o n re p o rti n g. Th is rep or t al so hi g hli gh ts
20,000 1.6 in n ov ati ve w ay s i n w hic h s ol uti o ns a re di r ecti n g t h ei r
1.4
al e rti n g me t ho d olo gy , a s well a s a d dit io n a l b u si ne ss
19,500
Total Headcount: in si gh ts t h ey ar e a bl e t o p ro vi de fo r t he ir clie nts. Fo r
Sell Side, Buy Side,1.2
19,000 m ar ke t p a rtic ip an ts s ea rc hi n g fo r p o in te d a ssi st a nce
Exchanges,
Headcount in Surveillance
su rv eilli n g v oic e a n d / or e -c o m mu n ic ati o ns , l oo k fo r
IT Spend (US$ B)
Regulators 1.0
18,500 IT Spend (US$ B) up c o mi ng O p i m as rep or t s on v oi ce and e-
0.8 c o m mu n ic ati o ns s u rve i lla nce i n c ap it al ma r ke ts .
18,000
0.6
O nly a h a n df ul o f t h e p ro fil e d sol ut io ns p ro v id e t r ue e -
17,500
0.4 co m mu n ic ati o ns an d v oice s ur veill a nce al on g si de m ar ke t
su rv eill a nce c ap a bil iti es. NI C E Act i miz e h as l e d t he
17,000 0.2
ch ar ge as a p r ovi d er fo r h oli stic s u rv eill a n ce, p r ovi n g
16,500 0.0 itsel f t i me a n d ti m e a ga i n wit h i ts glo b al cl ie nt b ase.
2017 2018 2019 2020 2021 So me ne wc om er s , l ik e Be h av o x , a re t r yi n g t o t a ke
m ar ke t s h a re o n t h is fr o nt – b ut it is e a rly d ay s yet.
Source: Opimas Analysis
Ot h er p l aye rs w ho ha ve b ee n o n t h e m a rk e t f o r so me
ti me a re al so o ff er in g co m mu n ic ati o ns a gg re ga ti on an d
Copyright © 2018 Opimas LLC 5
SHORTLISTING SURVEIL LANCE SOLUTIONS m or e l i mite d m o nit or i n g i n co nj u nct io n wit h t he ir m ar ke t of fe ri n gs a re not y et co mp r e he ns ivel y s u rv e illi ng v oice su rv eill a nce c ap a bil i ties , i ncl u di ng So ft w ar e AG , alo n gs i de e -co m m u nic at i o ns, b u t a re m ov i n g i n t h at Bloo m b er g, S cil a, b- n ext , Tr ap ets , a n d I ris i u m. T he se di re cti o n. Copyright © 2018 Opimas LLC 6
SHORTLISTING SURVEIL LANCE SOLUTIONS
CONSIDERATIONS FOR SUCCESSFUL SELECTIONS
To h elp m ar ke t p a rti cip a nt s so rt t hr o ug h the j u m ble o f
I n th e f ollo wi n g p ag es , Op i m as will b ri efly d i s cus s s o me k ey
p lay er s a cti ve i n cap i tal m ar ke ts tr a de s ur veill a nce , t his
co nsi d er at io n s t o be ar i n mi n d w h ile e m b ar ki n g o n a
rep or t p r of il es t he l e a di n g a n d e me r gi n g sol uti o ns de si g ne d
selec tio n , i ncl u di n g: va rie d s ur veill a nc e a p p ro ac h es p e r
to de tect a n d p re ve n t m a rk et a b use. P ro d uct d e mo s an d
typ e of ma r ket p a rt i cip a nt , t he mov e t o w ar d s hol ist ic
int er vie w s wi th e n d -u se rs h av e help e d to v ali d at e
su rv eill a nce, t he p r o mi se of a rt if ici al in t ellig e nce , a n d
fu nc ti on al itie s a n d as ses s me nts o f t h e v en d or s p ro fil e d.
a d dit io n al b u si ne ss i ns ig ht s s u rv eill a nce mi gh t s u rf ac e . T he
Bef or e j u mp i n g t o t h e ve n do r m ap p i n g an d p r of iles , Op i m as
fiel d of sol u tio n s is v as t, but c a re full y rec og niz i ng
rec o m me n ds ma r ket p a rtic ip a n ts ca re f ully co ns i de r t h e
re q ui re me n ts sh o ul d h elp t he re a de r t o s h o rt l ist t h e ve n d or s
foll o wi ng :
m ost s ui te d f o r f ur th e r at te nti o n.
• Do es th e s ol uti o n se rve my ne e ds a s a m ar ke t
m ak er , sel l - si de , o r b u y -si d e p la ye r? BUY SIDE / SELL SIDE / MARKET
OPERATOR SURVEILLANCE NEEDS
• W hic h as set cl a sse s a re c ov er e d? H o w a re ale rts
co nst r uct e d? It mu st be un d er sc or ed t h at it wo ul d be a mis ta ke fo r a
m ar ke t o p e ra to r, b uy - si de , o r s ell - si de i nst it uti o n t o us e a
• W ha t ot he r ne e ds d o I h a ve , t h at a s ol uti o n m ay be sol uti o n d esi g ne d f or a not h er typ e o f m a rk et p ar tici p a nt .
a bl e to me et ? (e. g. tr a d e rec o nst r uct io n, e- Ju st as j u d gi n g m isc o n d uct acr o ss a ss et cl as ses wi th t h e
co m mu n ic ati o ns s u rve illa nce , vo ice s u rve ill a nce, sa me al go rit h m i s i n e f f ectiv e, s o is usi n g t he sa me ap p ro ac h
be st e xec ut io n ) fo r t hes e d ist i nct p la y ers .
• H ow fl e xi bl e i s t he ar ch ite ct ur e i n c ase fu t ur e
int eg r ati o ns ar e d esi re d ?
Copyright © 2018 Opimas LLC 7
SHORTLISTING SURVEIL LANCE SOLUTIONS
Tr a de rs a re ass es se d d ail y , w he re a s a sse t m an a ge rs ar e Th is ev ol uti o n h as b ee n i n evit a bl e, gi ve n t he p iec e me al
rev ie we d q u ar te rl y/ m on t hl y. T h e sell si de g en er ally t r a de s exp a ns io n of r eg ul at o ry re q ui re m e nts a n d t he ch all en ge s
m ost b r oa dl y an d d eep l y. T he b u y s i de oft e n t ra d es b r oa dl y, u ni q ue t o e ac h d at a s e t. T he re sul t is t ha t co mp li a nce te a ms
b ut n ot de ep l y (l o n g -te r m h ol d, etc ). T h e sell si de is h ave of te n t ack e d to g eth er il l - fitt i ng s ol uti o ns fo r sp ee dy
re g ula rly s ee n a s t he m ost c o mp lic at e d , w it h h ig h v ol u mes re g ula to ry c o mp li a nc e, o r e xp a n de d le g a cy sy ste m s t o
a n d v a ryi n g as set cl a ss es a n d i ns tr u me n ts. T h e bu y s i de h as h ap haz a r dly a n alyz e a d di ti on al d at a set s.
its o w n c h al l e n ges d ue t o a l ac k o f e xp eri e nce t a ki ng
res p o ns i bil i ty for s u rve il l a nc e – als o re flect e d in it s Di sti nct d at a c h a n ne ls re q ui re t ar ge te d ap p ro ac he s t o
u n willi n g nes s to sp e n d as m uc h as t he s ell si d e on h an dl e t he u ni q ue c h alle n ges th ey p res e nt. Ap p ly in g t he
su rv eill a nce . I n si de r t ra d i ng det ect io n is o f ten c o nsi d er e d sa me al go ri t hm to fi xe d i nc o me as o ne wo ul d to e q ui tie s, f o r
to be t he bi gg est s ur ve il l a nce p r io ri ty b y t he b uy si d e, r at he r ex a mp le , is usel es s. C o mm u ni ca ti on c h a n nel s p re se nt t he ir
th a n ot he r ma r ket a b u se sce n a ri os. ow n di ff ic ulti es. T h e res ul t i s t ha t c o mp li a nce t ea m s a re
oft e n o ve r wh el me d w i th a fl oo d o f ale rts , n ea rly n eg at in g
M ar ket op e r at or s ’ ap p ro ac he s to s ur veill a nc e als o nee d t o the p o ssi b ilit y for t h o ug ht f ul i nv est ig ati o n an d
be q ui te dis ti nct. T he y s ho ul d p rio ri tiz e f a mil ia riz i ng id e nti fic at io n o f tr u e p osi tiv es.
the m selv es w it h s u rv e il l a nce s ol uti o ns fo cu s ed o n e qu iti es
a n d e xc h an ge -l i ste d d eri va tiv es, a s t hi s is w ha t t he y w ill Selec t ve n d or s li ke N I CE Act i miz e , Blo o m b er g, B eh av o x ,
ne e d t o mo ni to r. Sc al a bil i ty to h a n dle la r ge da ta v ol u mes Scil a, b -n e xt, Tr ap ets , So ft w ar e A G, Pa n alyt i cs, a n d I ri si u m
a n d a b ilit y t o c on d uc t re al -t i me m on it or i ng wo ul d b ot h be ar e p o sit io ni n g t he ms elves t o be gi n ha n dl i n g tr a de a n d
key c o nsi d er at io n s fo r e xc h an ge s o r a n HF T. co m mu n ic ati o n mo ni t or in g in a h olis tic m a n ne r , t h o ug h a
syst e m th at t r uly c re ate s al ert s by co m bi ni n g t hes e
di sp ar at e so u rce s is n ot yet av ail a ble. P a na lytic s w as not
HOLISTIC SURVEILLANCE
p ro fil e d i n th is rep o rt bec a us e it do es no t yet of fe r
sta n d al on e tr a d e s ur v eilla nc e – t h ou g h t hi s is o n it s s ho rt -
M uc h o f t he m a r ket sti l l ap p ro ac he s s u rv eill a nce i n a sil oe d
ter m ro a d m ap .
m a nn er , w it h sep a r ate syst e ms c re ati n g ale rts o f s us p ici o us
be h av io rs fo r e ac h as s et cl a ss a n d co m m u nic ati o n c ha n nel .
Copyright © 2018 Opimas LLC 8
SHORTLISTING SURVEIL LANCE SOLUTIONS
FIGURE 2. SURVEILLANCE SYSTEMS ARCHITECTURE OVERVIEW
Communications Surveillance Trade and Order Surveillance
Mobile Electronic Communications Internal Systems External Systems
Voice Voicemail Email Chat apps Execution Order Exchange News
Management Management Order Books Feeds
Messenging VoIP Apps Social Media VoIP Apps
Alternative
Algo Pricing/ Market Data
Trading
Trading Quotes Providers
Systems
Documents Fixed Line
OTC Derivatives
Exchange-traded
Fixed Income
Meeting Computer
Derivatives
Voice Voicemail
Equities
Minutes Files
FX
Contracts Research Turrets
Alert Metadata Trade Order Book
Generation Analysis Reconstruction Replay
Communications Trade and Order
Archive Repository
Alert
Filtering Replay Visualization
Generation
Case Management
Hollistic trade and communications surveillance
Source: Opimas
Copyright © 2018 Opimas LLC 9SHORTLISTING SURVEIL LANCE SOLUTIONS
H olis tic s ur veil l a nce ca n al s o ai d i n m ee tin g Mi F ID I I ove rl ay t o cl e ar a n d de fe n d a ble ale rti n g me th o d olo gie s.
de m a n ds t h at al l p r e - , at, a n d p o st - tr a de d at a , i ncl u di n g So me p la n ne d s ur veill a nce ap p ro ac he s rely i n g o n A I al o ne
rel ate d t ex t a n d vo ice co m m u nic at io n s , b e p ulle d t og et he r ar e cu r re ntly s till to o e xo tic. A r ules - ba se d e ng i ne, wh ile
fo r tr a d e rec o ns tr uct io n w it hi n 7 2 h o u rs of a re q u est . less e xc iti n g , is s till n e cess a ry t o ke ep re g ul a to rs a t b ay.
Ret ri ev a bil i ty i s ke y t o m eet i ng t h e se ne w re q ui re me nt s ,
a n d th is i s n ot a tr ivi al e xe rci se, re q ui r i n g c o ns ist en t Eve n f or s olu ti on s em p loyi n g m ac h i ne le a rn i n g, a c o m mo n
in d ex i ng o f rec or d e d d at a t o tr a ns act io n s, l i n ki ng t og et he r p ro bl e m ex ist s. Ho w c a n o ne bes t tr ai n a m a chi n e l ea r ni n g
voic e, S M S, IM , S kyp e , an d al l o t he r re q u ir e d ch a nn els. Th is syst e m wit h o ut th e c ri tic al m ass o f h ar d e x a mp le s of p r ov en
is t oo o fte n a m a nu al , ti me - in te ns ive p r oce ss . If o ff er e d a s cas es o f m ar ket a bu s e? T he co n fi rm at io n s a mp le f or tr u e
a s er vic e, t r a de re co ns tr uct io n c a n f u ncti o n as m o re t h a n a ale rts acr os s m a ny ma r ket a b u se sce n a ri os a r e ve ry li m ite d,
sp o r a dic ta sk for re g ul ato ry c om p li a nce. I ns te a d, w hic h do es n’t l ea d t o r o bu st m ac hi ne le ar n in g. B ef or e
co mp li a nce te a ms ca n al s o us e t r a de rec o ns t r ucti o n d ur i ng rely i ng o n a s ol ut io n d ep e n di ng he avil y o n A I an d ma ch i ne
ale rt i nve sti g ati o ns. Bl oo m b er g a n d N I CE Ac ti miz e ar e lea r ni ng , fi rm s sh o ul d i nv est ig at e t he h ist o ric al d at a us e d t o
hi g hly r eg a r de d f o r th eir t r a de r eco n st ru cti o n ca p a b ilit ies . tr ai n t he sys te m, a n d be c a re f ul a b o ut s ol ut io ns w ho h av e
co nst r uct e d c ase s a rti fici all y t o c o mp e ns at e fo r a l ac k o f
tr ue p o sit ive s.
ARTIFICIAL INTELLIGENCE
Wit h t he r a ng e o f A I c a p a bil itie s e xp a n di ng , h ow eve r, it m ay
Th e use o f AI in s ur ve il l a nce h a s t he p ote nt i al t o p ro d uce
be wi se to selec t a s u rve illa nc e p la tf or m b u ilt wi t h sp ee d
sm a rte r al er ts, i mp r ove au to m at io n, an d r e du ce t he
a n d fl e xi bil ity i n mi n d to m ak e m ac hi ne le ar n in g p os si ble i n
m a np o we r nee d e d t o ma n a ge i nve sti g ati o ns. If ap p lie d
the f ut u re. E ve n i f AI i sn’ t hap p e ni ng yet , it l i kely w ill i n t he
ju d ici ou sl y, i t h as t h e a bil i ty t o p re -e mp tivel y i de nti fy
fu t ur e. I nt er est in gly , re g ula to rs h ave b ee n v er y k ee n o n
be h av io r i n dic at ive of fu t ur e m isc o n du ct, be f or e a ny gr av e
us in g A I a n d m ac hi ne le a r ni ng to i de nt ify ne w fo r ms of
d a ma ge is in c ur re d. W e a re n ot y et at t he st ag e, ho w eve r,
m ar ke t a bu se. T he re see ms t o be a d u e p r oce ss iss u e i n
w he re a bl ac k - b o x A I s ol uti o n gi ves m a rk e t p a rtic ip a n t s
hol d i ng m a rk et p art ici p a nts acc o u nt a ble f o r viol at io ns th at
co mf o rt e xp l a i ni ng t o a re g ul at or wh y a n al e rt w a s h a n dle d
ar e n ot ye t a g ai nst t h e l a w – a su b ject de se rvi n g a tte nt io n
on e wa y o r a no th er. Fo r no w, A I i s bes t st r uct ur e d as a n
in a sep a ra te st u dy.
Copyright © 2018 Opimas LLC 10SHORTLISTING SURVEIL LANCE SOLUTIONS
ADDITIONAL BUSINESS INSIGHTS
W hile s ur veil l a nce w a s p re vi ou sly o w ne d s ole ly b y t he h ea d
of co mp l ia nc e , it i s be co mi n g a m a na ge m ent co nc er n i n
tr a di n g a s wel l . A k ey re as o n a he a d of tr a di n g s h o ul d be
in volv e d in c h oo si ng a s ol u ti on i s fo r t he a d di ti on al i ns ig ht
a s u rve il l a nc e sy ste m mi g ht p ro vi de. Su rv eil la nce s yst e ms ,
oft e n e qu ip p e d wit h b eh av io r al a n alyt ics , a r e i n d ee d bei n g
us e d to g a in u ne xp ec t ed b us in es s b en ef its , i ncl u di n g:
1. Best e xe cu ti on a nal ys e s
2. Tr a de r/ p or tf ol i o m a n a ge r p er f or m a nce as ses sm e nt
3. C ro ss - sel l in g op p o rt u n ity i de nt if ic ati o n
4. Em p l oy ee r ete nt io n i n f or m at io n
5. Ne w p r o d ucts/ i n dice s cre at io n b as e d on p r evi ou sly
u nr eco g niz e d cl ie nt de m a n d
Copyright © 2018 Opimas LLC 11SHORTLISTING SURVEIL LANCE SOLUTIONS
COMPARING SURVEILLANCE VENDORS
fi r ms , li ke Ne u re ns i c an d A nco a, h as ma d e m a rk et
COMPETITION AMONGST SURVEILLANCE
p a rtic ip a n ts eve n mo r e r el uct a nt a b o ut rel y i n g on s ta rt -up
SOLUTIONS
sol uti o ns .
Esp e ci all y i n t r a de s u r veil l a nce, th e co mp eti t io n f o r m a rk et
FIGURE 3. TRADE SURVEILLANCE MARKET
sh a re is fi erc e. As Op i m as’ Fi n Tec h Sp e n d in g a n d I n nov at io n
SHARE
in C ap it al M a rk ets rep or t de m o nst r at es, I T s p en d f o r 2 01 7
w as act u al l y rel at ivel y sm al l ac ro ss Re g Tec h in c o mp ar is o n
Nasdaq and NICE Actimize dominate the market in trade
to ot he r step s i n th e c ap it al m a rk ets v al ue c h ai n at U S$ 6. 4 surveillance, accounting for over half of overall revenues...
bill io n an n u al l y.
M ar ket s h a re fo r t he tr a de s u rve ill an ce so ft wa re sl ice –
Other
US $ 28 4 m n t ot al – i s i nte n sel y g u ar d e d by l ea de r s Na s d a q
22% Nasdaq
SM A RT S a n d N I C E A c ti miz e. Still , n e w s olu tio n p ro vi de rs b-next 33%
h ave flo ck e d to th is s p ace. T he re as o n r ep e ate dl y cit e d by 4%
Trading Hub
ne wc o me rs is t h at t h e i nc u m be nt p ro vi de r s p r o d uce p oo r
4% FIS
q u alit y al er ts a n d h av e i n fl e xi bl e a rc hi tect u re s. C o nf i de nce 4% NICE Actimize
ap p e a rs hi g h t ha t m a r k et p a rt icip a nts will c o nti n ue to gr o w Scila 25%
we a ry of i nc u m b en ts t h at p ro d uc e a fi re h ose of f alse ale rt s. 8%
But wa ri ne ss o ve r p ote nt ial e xp os ur e t o fi ne s d ue to Total Market Size TTM: US$ 284mn
tr ust i ng a n u n tes te d s ol u ti o n ha s l en gt he n e d s ales cycl es Source: Opimas Analysis
a n d h as fo rce d m a ny st a rt up s t o p rov i de fr ee p r o of s o f
c o ncep t t o p r osp ect s. Th e h ig h-p r of ile a b so r p tio n s of y o u ng
Copyright © 2018 Opimas LLC 12SHORTLISTING SURVEIL LANCE SOLUTIONS
We e xp ect t he m a rk et to co ns oli d at e f urt h er in t he co m in g F I G U R E 4 ) t o bet te r u n de rst a n d t he wi de r l a n dsc ap e
w he re t he se s olu ti on s sit. F I G U R E 5 , F I G U R E 6 , a n d
12 -1 8 m o nt hs. Some of th ese ne we r sol ut io n s ar e
F I G U R E 7 p r ov i de si de by s i de c om p a ri so n s of e ac h
p ote nt ial l y ov er e xte n de d on i mp r ess ive , b ut lo w-p a i d
act ive s ol uti o ns f u nct i on al itie s. F or a d eep e r i ns ig ht i nt o a
p ro ject s , be ne fi ti ng mo stl y Tie r 1 and 2 s ell - si de p a rtic ul a r ve n do r , p le a se re fe r t o t h e foll o wi n g p r ofil e s:
in stit u tio n s. T he re i s ro o m f or t he se ne we r so l ut io n s to
th riv e, h o wev er , a n d t w o ap p ro ac he s we h ave t he m os t • ACA - Decryptex
• Aquis Technologies – Aquis Market Surveillance (AMS)
co nf i de nce i n a re :
• b-next – CMC:eSuite
• Ba y S t r e e t T e c h
1. Al l o w in g ma r ket p ar tic ip a nt s to l aye r t hes e s ta rt - up • Be h a v o x
su rv eil l a nce s ol uti o ns on top o f t hei r e xi st i n g al er t • Bl o o m b e r g – BT C A A N D BV A U L T
• eflow
p ro vi de rs at a l o we r cost t h an t r a diti o n al , p r ove n
• FI S G l o b a l – P r o t e g e n t M a r k e t A b u se
sol uti o ns . • G M E X T e c h n o l o g i e s – Fo r u m D e t e c t
• I r i si u m
2. O ff ici al l y co m b in i ng or p a rt n er in g w it h a m or e • I T I V I T I - A n a l y st
• K X S y st e m s – K x f o r S u r v e i l l a n c e
est a bl i sh e d p l ay er – l ik e Sy be n eti x w it h N a s da q
• Liquidmetrix
SM A RT S . • LSEG Technology – Millennium Surveillance
• N a sd a q S M A R T S
I n t h e f ace o f t he p rev i ou sl y l i ste d c h alle n ges , we e xp e ct to • N I C E A c t i m i z e – H o l i st i c S u r v e i l l a n c e
• OneMarketData – OneTick
see s eve r al o f t he se n ew t r a de s u rv eill a nce fi r ms m ak in g a
• R I M E S T e c h n o l o g i e s – R e g Fo c u s M a r k e t S u r v e i l l a n c e
co nce rte d e f fo rt t o p u rs ue t he se op ti on s. • Scila – Scila Surveillance
• SIA - SIA EAGLE Surveillance
Th e f ollo wi n g p a ge s c on ta i n a ba sic ove rv ie w o f th e • Software AG – EagleEye
sol uti o ns acti ve i n t ra de a n d o r de r su rv eill a nce t o e na bl e a • The Technancial Company - Janus Suite
q uic k map p i ng of t h os e t h at s ui t th e re a de r’ s nee d s . Re fe r • T r a d i n g H u b - M a r k e t A b u se S u r v e i l l a n c e T o o l ( M A S T )
• T r a p e t s – I n st a n t W a t c h M a r k e t & O u t so u r c e d T r a d i n g
to (
Surveillance
• Trillium Surveyor
Copyright © 2018 Opimas LLC 13SHORTLISTING SURVEIL LANCE SOLUTIONS FIGURE 4. LANDSCAPE OF SURVEILLANCE SOLUTION PROVIDERS Source: Opimas Analysis Copyright © 2018 Opimas LLC 14
SHORTLISTING SURVEIL LANCE SOLUTIONS
FIGURE 5. SURVEILLANCE VENDORS BASIC INFO
ACA Compliance
Company Name
Bay Street Tech
OneMarketData
NICE Actimize
Technologies
Technologies
Software AG
LiquidMetrix
Technancial
Kx Systems
Technology
Technology
TradingHub
Bloomberg
Behavox
Nasdaq
Trapets
Trillium
Irisium
RIMES
b-next
GMEX
Aquis
LSEG
TZ Market Abuse eflow
Scila
Itiviti
SIA
FIS
Protegent Market
Solution Names
Bvault & BTCA
OneTick Trade
JANUS Trade
ForumDetect
InstantWatch
Surveillance
Surveillance
Surveillance
Surveillance
Surveillance
Surveillance
Surveillance
Surveillance
LiquidMetrix
CMC:eSuite
Compliance
Millennium
RegFocus
Decryptex
EagleEye
SMARTS
Surveyor
Platform
EAGLE
Analyst
Apama
Market
Abuse
MAST
Kx for
Scila
AMS
FMC
Solution Founding Year 2014 2018 2017 2014 2010 1989 2007 2013 2012 2010 2016 1993 2013 1996 1998 1999 2015 2016 2008 2002 2012 2013 2010 2005 2014
Darmstadt, Germany
Headquarters
Malabe, Sri Lanka
Herford, Germany
Newry, N. Ireland
Jacksonville, FL
Hoboken, NJ
Hoboken, NJ
Stockholm
Stockholm
Stockholm
New York
New York
New York
New York
New York
Montréal
London
London
London
London
London
London
London
London
Milan
Employees for these solutions 50 20 4 120 120 55 15 50 10 22 15 25 10 18 200 307 20 35 50 40 20 15 45 30 20
Regions Europe ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ◐
North America ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
APAC ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Rest of World ● ● ● ● ● ● ● ● ● ●
Trade Equities ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Surveillance
Fixed Income ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Asset Classes
FX ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
ETDs ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
OTC Derivatives ● ● ● ● ● ● ● ● ● ● ● ● ●
Comms E-comms Surveillance ◐ ● ● ◐ ◐ ◐ ● ◐ ◐ ◐
Surveillance
Voice Surveillance ● ◐ ◐ ◐ ● ◐ ◐
Mobile Surveillance ● ◐ ◐ ◐ ● ◐
E-Comms Archiving ● ● ● ● ● ● ●
Other Functions Case Mgt ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Trade Reconstruction ◐ ◐ ● ● ◐ ● ◐ ● ◐ ● ◐ ◐ ◐ ● ◐
Source: Firms, Opimas Analysis and Estimates
Copyright © 2018 Opimas LLC 15Options
Client Type
Nr of Installs
Deployment
Company Name
Representative Clients
Regulators
Exchanges
On Premise
Cloud/hosted
Buy-side - Tier I
Sell-side - Tier I
Buy-side - Tier II
Surveillance BPO
Sell-Side - Tier II & III
Copyright © 2018 Opimas LLC
●
●
●
●
●
●
Source: Firms, Opimas Analysis and Estimates
ACA Compliance
60
●
●
●
●
●
A2X, UBS Aquis Technology
●
●
●
●
●
UK OTF, US ATS, Canada IB & exchange 4 Bay Street Tech
●
●
●
●
●
●
Marshall Wace, TP ICAP, Arrowgrass Behavox
●
●
●
●
●
●
●
SHORTLISTING SURVEIL LANCE SOLUTIONS
Bloomberg
Börse Stuttgart, Commerzbank, ITG,
●
●
●
●
●
●
●
Santander, SocGen, UBS b-next
1000+ 80+
Kames Capital, UniCredit, Singapore
●
●
●
●
Monetary Authority eflow
50
●
●
●
●
●
●
FIS
ALTX Uganda, ICDX, Hanoi Stock Exchange,
●
●
●
CASE, SEED Commodities Exchange GMEX Technologies
Asia Pacific Ex, Cowen, Energie Steiermark,
●
●
●
●
●
●
Cenkos, Bitfinex Irisium
13
●
●
●
●
Itiviti
3
Bank of America Merrill Lynch, ASIC,
●
●
●
●
●
●
●
Standard Chartered Bank, CSA, IEX Kx Systems
●
●
●
●
Macquarie LiquidMetrix
●
●
●
LSEG LSEG Technology
14
BIVA, Gemini, HKEX, SIX Swiss, Statkraft,
●
●
●
●
●
●
●
ACER, IIROC Nasdaq
216
BNP Paribas, HSBC, JPMC, Mizuho
●
●
●
●
●
●
●
Securities NICE Actimize
110
●
●
●
●
●
Credit Suisse OneMarketData
10+
●
●
●
●
●
Large pension fund RIMES Technologies
9
LSE, NYSE, Deutsche Börse, Athens SE,
●
●
●
●
●
●
●
Irish SE Scila
35
●
●
●
●
●
LSEG SIA
30
FIGURE 6. SURVEILLANCE VENDORS DEPLOYMENT OPTIONS AND CUSTOMERBASE
●
●
●
●
Software AG
●
●
●
●
●
KGI Ong Capital, Citi, BAML, SocGen Technancial
30
●
●
●
●
●
●
●
UBS, Invesco, Aberdeen TradingHub
50
●
●
●
●
●
●
●
Seydler Bank, NGM, NDX, Dhaka SE Trapets
30
Lime Brokerage, Apex Clearing, Advantage
●
●
●
Futures, Gelber Group Trillium
14
16SHORTLISTING SURVEIL LANCE SOLUTIONS
FIGURE 7. SURVEILLANCE VENDORS FUNCTIONALITY OVERVIEW
Company Name
RIMES Technologies
GMEX Technologies
Aquis Technology
LSEG Technology
ACA Compliance
Bay Street Tech
OneMarketData
NICE Actimize
Software AG
LiquidMetrix
Technancial
Kx Systems
TradingHub
Bloomberg
Behavox
Nasdaq
Trapets
Trillium
Irisium
b-next
eflow
Scila
Itiviti
SIA
FIS
Advanced Smart Alerts ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Analytics ● ● ● ● ● ● ● ● ◐ ● ● ● ● ●
Behavioral Analytics
Relationship Mapping ● ● ● ◐ ● ● ● ◐
AI / ML ● ● ● ● ● ● ● ● ● ◐ ● ◐ ●
Natural Language Proc ● ● ● ◐ ◐
Sentiment Analysis ● ● ● ● ● ●
Data Sources OMS/EMS ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Ingested Market Data Feeds ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Evaluated Prices ● ● ● ● ● ● ● ◐ ● ● ● ● ●
Corporate Actions ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Market News ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Tech Flexibility Alert Customization ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
APIs, ease of integration ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Ability to extract data ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Beyond Best Execution ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Surveillance ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Regulatory Reporting
Performance ● ● ● ● ● ● ● ●
Employee Retention ● ●
Cross-selling ●
Source: Firms, Opimas Analysis and Estimates
Copyright © 2018 Opimas LLC 17SHORTLISTING SURVEIL LANCE SOLUTIONS
SOLUTION PROFILES
ACA - DECRYPTEX tr a di n g e q u iti es, de riv ati ves , c u r re nci es, an d f ix e d in co me .
Mo st o f Dec ry p te x’ 6 0 cl ie nt s ar e he d ge f u n ds o r a sse t
Dec ryp te x m a rk et s u rve il l a nc e h as be en p a rt of ACA
m a na ge rs , an d 2/ 3 tr a de e q uit ies i n so me f o r m. Dec ryp t e x
C o mp li a nce G r oup ’s ( A C A) Re gT ec h s olu ti on s uit e si nc e
h as no t yet p os iti o ne d i tsel f t o a d d re ss s u rve illa nc e o f
20 1 6. W it h t he rece n t ac q ui siti o n o f Co r di u m , A C A se rv ice s
illi q ui d sec u rit ies no r to me et t he ne e ds o f H FT s. 90% o f
ove r 4 00 0 cl ie nt s gl o b al l y. He a d qu a rte re d i n Ne w Y or k C ity,
us er s d ep lo y t h e sol u tio n i n th e clo u d a n d 10 % r un i t o n
the sol u tio n is us e d g l o bal l y, b ut m ost cl ie nt s cu r re ntl y r u n
p re mi se. 10% of cl ie n ts al so us e A C A’s f ul ly o uts o urc e d
the ir co mp l ia nc e p ro g ra m s i n th e Un ite d St ate s, a n d m a ny
tr a de s ur veill a nce s er v ice – all ow i ng A C A to act a s fi rst li ne
h ave no n - U S s u b si di ar ie s. Wh e n p u rc ha s ed by A C A,
co mp li a nce o ffi ce rs. D ecis io ns a n d re sp on si b ility to s u b mit
Dec ryp te x w as i nt eg r a te d wi th A C A N or t hP o int ’s h ist o ric al
rep or ts t o re g ula to rs s till re st w it h t he clie n t , no t A C A.
in fr a st ru ct ur e. T he s ol u ti on is co mp le m e nte d b y ot he r
co mp li a nce c on s ul ti n g a n d o u ts ou rc in g se r vice s r u n b y Dec ryp te x’s p r of ili ng of cl ie nts ’ t ra d in g str a teg ies ( ave r ag e
A C A’s gl o b al te a m o f e x r eg ul at or s, i ncl u di n g em ail rev ie w. hol d i ng p e r io d, t r a ns a ctio n s iz e, av er a ge v ol atil ity fo r e ac h
sp eci fic se cu ri ty, etc ), is key to f als e p o sit ive re d uct io n. It s
Dec ryp te x a ut o m ate s the su rv eill a nce o f i n si de r tr a di n g,
p rop ri et ar y T +1 ale rt in g al go ri t h ms co n si d er mo re t h an
m ar ke t m a nip ul ati o n a n d f ai r nes s in de ali n g. M AR sc en a ri os
tr a di n g a n d p o sit io n act ivit y. D ecr yp te x d rop gr a b s th e
incl u d e b ut n ot l i m it ed to : sp o of in g, la ye ri n g, c ro ss in g,
tr a de d at a i n a b ul k file at t he e n d of t he da y, fr o m t h e O MS ,
m om e nt u m i g nit io n a n d ot he r t h at cr os s wit h in si de r de al in g
a n d t he n au g me nt s i t wi t h p r ici n g f ee ds , m ar ke t da ta ,
a n d m ar ke t a bu se. Ne w al go rit h m s c ove r f ai r nes s i n de ali ng
cor p o r ate ac ti on s, a n d cl ie nt sp e ci fic i n fo r m ati o n li ke
w hic h rep res e nts b es t ex ec uti o n a n d all oc ati o n e q u alit y.
me eti n g c ale n d ar s. B e ca us e t he al go ri th m is co nf ig u re d fo r
Dec ryp te x h as a u n i qu e ap p ro ac h to M NP I m on it or in g a n d
eac h cl ie nt, th e p ar a m ete rs p ro d uc i ng ale rt s va ry wi th e ac h
tr ac ks b uy si de fi r ms me eti n gs. T he s ol uti o n c ove rs fi r ms
in st alla ti on. Dep l oy m e nt t yp ic ally t a ke s 2 m on t hs, m ostl y
Copyright © 2018 Opimas LLC 18SHORTLISTING SURVEIL LANCE SOLUTIONS sp e nt cl e an i ng da ta , and th e n t we a ki n g th e ale rt in g sp eci fic at io n s to s at is f y t he e n d us er. FIGURE 8. ACA DECRYPTEX TRADE DASHBOARD Dec ryp te x’ c as e ma n ag e me nt is c ap a ble of in ge sti n g rele va n t e- co m ms as wel l a s ha vi n g att ac h me nt s a d de d to ale rts be in g i nve sti g a te d. Di sti nct f r o m ot he r sol ut io n s, Dec ryp te x d oes n ot sc or e t he r is ki ne ss of cr e ate d al er ts n or d oes i t p r ovi d e m a r ket rep l ay. In t he f ut u re, A CA i s co nsi d er i ng e xp a n di n g Dec ryp t e x to i n ge st c o mm u ni ca ti on s a n d p ro vi de ar ch ivi n g o f al l s ur veill e d d at a . D ecr yp te x i s well su ite d f or b uy si d e i nst it uti o ns w ho d o n ot re q ui re re al - ti me s ur veil l a nce a n d w ho se p r im a ry co nc er n is A me ri ca n re g ula tio n s. Copyright © 2018 Opimas LLC 19
SHORTLISTING SURVEIL LANCE SOLUTIONS
AQUIS TECHNOLOGIES – AQUIS MARKET on p re mi se - acce ssi ble v ia a c ust o miz a b le we b - ba se d
SURVEILLANCE (AMS) p or tal. T yp ic al d ep lo y me nt a n d al er t c us to m iz at io n ta ke s 3
cale n d a r mo n th s. A q ui s als o of fe rs v a ri ou s l evel s of
Lo n do n he a d q u art e re d A q uis Tec h n olo gi es , the
m a na ge d se rv ice s, p r o vi di n g t he f ir st l i ne o f de fe nc e fo r
tec hn ol og ies di vi sio n of A q uis Ex ch a n ge PL C, i nt r o d uce d
clie nts wh o w a nt to o ut so u rce i nit ial al er t i nv est ig at io n s i n
A q uis M ar ket S ur veil l a nce ( A MS ) t o t h e m ar ke t i n 2 01 7.
a n a u d it a ble m an n er. B ec au se re sp o n si bil i ty c an n ot be
W hile th e o ve ra rc hi n g go al of A q ui s T ec h nol og y is to o ff er
ou ts o urc e d, th e de cis i on t o s u b mi t a rep o rt t o re gul at o rs is
all o f t h e t o ol s r e qu ir ed t o r u n a ma r ket p l ace s uc h a s a n
al wa ys ma d e b y t he cli ent , n ot A q u is.
MT F f r o m sc r atc h, A M S is al so sol d as a s t an d alo n e s olu ti on.
A q uis E xc h a ng e al s o b uil t AM S fo r its o w n o p er ati o n as a n
FIGURE 9. AQUIS TECHNOLOGIES
MT F – s ug ge sti n g a n a d di ti on al i nce nt iv e t o keep t he
SURVEILLANCE DASHBOARD
ser vic e c o mp l i a nt an d r un n in g o n be st p r act i ces.
A MS’ r ul e s-e n gi ne is p rec o nf ig u re d t o keep i ts cl ie nts up -
to- d at e wit h r eg ul ati o ns – bo th f o r su rv eill a nce o f l o ng er
ter m ma n ip ul a tio n l i ke i ns i de r t r a di n g a n d p u mp a n d d u mp ,
a n d f or s ho rt er t er m s ce n ar io s li ke l aye ri n g. U se rs ar e
eq u ip p e d wit h a p ar se r to b u il d a n d e d it p a ra m ete rs wi t h
im m e di ate e ffe ct, a n d ca n ba ck te st ale rt s wit h his to ric al
d at a. AM S ge ne r ate s al e rt s i n re al - t i me a n d T+ 1 w he re
ap p rop ri at e, a n d t he s yste m cr ea tes ti me st a mp s a n d u ni q u e
ID s f or fu rt h er an al ysi s a n d rep o rti n g.
Th e tec h nol o gy sp eci al iz e s i n h ig h - vol u me a n d re al -t i me
tr a ns acti o ns. Scal a b il it y i s a key c on si d er at io n i n th e d es ig n
– te ste d th r o ug h t h e f ul l rul es l i br a ry at 17 0 mill io n
All acti vit y w it hi n A MS’ c a se m a na ge m ent sy ste m is
me ss a ges p er s ec on d s us ta in e d. A M S is av ail a ble ho ste d or
a u dit a ble a n d st ru ct ur ed to r efle ct cl ie nts ’ d esi re d r ule s a n d
Copyright © 2018 Opimas LLC 20SHORTLISTING SURVEIL LANCE SOLUTIONS p er mi ss io ni n g. Th e in ves ti g ati o n da s h bo a r ds all o w co mp li a nce o ff ice rs t o z o o m i n do w n t o t he m icr o sec on d level and to p a rt ic ul ar p o in ts of i nt e res t allo w in g vis u alis at io n o f f ir m e ve nts o ve rl ai d o n top o f t he w i de r m ar ke t p ict u re. Use r s can als o co n fi g ur e rep o rts to u n de rst a n d al e rt s ove r ti me. Al er ts a re cu r re ntly e xp l ai ne d via p op -u p , w hic h i s a bit a w k wa r d t o n av ig ate , b ut t hi s fe at ur e is c u rr en tl y be in g c ha n g e d. A q uis h as b ot h b ite siz e a n d a m bit io u s f ut u re p la ns fo r A MS. Mi n or i nt en d e d i mp r ove m en ts t o u se r e xp e ri en ce a n d ef fici e ncy i ncl u de : ti g hte ni n g wo rk fl o w to h elp use rs u n de rst a n d al ert s q u i ckl y, p res e nti n g T +1 a n d re al -t i me ale rts m or e d ist i nctl y , a n d ex p a n di n g t he li b r ar y o f rep o rts th at c an be g e ne ra te d . Lo n ge r te r m A q uis p l a ns t o l eve r ag e m on it or e d d at a t o, for e xa mp l e, help use r s b ett er u n de rst a n d t he ir c u sto me rs a n d s up p or t KY C e ff o rts. A q ui s is al so c on si d er in g mo vi ng i nt o s ur veill a nc e of u nst r uct u re d co m mu n ic ati o ns da ta v ia a p a rt ne rs hip . A q uis ’ AM S is a p o w er ful , t a rg ete d s ol uti on t h at c o ul d cert a inl y c o mp e te w i th t he l ik es o f N a s d a q S MA R TS, Mille n ni u m IT, a n d Sc il a f or t h e b u si nes s o f m ar ke t m a ke rs. Alt ho u g h o nl y a ro u n d f o r 1 y e ar n ow , it h as s ig n e d o n a di ve rse cl ie nt g ro up w ho see m p l ea se d by t he sol ut io n’ s reli a bil ity , fl e xi b il it y, a n d st re n gt h. Copyright © 2018 Opimas LLC 21
SHORTLISTING SURVEIL LANCE SOLUTIONS
B-NEXT – CMC:ESUITE FIGURE 10. b-next CASE MANAGEMENT
DASHBOARD
A l ea d er i n Ge r m a ny f or wel l o ve r t w o d ec a de s, b- ne xt i s
he a d q u art er e d i n H er f or d , G er m a ny. b - ne xt ’s CM C :eS u ite i s
a n i n te gr at e d, m o d ul ar c o mp l i a nce p la tf o r m t ha t of fe rs
fi n an ci al in sti t uti o ns a me a ns of de tec tin g p o te nti al
att e mp ts at m ar ke t m a nip ul ati o n. Ove r 1 2 0 sc e na ri os a re
av ail a ble o ut - o f-t he - b ox , wit h c u st om sc en a ri os t o be
de te r mi ne d by cl i en t s ’ ne e ds. b- ne x t m o d ule s in cl u d e:
C M C: Ma r ket A b u se , C M C:Gl o b al C o nt rol R oo m ,
C M C: C on fl ic ts of I nte re st , C M C: I nsi d er Co mp l i an ce ,
C M C:F X Be nc h m ar ki n g, C M C:E ne r gy, a n d C M C:Bl oc kc ha i n
Su rv eill a nce.
Mo d ul es al so c ove r bes t e x ec uti o n, p ric e de vi ati o n
de tect io n, b e nc hm a r k m on it or in g, c r os s - m ar ket a n d c ro ss -
as set mo ni to ri n g. W hil e mo stl y s er vi ng t he s ell -si d e a n d a A bo ut 40 % of b - n ex t’s cli en t b as e d ep lo ys t h e s u rv eill a nce
fe w re g ul at or s, b - ne x t h as al so ga i ne d t ra ctio n wit h t he sol uti o n ei t he r h os te d on T ho m so n Re ute rs’ Ele kt ro n or
M AR a n d Mi FI D I I af fe cte d me m be r s o f t h e b uy -si d e , as w ell else w he re, wit h th e re m ai ni n g 60 % of clie nt s rel yi n g on an
as e ne r gy a n d c o m mo d itie s tr a di n g fi r ms. on -p re mi se in st all ati o n . M or e ne w sal es a r e op ti ng f o r a
ho ste d s ol uti o n. Th e b - n ex t c as e m a na ge m ent vi e w w as
b- n ex t p ro vi de s m ul t i - as set s u rve illa nc e, w it h so m e cl ie nts
b uilt to s ati sf y c o mp li a nce o ff ice rs’ n ee ds – wi th
co nt ri b uti n g th ei r o w n d at a to be st a n alyz e O T C. Cl ie nts ar e
vis u aliz ati o ns an d so rt in g p o ssi bl e b y ale rt a n d clie nt t yp e.
a ble t o f ur th e r h on e a l ert s a n d t hr es h ol ds t o t hei r c om f or t
level. W hil e m ar ket d at a a gn os tic, b - ne xt d oe s h ave a b- n ex t ha s t im est a mp co nn ect io ns t ha t ti e t r a de a n d or d er
p a rt ne rs hip wi th T ho ms o n R eu te rs t o si mp li fy acc ess. b - d at a a n d in ge ste d vo ic e rec o r di n gs an d tr a ns crip tio n s f ro m
ne xt i s al so s et up t o b e c o nf ig u ra bl e w it h a n y O MS . its p a rt ne r Ve ri nt w it hi n its C M C: D ig it al C o mm u ni ca ti on s
Copyright © 2018 Opimas LLC 22SHORTLISTING SURVEIL LANCE SOLUTIONS A nal ytic s mo d ul e. Ve ri nt hel p s b - ne xt t o e n a ble v oic e su rv eill a nce a n al ys is wit h n ea r t i me t ec h no log y , i ncl u d in g the t ra n sc rip t io n o f c a l l s i n 40 l an g u ag es . b -n ex t p ro vi de s 21 p re co n fi gu re d sce n ar io s f o r clie nt s r e q ui r in g an aly si s o f voic e fil es. b- n ex t’s ro a d m ap ce nt ers he a vil y on r o bu st M AR a n d Mi F ID II bes t e xe cu ti on co mp l ia nce , as w ell as p rep ar at io n i n c as e of f ut ur e r eg ul at o ry de m a n ds f or re al - ti m e o r ne ar -ti m e m on it or in g of m a rk et a b use . b - ne xt h as a lso ag re e d t o p a rt ne r wit h C at el a s to o ff er jo i nt m ar ke t an d e- co m mu n ic ati o ns s u rve i l l a nce i n t he f ut u re. Copyright © 2018 Opimas LLC 23
SHORTLISTING SURVEIL LANCE SOLUTIONS
BAY STREET TECH allo w s use rs to p l ay wi th c olle cte d in f or m at io n t h ro u g h d ra g
a n d d r op f u nct io n alit y t o c re ate rep or ts, a n d to s u r fac e
Bay St re et Tec h is a yo u ng C a n a di a n ou tf it , f ou n d e d wit h
a d dit io n al b u si ne ss i n sig h ts, i ncl u di n g b est ex ec uti o n a n d
the g oal of b ett er ser vi n g t he c ap it al m ar ke ts’ t r a de
op e ra ti on s m o nit or i n g. Use r s ar e als o a ble to bu il d
su rv eill a nce nee d s. B a y St ree t be ga n i n 20 1 7 by t ar ge ti n g
int er ac tiv e vi s ual iz a ti on s of t h ei r a n aly se s w it hi n t he
the nee d s o f s mal l ma rk et op e r ato r s wh o w ere dis s ati sfi e d
p lat fo r m, w hic h ot he r use rs c an d r ill i nt o f o r f u rt he r
wit h ot he r s ol u ti on s’ str u g gl e to c op e wi t h hi gh -v ol um e ,
co nsi d er at io n.
re al -t i me s ur veil l a nc e . S in ce t hes e ea rli e st d ay s, t he
of fe ri n g h as e xp a n d e d to al s o se rve t he mo ni t or in g n ee ds o f FIGURE 11. BAY STREET TRADE SURVEILLANCE
the b u y a n d sel l s i de ac ro ss e q ui tie s, de ri vat ive s, fi xe d DASHBOARD
inc o me, F X, a n d e ne rg y & co m m o dit ies , b ot h i n re al ti me a n d
T+ 1.
Dep l oye d as a w e b ap p l ica ti on , cl ie nt s c a n ch oo se to r un
Bay St re et o n t he cl o u d, h os te d or o n p re m is e. T he p la tf or m
is a st an d o ut f or us a b il ity – w it h a w h olly i nte g r ate d a n d
a u dit a ble ca se m a na ge me nt sy ste m. T he w or kfl o w is
int u iti ve a n d t ho u g ht f ul l y e ff ici en t, w it h op tio ns t o di ges t
ale rt desc r ip ti o ns i n tex t, g r ap hic, o r t a bu lar v ie ws. T h e
p lat fo r m al s o m ak es i t e a sy fo r a p e r mi ss io n ed u se r t o a d d
ne w “ w atc h l i st s” , e. g. ne w co rp or at e a cti o n s f ee ds to be
Ale rts ar e t ail o r m a de p er a sse t cl as s, c ap a bl e o f m o nit o ri ng
co nsi d er e d.
cro ss m ar ke t a n d cr oss as set cl as s w h er e ap p rop ri at e.
Bay S tr eet i ncl u de s a wi d e ra n ge o f a n alyt ic al t o ols to help Cli e nts ca n f u rt he r h on e ale rts a n d dis cov er alt er n ati ve
us er s in ves ti ga te al er ts a s wel l as dis cov er key m a r ket a b u se ou tco m es by usi n g B ay S tr eet’ s p r op rie ta r y b ac k tes ti ng
in d ica to rs o n th ei r o w n to fee d b ac k i nto t he ir ale rti n g en gi ne. T hi s h o me g ro w n t ool r u ns co ns ist en tly at
me th o d ol o gy. A mo d ul ar t a bl e vi ew o f all i n g este d d at a als o
Copyright © 2018 Opimas LLC 24SHORTLISTING SURVEIL LANCE SOLUTIONS ap p ro xi m at el y 2 mil l i o n tr a ns ac tio n s p er s ec on d – th o ug h it ca n m o re t ha n t rip l e t hi s sp ee d. Bay St re et is a ne w c o mp an y wit h im p re ssi ve d at a p ro ces si n g p o we r, a ver y c a re f ully co ns i d ere d wo r kfl o w, a n d a br e a dt h o f fl e xi bl e a n al yt ic al t ool s. O f c ou rs e , it i s still e a rl y d ay s f o r t hi s sol ut io n, b ut t hu s f a r fee d b ac k fr o m its f ir st i nst al l at io ns h as be en p osi tiv e. Copyright © 2018 Opimas LLC 25
SHORTLISTING SURVEIL LANCE SOLUTIONS
BEHAVOX FIGURE 12. BEHAVOX RELATIONSHIP MAP
A 2 0 14 e n tr a nt he a d q u ar te re d i n L on d o n, B eh av o x o ff er s a
“p e op le a n al yt ics ” e nte rp ri se p l at fo r m t h at i nt eg r ate s
tr a ns acti o n, c o m m un i cat io n, voi ce, a n d CR M d at a i nt o a
u ni fie d e n te rp r ise g ra d e d at a l a ke d ep lo ye d o ns ite or v ia th e
clo u d (e. g. A m az o n W e b Se rv ice s, Go o gle Cl o u d Pl atf o r m, o r
Mic r os oft Az u re ). P ro p rie ta ry Be h av ox m ac hi ne l ea r ni n g ,
n at ur al l a ng u a ge p ro c ess in g, a n d p h on etic a nal ysi s ru n to
id e nti fy c ap i tal m a rk et s m isc o n d uct , in si de r t h re ats , a n d t o
su r fac e ot he r e mp l oye e a n d c u sto m er i ns ig h t s. B eh a vo x h a s
rec eiv e d si g ni fic a nt at ten ti on fo r i ts MA R c o mp li a nce use
cas e, b ut i s p osi ti on i n g it sel f t o o ff er a b r o a de r ar r ay of
ser vic es sp a n ni n g r ese a rc h u n b u n dli n g, t ra d e
rec o nst r uct io n, e - d isc ove ry , an d t he s ur f aci n g o f b u si ne ss
in si gh ts f r o m C R M a n d co m m u nic at io n s d at a. Beh a vo x h as p re co n fi g u re d ove r 15 0 sce n a ri os l oo ki n g fo r
mi sco n d uc t ( m a ny a d d res si n g MA R, so m e f or i nte r nal
W hile th e t ra d e an d t r a ns act io n s u rv eill a nce fe at ur e i s st ill
th re at s li ke se x u al h a ra ss m en t) . To a nal yz e vo ice
q uit e n ew , o nl y a d de d t o t h e Be ha vo x s ui te la te i n 2 0 17,
int er ac ti on s Be h av ox d evel op e d a p h o net ic k e yw or d se ar ch ,
Beh a vo x h as m a de a n a me f o r i tsel f q u ickl y fo r e -c om m s a n d
b as e d on 16 y ea rs of N o rt h A me ric a and E u rop e
voic e a n al y si s. Be h av o x sc or es c o m mu nic at io n s on
en fo rc em e nt c o m mu n i cat io ns . T hi s r a n ge o f s cen a ri os gr o ws
tr ust / clo s e ne ss (i n dic at or s i ncl u de: la u g ht er, e mot ic on s,
wit h ev er y clie nt e n ga ge me nt , a n d i s co up l e d w it h d etec ti on
sp elli n g er r or s, r esp o n se ti me , etc . ) a n d b usi ne ss c rit ical ity
of e mo ti on s in c o nve rs ati o ns t h at c o nt ri b u te t o th e ri sk
to de te r mi ne th e ris k in ess o f rel ati o ns hip s . Cl ie nts se e m
sco ri n g ( q ues ti on s, wh i sp e ri ng , d e ba te, an ge r, i nte r r up ti o ns,
p a rtic ul a rl y d r aw n to Be h avo x’ vi s ual iz ati o n c ap a bil iti es,
p itc h, to n e, i nt on at io n ).
incl u d in g rel ati o ns hip m ap s a n d wo r d cl ou d s, as well as t he
a bili ty t o as si st w it h tr a de r ec on st r ucti o n re q ui re me n ts.
Copyright © 2018 Opimas LLC 26SHORTLISTING SURVEIL LANCE SOLUTIONS Foll o wi ng e a rl y a tte n tio n f ro m a fe w la r ge h e dg e f u n ds, Beh a vo x ha s al s o r ecei ve d h e av y i n te res t f ro m t he sell - si de , eve n s ec ur i ng a m aj o r i n ves t me nt fr o m Ci ti gr o up i n 2 01 7. W hile rel a tiv el y ne w t o t he ma r ket a n d rel at ively u n tes te d, Beh a vo x i s p osi ti on i ng itsel f t o be a h oli stic p eop le a n alyt ics sol uti o n t h at a g gr eg at es al l c o m mu n ic ati o ns d at a in to o ne int eg r ate d s ol uti o n, c or rel at es t ho se co m m u nic at io ns t o ot he r d at a ty p es , and p r o d uce s i m me di ate act io n a ble in si gh ts fo r t he ir cl ie nt s. T hi s is d ist in ct f r o m i nc u m be nts w ho p ro vi de a h ol i sti c s ol uti o n vi a ac q u isi tio ns of on ce di sti nc t sol ut io n s o r w ho s el l ele me nt s o f a n i nt eg r ate d sol uti o n w it ho ut v er tic al i nte g ra tio n. Beh a vo x cl a im s it is b u il d i ng t he fi rs t be h av io u ral op er at in g syst e m wi th an e v ent u al f oc us e xte n d in g w ell p as t co mp li a nce i nt o a re as l i ke p ro d uc tiv ity, c ult u re, an d rev e nu e ge n er at io n. Copyright © 2018 Opimas LLC 27
SHORTLISTING SURVEIL LANCE SOLUTIONS
BLOOMBERG – BTCA AND BVAULT incl u d es ba ck t est i ng o f a bo ut on e ye a r of t he cl ie nt’ s
hi sto ri cal da ta. U se rs h ave a cce ss t o a 24 / 6 Bl oo m b er g
Fo u n de d i n 19 8 1 a n d he a d q ua rt er e d i n N ew Y o rk Ci ty,
sup p o rt l i ne i n c ase of is s ues.
Bloo m b er g’ s p e rv asi ve p r ese nc e in c a p ital m a rk ets
(3 2 5, 00 0 + t er m in al s w orl d wi d e ) als o e xte n ds to m ar ke t a n d FIGURE 13. BLOOMBERG BTCA TRADE
co m mu n ic ati o n m o nit o ri n g a n d a rc hi vi ng. SURVEILLANCE DASHBOARD
BLOOMBERG TRANSACTIO N COST ANALYSIS (BTC A)
I n BT C A, cl ie nts re ce ive t r an s acti o n co st a n alys is (T C A ),
be st e xec uti o n a n al ys i s ( i ncl u di ng r ep o rt i ng cap a bili tie s fo r
Mi FI D I I R TS 2 7 & 2 8 ), a n d s u rve illa nc e c ap a bil iti es f or t he
p rev e nti o n a n d de tect i on o f m a r k et mi sco n d u ct. T he m ar ke t
su rv eill a nce o f fe ri ng hi g hl i gh ts o utl ie rs a n d h elp s det er mi n e
u n de rlyi n g c au se s. De sig n e d to me et g en er al s ur veill a nc e
a n d rep or ti ng r e q ui re me nt s fo r t h e b ro a de st c o m mu n ity
ri g ht ou t of th e ga t e, B T CA is a mul ti - as set sol u tio n
a d dr es si ng e q ui tie s, fi xe d i nco m e, fo re x, an d f ut ur es. T r a de
d at a, as w el l as Bl o om be r g m ar ket d a ta a n d n ew s f ee ds w it h
Bloo m b er g’ s r oa d m ap fo r BT C A di rec tly r esp on d s to cl ie nt
b as ic se nt im e nt a n al y s is , a re i ncl u d e d in t h e of fe ri n g.
re q ue sts , a n d is p rio ri ti z in g d evel op me n t of O T C d er iv ati ves
su rv eill a nce. Wit h in d us tr y - wi de d e ma n d al so p re se nt fo r
BT C A’s c a se m a na ge me nt sy ste m f acili ta t es ap p r op ri ate
co m bi ne d a n alys is and v ie w of u nst r uct u re d
esc ala ti on p r oce d u re s a n d a ssi g n me nt of e xc ep ti o ns -
co m mu n ic ati o ns , as we ll as t r a de a n d or d er d a ta, Bl o om b er g
evi de nc i ng ef fo rt s m a de to co mp l y wit h re g ula tio n s i n a n
is e xp lo ri n g h oli stic i n vest ig at io n c ap a bilit ie s.
a u dit a ble f o r m. Fo r Bl oo m be r g u se rs, i t t a ke s onl y a b o ut 1
m on th to d ep l o y ma r ket s ur veill a n ce cap a bil iti es. W hile
sp eci fic s v a ry b y re q ui re me nt s, ale rt co n fi gu r ati o n t yp ic ally
Copyright © 2018 Opimas LLC 28SHORTLISTING SURVEIL LANCE SOLUTIONS
BLOOMBERG VAULT (BVA ULT) a n d e f fici e ncie s o bt ai ne d, it i s oft e n j u d g ed t o be t oo
exp en si ve fo r u se in d ail y i n ves ti ga tio n s of s us p ici o us
Bloo m b er g p ro vi de s c o m mu n ic ati o ns a rc hiv i ng and ale rts.
su rv eill a nce f o r:
• Bl oo m b er g d at a, co rp o ra te em a ils, i ns t a nt m e ss ag in g FIGURE 14. BVAULT COMMUNICATIONS
ap p s , soc i al me d i a, fil e s, MONITORING DASHBOARD
• Vo ice t r an sc rip t s a n d rec or d i ng s - Re d B o x p a rt ne r,
b ut c om p a ti bl e wit h o t he rs )
• Tr a de d at a - Bl oo m b er g t r a di n g s yst e ms a n d d at a
exp o rts f ro m 3rd p ar tie s t h ro u g h Bl oo m be r g’s
C on n ecti vit y a n d I nt eg ra ti on Sol ut io n ( C I S)
Th e B V a ul t a rc hiv e, is wel l r eg a r de d fo r re g ula to ry
co mp li a nce. T ho u g h e q u ip p e d wi th Ba yesi a n se arc h
cap a bili tie s, mo st cl i e nt s rel y o n t he le xi co n a n d key w or d
se arc h f u ncti o n al iti es . Fo r c o m m un ic ati o n su rv eill a nce,
BV a ult s up p l ies 4 0+ c us to miz a ble p oli cie s , a s well a s re al -
ti me en te rp r ise rul e vi ol a ti on mo ni to ri n g . It s i nt u iti ve
int er f ace i s acc es si bl e t h ro u g h a w e b a p p lica ti on fo r
di sp e rs e d re vie w er s . Wit h an a u dit tr ail a n d rep o rti n g
cap a bili tie s, use rs al s o ha ve t he a bili ty r o ute ale rts by t yp e
a n d to ma n a ge t he r evi ew p roc es s hi er a rc hy.
I n B Va ul t’s tr a de r ec on st r ucti o n s er vic e, c o mm u ni ca ti on
W hile ma n y c o mp et it or s in t he s u rve illa nc e sp ac e of fe r
d at a is i m me di at el y s e arc h e d f or and t a gg e d wit h
m or e n ic he s ol uti o ns , Bl oo m b er g be gi n s b y se rvi n g t he
tr a ns acti o ns , a n d t he n e xp or te d i n t he re q ui re d fo r m at .
ne e ds o f t he ge ne r al p op ul a tio n , a n d t he n a d ds sp eci fic
W hile cl ie nt s e xp res s sat is f acti o n wit h t he r es ulti n g r ep o rt
Copyright © 2018 Opimas LLC 29SHORTLISTING SURVEIL LANCE SOLUTIONS re q ui re me n ts fo r s u bp op ul a ti on s. T h is s erv ice m o del en a ble s th e q u ick a n d ea sy dep l oy me nt o f s u rve ill a nc e a n d ar ch ivi n g c ap a bil i tie s fo r g e ne ral n ee ds. For f in a nc ial in stit u tio n s al r e a dy u si ng t he Blo o m be r g Te r mi nal , co m mu n ic ati o ns s u rve i l l a nce i s in clu d e d w it h the ir Te r mi n al su b sc rip t io n. T h at, al o n g w it h t he q uic k dep l oy me nt , h as l e d a nu m b er of fi n a nci al i ns tit ut io ns to s elec t B V aul t f or M AR a n d Mi F ID II c o mp l i a n ce as wel l . Copyright © 2018 Opimas LLC 30
SHORTLISTING SURVEIL LANCE SOLUTIONS
EFLOW – TZ MARKET ABUSE FIGURE 15. EFLOW TRADE SURVEILLANCE
DASHBOARD
Fo u n de d in Lo n d o n in 2 00 4, efl o w be g a n by o ff er in g
str ai g ht -t hr o ug h p r oc ess in g s er vic es t o i n v est me nt b a n ks.
Foll o wi ng i ni ti al s ucce ss i n t h is a re a, e fl ow i nt ro d uc e d th e
TZ re gt ec h s ui te i n 2 00 7. T his o ff er i ng p r ovi d es sev er al
ser vic es i n a d dit io n t o tr a de s u rv eill an ce f o r t he p re ve nti o n
of m ar ket a b us e, i n cl u di n g T C A, be st e xec ut io n, and
tr a ns acti o n rep o rti n g cap a bil i tie s c o mp let e d vi a L SE G a n d
Eu r on e xt p a rt ne r sh ip s . W h il e h ea vily foc u s ed on t h e b uy
a n d s ell s i de i n E u ro p e, e fl o w’ s 5 0+ T Z M ar ket A b u se
in st alla ti on s i ncl u d e a h an d f ul of clie nt s i n t h e U ni te d St ate s
a n d As i a Pa cif ic.
Th e s olu ti on is e xc ep t io n dr ive n wit h c us to m p ar a me te rs,
Pri o r t o M A D a n d Mi FI D I I, efl o w’s cli en t b as e c o nsi ste d m on it or in g f o r 5 0 + p r e co nf ig u re d sc e na ri os a cro ss all a ss et
m ostl y o f sel l si de in stit u tio n s, ro u g hly sp lit b et wee n clas se s. U se rs be n e fit fr o m t he sol u ti on ’s b uilt -i n
ho ste d , on p re m ise de p l oy m e nts and w hit e l a bel int eg r ati o n w it h m ar k et ne ws a n d a h ost o f m ar ke t d at a
p a rt ne rs hip s. Si nce t h ese re g ul ati o ns h av e c o me i n to f orc e ve n do rs th a n ks t o e x is tin g e fl o w p a rt n er sh ip s. T he sys te m’ s
ne w sal es h ave b ee n d o mi na te d by t he b uy s id e an d H F Ts, ST P f o un d at io n h as the a bil ity to i n ge st m ultip l e da ta
wit h 9 5% op ti n g f or t h e h ost e d o f fe ri ng. Efl o w’s sc al a bil it y so u rces (c u rr en tly i n g esti n g f r o m 2 40 m a rk e t d at a s o ur ces )
is u n d er sco re d b y th e v a riet y i n it s clie nt s’ d aily t r a di n g at o ne ti m e, t his als o e na bl es a re d uct io n i n th e ti me t o
vol u mes – s ta rt in g f ro m as f e w as 1 0 0 b ut r o b us t e n o ug h to dep l oy m en t. G en er ally sp e a ki ng , e flo w’ s cl ie nt s mo ve fr o m
h an dl e mil l i o ns. Th e T Z p l at fo r m is p ri ce d by v olu m e, m ak in g a fr ee p r oo f o f c o ncep t t o full dep l oy me nt , b ac k t est in g t he
it ap p e al i n g t o s m al l e r b uy si d e f ir m s wit h ne w s u rv eill a nce syst e m w it h 3 mo nt hs of his to ric al d at a, i n t wo m on t hs.
o bli ga ti on s .
TZ al so allo w s fo r unl i mi te d u se rs wit h de fi n ed acce ss at n o
ext r a co st a n d c o mes wit h a n a u dit a bl e c a s e m a na ge m en t
Copyright © 2018 Opimas LLC 31SHORTLISTING SURVEIL LANCE SOLUTIONS syst e m, w it h as si g n a bl e wo r kfl o w, a n d st or a ge f or up t o 7 yea r s. U se rs ca n at ta ch fil e s, U RLs, a n d n ew s st o rie s t o rele va n t c as es, a n d c a n al s o i ng est e -co m ms an d v oic e rec or d i ng f il es . TZ M a r ket A bu se use rs c a n e mp l oy ke y wo r d a nal ysi s o n in ge ste d e m ail a n d c ha t. T he c a s e m a n ag e me nt syst e m i ncl u de s i nt er act ive, c ust o miz a ble, a n d e xp ort a bl e rep or ts, oft e n set up f or p a rtic ul a r re g ul ato r y re q ui re m en ts. Efl o w al s o r u ns t ra d e rec o nst r uct io n r ep o rt s u p o n r e qu est fr o m a cl ie n t. W h il e m ost tr a de re co ns tr uc ti on r ep o rt s t ak e onl y mi n ute s t o r u n, w he n acc es si ng a rc hi ve d d at a t he p ro ces s m ay t a ke a fe w h o ur s. Efl o w’s co st e ff ecti ve sol uti o n h as rec en tly s ee n e sp ec i ally str o ng g r o wt h wit h s m al l e r b uy si d e fi r ms d riv e n by M A D a n d M iF I D I I’ s r e q ui re me nt s. T h e n e w r ele as e o f T Z Ma r ket A b us e p r o mis es i mp r o ve me nts to t h e u se r e xp e ri en ce, d at a mi ni n g c ap a bil i tie s, a n d gr o up i n g o f ale rt s b y v a ri ou s cat eg or ie s. T he u p da t es s h o ul d e n a ble t h e us er to mo re re a dily s u rf ac e b u si nes s i n si g hts, i nc lu di n g a bo ut co un te rp art ie s. Copyright © 2018 Opimas LLC 32
SHORTLISTING SURVEIL LANCE SOLUTIONS
FIS GLOBAL – PROTEGENT MARKET so me h ol do ut s s till re q ui re an on -p r e mi se s er vic e.
ABUSE Resp o n di n g t o cli en t r eq u est s, F I S ha s als o be g u n ai di n g i n
p ulli n g da ta f ro m P r ote ge nt fo r M iF ID II tr a de
Th e F I S P r ote ge nt s ui te s up p or ts fi n a nci al i ns tit ut io ns a s
rec o nst r uct io n r e qu ir e me nt s.
the y a ut o m ate c o mp l ia nce p r oce sse s ac r oss c u st om er
on b o ar d i ng , e mp l o yee t r a di n g a n d c o de of e th ics , s ale s
FIGURE 16. FIS PROTEGENT FRONT RUNNING
su it a bili ty te sti n g, so ci al m e di a ac tiv ity r evi e w, a n d m ar ke t
VISUALIZATION
a b use det ect io n. T ho u g h FI S is he a d q u ar te re d in
Ja ck so nv il l e, Fl or i da , Pr ote ge nt w a s a lr ea d y o n t he m a rk et
as a S u nG a r d p r o d uct i n 2 0 13. FI S P r ote ge nt M ar ket A b us e
p osi ti on s its el f t o se rv e t he s el l s i de a n d t he bu y si de as a
cro ss ass et cl ass and cr os s j ur is di cti o na l s ur v e illa nc e
sol uti o n. Al t ho u gh it c ove rs al l ass et cl as ses , clie nt nee d h as
d riv e n str o n ges t de v el op me nt of e q uit ie s , f u tu re s a n d
op ti o ns s ur veil l a nc e t h us f a r. Cl ie nts wh o u s e P ro te ge nt to
m on it or fi x e d i nc o me re q ui re e xt ra c on fi g u r ati o n wi th t he
p ro vi de d m a r ke t d at a t o g ai n co n fi de nc e i n al ert q u ality.
Pr ote ge nt Ma r ket A bu s e giv es u se rs a cce ss to vie w, e di t a n d
a d d t o t he o ut- of -t h e - bo x r ule s l i br a ry p ro vi de d up o n Pr ote ge nt ’s c a se m a na ge me nt all o ws f or t he est a bli s h me nt
dep l oy m en t . By m o nit o ri n g ch a n ges in m ar ke t and of a u se r hie r arc h y a n d rol es, a n d t r ac ks a ll in ves ti ga tiv e
p a rtic ip a n t acti vit y, the s ol uti o n c on ti n u ou sly tr ies t o act ivit ie s in a n a u di ta ble m a nn er. Ale rt vis u aliz ati o ns,
imp r ove al er t al go ri th ms an d re d uce f a lse p os iti ves. m ar ke t rep l ay , a n d b ul k t r ac ki ng a n d cl os i n g of gr o up e d
Pr ote ge nt a n al yz e s a n ar r ay of so u rce s w h e n s u rf ac in g a n ale rts ai d in sp ee d i ng up c om p li an ce o f fice r s’ i nsp e cti o ns.
ale rt, i ncl u d in g: t r a de an d or d er d at a ( I CE , C ME , L S E G, Th e p la tf or m als o all ow s f or t he att ac h m ent of rel ate d
NY SE , AS X) , cl ie nt da t a, T ho m so n R eu te rs m ar ke t d at a, a n d file s/ ev i de nce to p a rtic ul a r c as es, me a n in g th at all
m ar ke t n e ws. Mo st cl ie nts r un a ho ste d so luti o n, t h o ug h
Copyright © 2018 Opimas LLC 33SHORTLISTING SURVEIL LANCE SOLUTIONS d oc u me nts rel at e d t o a p ar tic ul ar ca se c a n be ke p t wit hi n the sa m e sys te m a n d r ep o rts c a n b e m o re e a sily c re ate d. FI S’ b ro a d c ove r ag e a cro ss as set cl a sse s tic ks t he b o x f o r co mp li a nce, b u t f u tu r e p l a n s f o r t he Pr ot ege nt M a rk et A b use o f fe ri ng i ncl u de i mp ro vi ng t he d ep t h of i ts su rv eill a nce q u al i ty f o r e ac h i n di vi d ual as set cla ss. F IS als o w an ts to del i ve r t r ue c r oss as set and c ro ss v e nu e m a nip ul ati o n de tect io n , wh er e ale rt s ar e c u rr e ntly p ro d uc e d fr o m m o re sil oe d s o ur ces. T he ro a d m ap i ncl u de s p r ovi d in g us er s wit h v ie ws of i n d ivi d u al an d fi r m le vel act ivit y, allo w in g g re ate r o ve rv ie w of s usp ici o us rel a tio ns h ip s. T he p us h fo r h ol i stic t r a de d at a a n d c o m mu nic at io n s d at a su rv eill a nce is al s o n ot l ost o n F I S, w ho is c on si d er in g b uil d in g ou t t hi s f u nc tio n al it y vi a p a rt ne rs h ip s. P r ote ge nt M ar ket A b use of fe rs exp a ns ive as set cl ass co ve ra ge fo r m ar ke t p a rti cip a nts , th ou g h wil l n ee d t o d ee p en a nal ysi s i n or d er t o re m ai n c o mp e titi ve. Copyright © 2018 Opimas LLC 34
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