SPARK Matrix™: Trade Surveillance and Monitoring, 2020€¦ · SPARK Matrix™: Trade...

SPARK Matrix™: Trade Surveillance and

Monitoring, 2020

Market Insights, Competitive Evaluation, and Vendor Rankings

August 2020

SPARK Matrix™

Copyright 2020 © Quadrant Knowledge Solutions Private Limited

Security and Risk Management


For Citation, [email protected] 2


Monitoring, 2020

Executive Overview ........................................................................................................................ 3

Key Research Findings ............................................................................................................................ 3

Market Overview, Key Trends and Market Drivers ................................................................... 5

Key Market Drivers and Trends.................................................................................................... 9

Market Adoption and Deployment Trends ................................................................................ 14

Regional Trends and Forecasts.................................................................................................. 17

Competitive Landscape and Analysis ....................................................................................... 19

SPARK Matrix™: Strategic Performance Assessment and Ranking ..................................... 22

Vendors Profile ............................................................................................................................. 25

Research Methodologies ............................................................................................................. 33

Table of Contents




Monitoring, 2020

Executive Overview

This research service includes a detailed analysis of global trade surveillance and

monitoring market dynamics, major trends, vendor landscape, and competitive

positioning analysis. The study provides competition analysis and ranking of the

leading trade surveillance and monitoring vendors in the form of SPARK Matrix. This

research provides strategic information for technology vendors to better understand

the market supporting their growth strategies and for users to evaluate different

vendors capabilities, competitive differentiation, and its market position.

Key Research Findings

Followings are the key research findings:

Deployment Trend: Trade Surveillance and Monitoring market is expected to grow at a CAGR of

10.4% from 2020-2025

Considering the impact of Covid-19, Quadrant research has revised the growth

estimates and market forecast for the global trade surveillance and monitoring market.

The global market, which has grown by 14.3% in 2019, is expected to grow at a

compounded annual growth rate (CAGR) of 10.4% from 2020-2025. The trade

surveillance and monitoring market is valued at $764.4 million in 2019 and is expected

to reach $1.38 billion by 2025.

On deployment type, while on-premise deployments primarily dominate the trade

surveillance and monitoring market, the cloud-based solutions are increasing finding

market traction across SMB, mid-market to large customer segments. The cloud-

based solution is expected to grow at a CAGR of 15.2% compared to a CAGR of 9.1%

for on-premise deployment. By 2025, the cloud-based solution to contribute 24.8% of

the total market.

Regional Trends: The Americas and EMEA region primarily dominate trade surveillance and

monitoring market.

North America and European Union markets are expected to continue to lead the

market growth with steady volume growth during the forecasted years of 2020-2025.

The Americas and EMEA region represent 47.7% and 42.5% respectively of the global

market in 2019 and is expected to remain the primary market throughout the

forecasted years. The market in the Americas region is expected to grow at a CAGR

of 10.7% from 2020-2025 to exceed a market size of over $670.6 million by 2025.




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The market in the EMEA region is expected to grow at a CAGR of 10.5% from 2020-

2025 to exceed a market size of 592.0 million by 2025.

Competition Dynamics & Trends:

NICE Actimize, Nasdaq, and Altair Panopticon are amongst the top performers and

technology leaders in the 2020 SPARK Matrix analysis of the global trade surveillance

and monitoring market. These companies provide comprehensive functional

capabilities and customer value proposition to provide a holistic solution for proactive

surveillance and regulatory compliance.

The study includes analysis of other major vendors, including FIS Protegent, Intellect

Design Arena, SIA, BAE Systems, Trillium Surveyor, and b-next.




Monitoring, 2020

Market Overview, Key Trends and Market Drivers

Trade surveillance and monitoring solutions identify and prevent illegal trading

practices in the securities market by monitoring trading activities for market abuse &

manipulation, suspicious trading pattern and fraud. Trade surveillance and monitoring

solutions should cover all asset classes, products and geographies to detect threats

linked with any trading transactions.

Trade surveillance and monitoring solutions offer capabilities for pre-trade, post-trade

& market surveillance, along with identifying market abuse practices & trade violations

and reporting. Trade surveillance and monitoring solutions key activities include full

depth analysis of the order book, review of entire audit trails, and examination of cross-

asset and cross-market trades. It helps in mitigating illegal trade practices,

safeguarding organizations from losses, frauds and penalties, enhancing consumer

trust and ensuring regulatory compliance.

Financial markets have been experiencing a major evolution since the last decade.

Banks and financial organizations have experienced failures and enormous losses by

rogue traders, owing which regulations and trade surveillance is on a surge. Trading

regulations, such as Reg BI, MAR, MiFID II, Dodd-Frank, Code of Conduct, along with

guidelines from regulatory agencies, including CFTC, SEC, FINRA and ESMA, as well

as other national regulations in various regions are increasing to detect trading

activities that sabotage public confidence in the markets. The rising thrust on financial

markets to comply with these regulations is the primary driving force for robust and

accurate trade monitoring systems.

As expectations by regulators for trade surveillance is increasing, financial

organizations are relentlessly attempting to eradicate breaches of policies leading to

unlawful trading activities. In recent times, trading practices globally is adhering to a

broader range of global regulations, embracing cross-asset class and cross-market

trade surveillance measures for identifying market abuse, behavioral patterns, and

non-compliant activities. Trade surveillance and monitoring solutions identify trading

rule violations or unlawful trading practices in the trading landscape. With the benefits

of transparency, efficacy, and oversight in capital markets, trade surveillance and

monitoring solutions are getting increasingly popular amongst both buy-side and sell-

side firms in the trading market.

Trade surveillance and monitoring solutions focus on restraining market manipulation

and market abuse, that causes reputational damage to firms. Regulators emphasize

to enhance market transparency and boost investor's confidence through these

solutions. The solution focusses on both pre-trade surveillance and post-trade

surveillance. Pre-trade surveillance helps to authenticate trade instructions, assuring

trading thresholds are never breached and block trades being performed on restricted




Monitoring, 2020

instruments. Whereas post-trade surveillance can track for front-running, suitability,

best-execution, and regulatory transaction reporting.

Trade surveillance & monitoring solutions offer comprehensive market surveillance,

including cross-market, equity market and OTC traded derivates surveillance; and

identifies market abuse practices and trade violations, such as wash trades, portfolio

pumping, insider trading, rogue trading and others. A robust trade surveillance

solution should offer capabilities for accessing complete historical & real-time data,

big data analytics and extensive business rule engine, efficient workflow management

through customizable dashboards and robust reporting capability. Furthermore, trade

surveillance focuses on detecting anomalies in trading activities, behavioral pattern

analysis and streamlines case management. Trade surveillance & monitoring solutions

monitor trading activities and generate alerts based on suspicious transactions,

thereby enhancing agility and efficacy of financial institutions.

Figure: A Framework for Holistic Trade Surveillance and Monitoring Solution




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Following are the key capabilities of trade surveillance and monitoring solution:

Real-Time Data Integration: Trade surveillance & monitoring solutions

enable data integration from a variety of sources. It offers optimum integration

of in-house data and external trading data. It supports both structured and

unstructured data across trade, market, written & voice communication, third

party and various other sources. The solution should integrate historical

transaction data and manage large datasets from multiple sources, store

essential data in-memory, and survey across asset classes and geographies.

Trade surveillance and monitoring solutions provide real-time decisioning and

detection on trading patterns across asset classes and markets.

Cross-Asset, Cross-Market Surveillance: Trade surveillance & monitoring

solutions provide robust and consistent surveillance coverage across

numerous trading venues, markets, asset classes and jurisdictions. It meets

regulatory mandates, handles risk and drive trading efficiencies in any market

across the globe, prevents sophisticated trade abuse, helps in maximizing

revenue, and safeguarding reputational damage across the multi-venue and

multi-asset class.

Advanced Analytics: Trade monitoring solutions use advanced analytics to

detect anomalous behavior, enable risk-based discovery, support cross-asset

class & cross-market surveillance, facilitate effective trade reconstruction and

such others. Some of the advanced analytics tools used by trade surveillance

& monitoring solutions are predictive analytics, sentiment analytics, big data

analytics, real-time streaming analytics, behavioral analytics, entity & network

analytics, and such others.

Trade Regulatory Compliance: Numerous global and country-specific

compliance frameworks, including Reg BI, MAR, MiFID II, Dodd-Frank, Code

of Conduct and such others, are significantly pushing financial institutions to

have a robust surveillance system in place. Trade surveillance & monitoring

solutions offer the capability for effectively meeting global trade regulations, to

avoid hefty fines. Trade surveillance solutions monitor a broad range of

products (cross-asset class & cross-market) to identity non-compliant

activities/ behavior. It ensures regulatory compliance and meeting the market

abuse guidelines defined by SEC, CFTC, FINRA, ESMA, FCA, and other

regulatory bodies around the world.

Dynamic Workflow Engine: To keep abreast with the changing trading

landscape, trade surveillance models should not be static. They need to be

reviewed and improved continuously. Trade surveillance and monitoring

solutions offer dynamic workflow engine for improved integration, agility and

responsiveness in trade surveillance activities.




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Investigation & Case Management: Trade surveillance & monitoring

solutions leverages surveillance visualization & reporting tools for in-depth

investigation of alerts and trading scenarios. It provides a centralized interface

for seamlessly capturing alerts and data, modifying trade surveillance

operations and carrying out investigations through advanced analytics and

automation. Further, enabling defined compliance workflows, maintain a

comprehensive audit trail investigation and documentation, manage alert

processing and escalation, effectively detect false positives, and efficiently

manage regulatory risk across the trading domain.




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Key Market Drivers and Trends

The followings are the dominant technology and market development influencing the

overall global trade surveillance and monitoring solution and market growth:

Growing Sophistication of Trade Surveillance and Monitoring

Solutions Powered by Advanced Analytics, AI, ML, and Process Automation Technologies

Driven by the continued complexities of the regulatory environment, organizations are

expected to continue to face challenges in meeting ever-increasingly compliance

requirements. Financial organizations are currently replacing their legacy

technologies and looking at evaluating advanced trade surveillance and market

compliance solutions to implement proactive surveillance strategy and improve

compliance infrastructure.

The vendors are increasingly embracing sophisticated technology innovations

powered by advanced technologies, including artificial intelligence (AI), machine

learning (ML), robotics process automation (RPA), natural language processing (NLP),

and advanced behavioral analytics to minimize false positives, automate tasks &

workflows, enhance regulatory compliance and risk management, and improving the

overall operational efficiency. These technologies are prominent inclusion in various

vendor's product roadmap. However, from incorporating advanced technologies

perspective, the current technology maturity, and breadth and depth of solution

portfolio may differ by different vendors offerings.

Growing Importance of Holistic Surveillance Solution with

Integrated Markets and Communications Surveillance

Electronic communication is a significant part of trading activity comprising of email,

instant messenger, text and voice. It uncovers malicious trading behavior, such as

insider trading, rogue trading, and others. Also, it is critical to mitigating conduct,

financial and reputational risks. Leading vendors continue to incorporate and improve

e-communication surveillance capabilities leveraging contextual analytics, behavioral

analytics, and advanced predictive analytics.

Although, most buy-side and sell-side firms maintain separate communication

monitoring system; when integrated with trade monitoring systems, it provides greater

efficacy and depth of coverage of data from omnichannel sources. Integrated

communication and trade surveillance results in better and quicker investigations by

bringing together trade, text, voice, and video communications data. A standalone

solution for communication and market surveillance adds to significant operational

efficiency with manual operations for data collection, correlation, visualization,

investigation, and analysis. Therefore, an increasing number of trade surveillance and




Monitoring, 2020

monitoring vendors striving to offer holistic trade surveillance and monitoring solution

with integrated communication surveillance capability. The holistic surveillance

solution brings together market, communication, and other surveillance data in a

single place which performs AI-powered analytics to offer integrated visualization and

provide intelligent alerts with minimum false positives.

Trade Regulations and Compliance Requirements are Increasingly Becoming Complex

Shifting trade patterns and increasing regulations have intensified the compliance

burden on capital firms, hedge fund and conventional asset managers. Historically,

only sell-side firms used trade surveillance solutions. However, in recent times with

several revised regulations in financial instruments, such as Reg BI, MiFID II, MAR and

Dodd-Frank, buy-side firms are increasingly focusing on adopting advanced trade

surveillance and monitoring solutions. Furthermore, guidelines from regulatory

agencies, such as CFTC, SEC, FINRA in the US and ESMA, FCA & other regulators in

the European economies are further driving the adoption by the financial institutions.

While compliance with the trade regulations helps in protection from trading risks,

safeguard reputation, restore investor’s trust and sustain the business, non-

compliance means a higher risk of market abuse, huge penalty, negative publicity,

and such others.

Cloud-Based Deployment is Expected To Grow Significantly During the Forecasted years.

Large enterprises from various industries are moving towards a cloud-first strategy

for deployment of enterprise software and business systems. However, cloud-based

solution is still in the emerging stage with most of the large banking organizations still

prefer on-premise deployment. Growing complexities of global and regional

regulations, data security, and privacy issues continue to impact the adoption of cloud-

first strategies by large financial service organizations. However, driven by the

advancements in security technologies and growing confidence of cloud platforms,

the scenario is gradually shifting. Global financial service organizations are

increasingly gaining confidence in cloud security and are moving towards cloud-

based deployments.

Cloud-based deployment offers a significant advantage in terms of scalability and

cost-effectiveness. Additionally, vendors ensure that organizations always have

access to the latest version of the solution with regular updates, maintenance, and

support services. Further, small and mid-sized businesses often lack resources in

deploying cutting-edge technologies and are associated with the same sets of

operational challenges as large organizations. Thereby, SMB organizations usually




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prefer cloud-based deployments to cut down their operational costs and fulfil all their

unmet needs with a low monthly/yearly charge.

Increasing Demand For Intraday Liquidity Management And

Real-Time Reporting

Intraday liquidity monitoring and management is increasingly becoming crucial in

recent market behavior; firms may be required to shift from submissively measuring

ebbs to manage and maximize intraday liquidity usage. Financial organizations should

adopt intraday liquidity management, real-time reporting, and risk management

solutions to fulfil payment and settlement obligations in a timely manner and enable

seamless payment functioning and settlement processes. Managing liquidity offers

benefits such as ensuring accurate intraday forecasting with real-time data points, the

early outset of analytics activities using real-time data, constant monitoring of net

cumulative cashflow across the day, and capturing real-time data connected to all

sources and boost overall operational efficiency.

Increasing Demand For 360 Degree Trade Surveillance

Driven by complex regulatory compliances and increasing instances of trade

malpractices, vendors are offering holistic Trade Surveillance & Monitoring solutions

with 360-degree surveillance. These trade surveillance solutions monitor & analyze

transactions, communications, and behavioral patterns to provide enhanced &

comprehensive investigation. The 360-degree approach to Trade Surveillance &

Monitoring improves true positives, decreases efforts to process false positives, and

better identify patterns for trade surveillance. Demand for robust trade surveillance

solutions that gathers data from all different channels such as trade and order data,

social networking sites data, voice communications and behavioral data is increasing

rapidly. 360-degree surveillance offers analytical insights to data captured in real-time

from market activity, sentiments, and trading behavior at multiple touchpoints in the

client lifecycle.

Migration from Reactive Surveillance To An Integrated Model Combining Investigative, Reactive, And Proactive Surveillance

While currently, a majority of organizations are using a reactive approach to trade

surveillance with post-trade controls, there is increasing traction for proactive

systems. With a proactive approach, firms can identify new profiles and risk indicators

before market abuse takes place. The proactive system leverages advanced data

mining techniques and unsupervised machine learning. Organizations are leaning

towards an integrated model, with capabilities for investigative, reactive, and proactive

surveillance. Merging real-time data and proactive surveillance with advanced




Monitoring, 2020

analytics will identify suspicious behavior patterns of individual and collective

tendencies prior to incidence.

The convergence of Automation, Machine Learning, and AI

Financial crime and compliance vendors are increasingly leveraging automation,

machine learning, and AI in automating repetitive tasks and manual processes to

improve process efficiency, resource utilization, and productivity. Automation and AI

can significantly improve organizations efficiencies in detecting and mitigating risks.

Risk investigation team often require a comprehensive analysis of the numerous data

sources to triage a high volume of alerts based on their risk scores. Financial crime

and compliance management platform can leverage automation and AI to integrate

data from multiple sources to drive actionable intelligence in detecting, analyzing,

investigating and resolving a large volume of alerts and cases. It may also assist

analysts in selecting appropriate analytics models to be used specifically to various

use cases. By automating manual, repetitive tasks in various investigation processes

and providing data-driven insights, it can significantly improve analyst's productivity to

triage a large volume of alerts.

Figure: MegaTrend and Technology Convergence

Security and Risk Management Technologies are Becoming Collaborative, Automated, and

Intelligent




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Vendors are also leveraging automation and AI to help data scientists automate data

science workflow, feature engineering, and create machine learning models at a faster

rate. As per Quadrant's analysis of the overall market, security and risk management

technologies are becoming collaborated, automated and intelligent. Adoption of

automation, machine learning, and AI is amongst the most significant trend and is

expected to influence the several security and risk management technology markets

during 2020-2025. Machine learning and artificial intelligence are expected to drive

the next generation of risk management solutions with the emergence of self-aware

platform integrating human, data, and technologies.




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Market Adoption and Deployment Trends

Driven by the impact of Covid-19 on the global economy, industry, and infrastructure,

Quadrant Knowledge Solutions have revised the market forecast estimates for all the

technology market. The global economy, along with industries, is facing significant

challenges and are expected to post negative growth. The global trade surveillance

and monitoring market, which has grown by 14.3% in 2019, is expected to grow at a

CAGR of 10.4% from 2020-2025. Driven by the extended lockdown imposed by global

economies around the world and continued uncertainty around Covid-19, the

technology investments in 2020 are significantly impacted. The global trade

surveillance and monitoring market is expected to shrink by 2.2% in 2020. Quadrant

analysts believe that from the year 2021 onwards, the technology investments will rise

again, mainly driven by the pent-up demand and economic recovery for the key

market. The trade surveillance and monitoring market is valued at $764.4 million in

2019 and is expected to reach $1.38 billion by 2025.

The primary drivers for the adoption of trade surveillance and monitoring solution

include innovation around advanced analytics, automation, and cognitive technologies

for effective proactive surveillance; product enhancements by leading vendors to

provide holistic surveillance technologies are improving market penetration against

in-house built solutions, growing adoption of the cloud-based solution; ever-increasing

pressure from global regulatory agencies; and such others.

Trends by Deployment Type

On deployment types, the global trade surveillance and monitoring market continue

to be dominated by on-premise deployments capturing 80.8% of the total market

compared to 19.2% of the cloud-based deployments in 2019. However, from the

trends perspectives, the cloud-based deployment is growing at a much faster rate.

According to the Quadrant's estimate, the cloud-based market is expected to grow at

a CAGR of 15.2% compared to a CAGR of 9.1% for an on-premise deployment during

the forecasted years of 2020-2025.




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764.4 747.6819.3

938.1

1078.9

1229.9

1383.6

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2019 2020 2021 2022 2023 2024 2025

Figure: Market Adoption Trends

Trade Surveillance and Monitoring market is expected to grow at a CAGR of 10.4% from a

forecasted period of 2020-2025.




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2019 2020 2021 2022 2023 2024 2025

Cloud 146.4 145.0 161.9 197.3 241.7 292.2 342.8

On-Premise 618.0 602.6 657.4 740.9 837.2 937.6 1040.8

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Figure: Revenue and Deployment Trends

By 2025, cloud-based deployment is expected to capture around 24.8% of the total market.




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Regional Trends and Forecasts

The Americas and the EMEA region primarily dominate the trade surveillance and

monitoring market. The Americas and EMEA region represent 47.7% and 42.5%

respectively of the global market in 2019 and is expected to remain the primary market

throughout the forecasted years. The market in the Americas region is expected to

grow at a CAGR of 10.7% from 2020-2025 to exceed a market size of over $670.6

million by 2025.

EMEA market growth is primarily driven by increasing adoption in markets, including

Germany, UK, France, and Italy. The market in Middle East countries and South Africa

is also expected to pick up during the forecasted years. The market in the EMEA

region is expected to grow at a CAGR of 10.5% from 2020-2025 to exceed a market

size of 592.0 million by 2025.

Driven by the growing cases of market abuse and frauds along with growing

complexities of regulatory compliance requirements, trade surveillance and

monitoring solution market in the APAC region is getting significant traction. Several

large enterprise organizations in the APAC region are actively evaluating advanced

trade monitoring solution to strengthen their technology infrastructure for proactive

surveillance and regulatory compliance. Trade surveillance and monitoring solution

market in the APAC region, which constitutes 9.8% of the total market in the year

2019, is expected to grow at a CAGR of 8.3% during 2020-2025 driven by rapid

adoption in Japan, Australia, New Zealand China, and improved penetration rate in

South East Asia.




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2019 2020 2021 2022 2023 2024 2025

APAC 74.9 72.3 77.7 87.0 97.8 109.8 121.1

EMEA 324.8 319.0 351.5 402.5 462.8 526.7 592.0

Americas 364.7 356.3 390.2 448.7 518.3 593.4 670.6

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

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Reve

nu

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mill

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)Figure: Market Forecast by Geographical Regions

The Americas and the EMEA region primarily dominate the trade surveillance and monitoring

market.




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Competitive Landscape and Analysis

Quadrant Knowledge Solutions conducted an in-depth analysis of major trade

surveillance and monitoring vendors by evaluating their products, market presence,

and customer value proposition. The evaluation is based on the primary research with

expert interviews, analysis of use cases, and Quadrant's internal analysis of the overall

market. This study includes analysis of key vendors, including Altair Panopticon, b-

next, BAE Systems, FIS Protegent, Intellect Design Arena, Nasdaq, NICE Actimize,

SIA, and Trillium Surveyor.

Key Competitive Factors and Technology Differentiators

The following are the key competitive factors and differentiators for the evaluation of

trade surveillance & monitoring Solutions and vendors. While the majority of trade

surveillance & monitoring solutions may provide all the core functionalities, the

breadth and depth of functionalities may differ by different vendors offerings. Driven

by increasing competition, vendors are increasingly looking at improving their

technology capabilities and overall value proposition to remain competitive. Some of

the key differentiators include:

The sophistication of Technology Capabilities: Users should evaluate trade

surveillance and monitoring solution that offers comprehensive capabilities, data

ingestion from internal and external sources, user and entity behavior analytics,

automated trade reconstruction, comprehensive visualization, real-time anomaly

detection, integrated case management, advanced modelling and rule-engine,

scalability and uptime, an open technology architecture, and such others. Additionally,

vendor’s customer value proposition may differ in terms of ease of deployment, ease

of use, price/performance ratio, support for a broad range of market and

communication surveillance use cases, global support service, and such others.

Rapidly growing digitalization in trade is causing various vendors to use emerging

technologies, including AI, ML, RPA, behavioral modelling and NLP to augment their

trade surveillance and monitoring solutions to perform sophisticated tasks with

intelligence. Factors, such as legacy technology, siloed operations, rising regulatory

requirements and complexity of in-house and outsourced solutions is leading to an

intricate web of technology architecture that is pressuring for the need of smarter

trade surveillance & monitoring solutions. Augmenting RPA along with AI and ML

technologies can seamlessly integrate technology, work systems and people, to help

capture information from numerous sources, conduct the advanced investigation with

large datasets, intelligent alerts, automate rule-based, indicative tasks, and enables

many types of robots such as task bots, IQ bots, basic chatbots and more.

Technologies, such as behavioral analytics and NLP further helps to interpret text-

heavy communications & intent and pre-empt trading abuse. Most of the vendors




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including Nasdaq, Nice Actimize, Altair Panopticon, FIS Protegent and Intellect Design

Arena, have implemented some of these technologies are continuing to invest heavily

on further enhancing their platform with automation, ML, behavioral analytics, AI and

NLP technologies.

Comprehensive Data Integration Capability: Vendors capability in providing

comprehensive data integration is essential in improving the performance of analytics

engine and machine learning models. Few vendors may support data ingestion just

from out-of-the-box transactional data, account information, basic customer profiles,

limited communication channels, and such others. In such instances, organizations

are required to invest significant efforts in acquiring data from additional sources.

Trade surveillance and monitoring platform should support comprehensive capability

to integrate a large volume of data, in multiple formats, and from contextual data

sources across all transaction, reference, behavioral, communication, and external

sources.

Custom Model Development and Deployment: Typically, global financial

organizations have internal data science teams and often prefer to utilize their in-

house developed machine learning models. However, few vendors may force

organizations internal data scientist team to work with vendor’s proprietary machine

learning models, language, tools, and libraries. Additionally, organizations may be

required to use vendors professional services for implementation and customization

on models to suit specific use cases. Organizations often incur additional costs and

delay in overall implementation. Trade surveillance and monitoring platform should

support an open system framework and facilitate easy imports of third-party models

built using any language, platform, and library. Leading vendors also support custom

model development, testing, and deployment capability for a variety of trade

surveillance and monitoring use cases.

Integrated Communication Surveillance: Unlike earlier, when firms used to offer

standalone communication surveillance systems, today, many firms are integrating e-

communication surveillance with their trade surveillance and monitoring solution.

Communication surveillance monitors and analyses all voice and written

communication made by the trader, to detect the behavioral pattern. Communication

surveillance gathers all forms of communication data, such as email, messages, text,

voice, and others. Integrated communication surveillance ensures comprehensive

investigation, reduces false positives, and helps in improving compliance. With

increasing risk in trade landscape and granular regulations being enforced,

communication surveillance integrated with comprehensive trade monitoring systems

is becoming a key differentiator to vendor solutions. Communication monitoring can

be more crucial for buy-side firms to prevent insider trading.




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Technology Vision and Roadmap: Financial crime and risk management market is

continuously experiencing constant evolution in recent times. The rapid technological

progress and regulatory advancements have created important changes in trade and

security market framework, owing to which advanced financial crime and compliance

technology has become one of the most prime decisions in most of the firm's

technology investment roadmaps. Trade surveillance and monitoring solution

providers are continuously improving their technology value proposition in terms of

providing a holistic surveillance solution with comprehensive data integration,

sophisticated analytics suite powered by advanced analytics and machine learning,

custom model development, robust investigation and case management, advanced

visualization tools, incorporation of workflow and process automation, and such

others. Organizations should carefully evaluate vendor’s existing technology

capabilities along with their technology vision and roadmap to improve overall

satisfaction and customer ownership experience for long-term success.

Vendor’s Expertise and Domain Knowledge: Organizations should evaluate

vendors expertise and domain knowledge in understanding their unique business

problems, use case, and industry-specific requirements. Organizations are advised to

conduct a comprehensive evaluation of different trade surveillance solutions and

vendors before making a purchasing decision. Users should employ a weighted

analysis of the several factors critical to their specific organization's use cases and

industry-specific requirements. Users should also look for trade surveillance and

monitoring solution with a history of successful large- scale deployments and carefully

analyze the existing case studies of those deployments. This should form the basis to

prepare best-practice for trade surveillance and monitoring solution deployments.




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SPARK Matrix™: Strategic Performance Assessment and Ranking

Quadrant Knowledge Solutions’ SPARK Matrix provides a snapshot of the market

positioning of the key market participants. SPARK Matrix provides a visual

representation of market participants and provides strategic insights on how each

supplier ranks related to their competitors, concerning various performance

parameters based on the category of technology excellence and customer impact.

Quadrant's Competitive Landscape Analysis is a useful planning guide for strategic

decision makings, such as finding M&A prospects, partnership, geographical

expansion, portfolio expansion, and similar others.

Each market participants are analyzed against several parameters of Technology

Excellence and Customer Impact. In each of the parameters (see charts), an index is

assigned to each supplier from 1 (lowest) to 10 (highest). These ratings are designated

to each market participant based on the research findings. Based on the individual

participant ratings, X and Y coordinate values are calculated. These coordinates are

finally used to make SPARK Matrix.

Evaluation Criteria: Technology Excellence

The sophistication of Technology: The ability to provide comprehensive

functional capabilities and product features, technology innovations,

product/platform architecture, and such others

Competitive Differentiation Strategy: The ability to differentiate from

competitors through functional capabilities and/or innovations and/or GTM

strategy, customer value proposition, and such others.

Application Diversity: The ability to demonstrate product deployment for a

range of industry verticals and/or multiple use cases.




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Scalability: The ability to demonstrate that the solution supports enterprise-

grade scalability along with customer case examples.

Integration & Interoperability: The ability to offer product and technology

platform that supports integration with multiple best-of-breed technologies,

provides prebuilt out-of-the-box integrations, and open API support and

services.

Vision & Roadmap: Evaluation of the vendor's product strategy and roadmap

with the analysis of key planned enhancements to offer superior

products/technology and improve the customer ownership experience.

Evaluation Criteria: Customer Impact

Product Strategy & Performance: Evaluation of multiple aspects of product

strategy and performance in terms of product availability, price to performance

ratio, excellence in GTM strategy, and other product-specific parameters.

Market Presence: The ability to demonstrate revenue, client base, and market

growth along with a presence in various geographical regions and industry

verticals.

Proven Record: Evaluation of the existing client base from SMB, mid-market

and large enterprise segment, growth rate, and analysis of the customer case

studies.

Ease of Deployment & Use: The ability to provide superior deployment

experience to clients supporting flexible deployment or demonstrate superior

purchase, implementation and usage experience. Additionally, vendors’

products are analyzed to offer user-friendly UI and ownership experience.

Customer Service Excellence: The ability to demonstrate vendors capability

to provide a range of professional services from consulting, training, and

support. Additionally, the company's service partner strategy or system

integration capability across geographical regions is also considered.

Unique Value Proposition: The ability to demonstrate unique differentiators

driven by ongoing industry trends, industry convergence, technology

innovation, and such others.




Monitoring, 2020

SPARK Matrix™: Trade Surveillance and Monitoring Strategic Performance Assessment and Ranking

Figure: 2020 SPARK Matrix™

(Strategic Performance Assessment and Ranking)

Trade Surveillance and Monitoring Market




Monitoring, 2020

Vendors Profile

Following are the profiles of the leading trade surveillance and monitoring solution

vendors with a global impact. The following vendor profiles are written based on the

information provided by the vendor's executives as part of the research process.

Quadrant research team has also referred to the company's website, whitepapers,

blogs, and other sources for writing the profile. A detailed vendor profile and analysis

of all the vendors, along with various competitive scenarios, are available as a custom

research deliverable to our clients. Users are advised to directly speak to respective

vendors for a more comprehensive understanding of their technology capabilities.

Users are advised to consult Quadrant Knowledge Solutions before making any

purchase decisions, regarding trade surveillance and monitoring technology and

vendor selection based on research findings included in this research service.




Monitoring, 2020

NICE Actimize

URL: https://www.niceactimize.com/

NICE Actimize is amongst the leading providers of financial crime, risk and compliance

management solutions for global financial services organizations. NICE Actimize offers

fraud prevention, anti-money laundering, market abuse, client suitability and conduct

surveillance solutions as part of its integrated financial crime and compliance portfolio.

The company provides SURVEIL-X, an AI-powered, fully managed, secured and

compliant cloud suite that analyzes and correlates all trade-related data, detects all

forms of risky behavior, and enables regulatory compliance. The SURVEIL-X holistic

surveillance suite offers comprehensive capabilities for complete analytical coverage

of all trade and communication data, including both voice and text communication, AI-

powered multi-dimensional analytics, and case management. SURVEIL-X offers

features, such as Markets Surveillance, Communication Surveillance, Trade

Reconstruction, Reg BI Surveillance, Sales Practices and Suitability, and Conduct

Surveillance.

SURVEIL-X Markets Surveillance ensures regulatory compliance for financial entities

through comprehensive compliance monitoring for all asset classes and instruments,

performs intent-based detection for market abuse, including cross-market and cross-

product analytics. It also provides intuitive alerts with explainable results and market

visualization to detect trading abuse. SURVEIL-X Communication

Surveillance analyses all trade related communications for financial, regulatory and

reputation risk using ML and NLP techniques. The solution provides instant access to

billions of communication records of employee and client discussions across

channels, leverages ML and NLP to understand and classify conversation and thereby

closes compliance gaps. Trade Reconstruction offers a simplified reconstruction of a

trade by aggregating, analyzing and acting on all trade-related data and

communications. SURVEIL-X suitability detects a wide range of prohibited sales

practices, thereby minimizing risk, improving productivity, and enforcing compliance.

The SURVEIL-X suite includes ActOne, a fully integrated and web-based case

manager with workflow capability for efficient alert management, investigation and

audit trail, leveraging intelligent automation, entity-centric triage, and comprehensive

visualization of activities and relationship between entities, alerts and cases.

SURVEIL-X provides comprehensive coverage through over 150 out-of-the-box

models, covering 25 asset classes, and monitoring nine communication types from

any source archive. SURVEIL-X offers extensive analytics coverage with OOTB

models covering a variety of market abuse and global regulations. SURVEIL-X also

offers Studio, a self-service analytics development tool for rapid development and

deployment of new detection rules.

https://www.niceactimize.com/




Monitoring, 2020

The company also offers ActimizeWatch Compliance, a managed analytics service

from NICE Actimize that improves the firm's agility, detection accuracy and

compliance effectiveness. ActimizeWatch offers model optimization services to

ensure analytics models are up-to-date, ensuring detection accuracy for Markets,

Communication, Suitability, and Conduct surveillance solutions. NICE Actimize

recently launched Reg BI Surveillance, an automated Regulation Best Interest tool, to

find and review all trade risk alerts associated with disclosures and recommendations

communication.

Analyst Perspectives

Following is the analysis of the NICE Actimize capabilities in the trade surveillance and

monitoring market:

NICE Actimize SURVEIL-X suite offers holistic trade surveillance through a fully

managed, secure and compliant cloud platform with capabilities for extensive

market data feed integration, broad analytics coverage via OOTB models &

self-service analytics, and automated Trade Reconstruction. SURVEIL-X

analyses all trade, communication and other surveillance data and uses AI-

powered analytics to produce precise alerts with integrated visualization. The

company also offers advanced machine learning and anomaly detection to

identify real risks and helps organizations to significantly reduce false

positives.

NICE Actimize’s capability to provide data integration with over 150 real-time

data feeds and ingest third-party data is also amongst the key differentiators.

Additionally, the company's industry-leading integrated case management

capability is widely recognized amongst its customers.

From a geographical perspective, NICE Actimize has a major presence in the

US, EMEA, and APAC. NICE Actimize supports a variety of institutional

financial customers from the sell-side and buy-side. The major verticals for

NICE Actimize being investment banking, global banks, wealth management,

asset management, insurance, cryptocurrency, utilities and brokerage sectors.

NICE Actimize product strategy and roadmap is centered around the themes

of complete coverage, precision detection, and intelligent investigations. The

company is making continued investment in AI and customer-enabled, self-

development tools for both traditional and ML-based models. With the focus

on providing proactive surveillance, the company continues to enhance its

automation capability by leveraging AI & expert user feedbacks and shares the

knowledge with its customers via federated learning.




Monitoring, 2020

NICE Actimize has scored the highest ratings for a variety of performance

parameters of technology excellence and customer impact and emerged as

the technology leader in the 2020 SPARK Matrix analysis of the trade

surveillance and monitoring market.




Monitoring, 2020

Nasdaq

URL: https://www.nasdaq.com/

Founded in 1971, New York-based stock exchange company Nasdaq is a leading

provider of various technology solutions for the financial market, including governance

solutions, marketplace technology solutions, market intelligence solutions, and trading

solutions. The company offers a comprehensive surveillance solution offering trade

monitoring and compliance capabilities through Nasdaq SMARTS. Nasdaq SMARTS

offers a robust platform covering cross-market, cross-asset class, and multi-venue

surveillance. Nasdaq SMART provides integration & analysis of multiple data sources,

identification of market manipulation, risk management, advanced analytics,

compelling trade visualizations and alert scenarios.

Nasdaq SMARTS offers a robust monitoring and analysis tool that effectively monitors

billions of trading data, both real-time and historical. Nasdaq SMARTS enables firms

to identify, investigate and report a wide array of market abuse behaviors, such as

market manipulation, insider trading, order handling rules, market maker,

watch/restricted list trading, unusual pricing, & many more. It analyses and manages

alerts and data output through an intuitive dashboard. Nasdaq SMARTS trade

surveillance uses advanced technologies, including AI application to new market

abuse detection models, behavioral analytics for trading behavior profiling and

advanced data analytics for the detection of trading malpractices.

Nasdaq SMARTS monitors malicious trading activities through effective, targeted and

transparent logic-based alerts. It investigates trading and compliance data to identify

risky trader or account behavior. SMARTS leverage surveillance visualizations and

reporting tools for the investigation of alerts and trading scenarios, with specific time

access to appropriate trading data. SMARTS trade solutions effectively manage and

process system alerts and outputs. The solution offers market replay functionality for

recreating order book to view order interaction and provide forensic investigation.

Nasdaq SMARTS incorporates Lens module that considers the overall risk profile of

the entity (trader and account) in addition to monitoring trading activities, as part of its

proactive approach to surveillance. Lens module enhances traditional rules-based

detection by enabling an entity-based view of monitoring. Further, Nasdaq SMARTS

complies with market regulations, internal risk and compliance policies, and offers

targeted regional alerts created as per specific market rules, relative liquidity/volatility,

and jurisdictional regulatory requirements.


Following is the analysis of the Nasdaq capabilities in the trade surveillance &

monitoring solutions market:

https://www.nasdaq.com/




Monitoring, 2020

With over 25 years of surveillance expertise, Nasdaq offers cross-asset class

and cross-market trade surveillance and monitoring solution for banks,

brokers, and retail broker-dealers globally. Nasdaq SMARTS provides holistic

and proactive trade surveillance with capabilities for covering a wide array of

market abuse, advanced visualization, insights & behavioral analytics, alerts

engine and market replay for recreating order book.

Nasdaq SMARTS offers advanced visualization, analytics and insights

including order book depth, "Signature of Spoofing", behavioral analytics, data

analytics and such others. The solution provides an entity-based view of

monitoring to complement its traditional rule-based detection for

comprehensive and proactive monitoring. Nasdaq SMARTS supports flexible

deployment options from on-premise, cloud or as a managed service.

Nasdaq SMARTS surveillance technology supports surveillance and

compliance for over 68 marketplaces & regulators and across 183 markets

globally. The solution offers coverage for equities, FX, dark pools, futures,

precious metals, energy, commodities, fixed income & cryptocurrency.

Nasdaq continues to focus on enhancing SMARTS trade surveillance solution,

by investing heavily on data discovery, new ML-based detection models,

improved behavioral profiling, and contextual surveillance by integrating e-

comm data.




Monitoring, 2020

Altair Panopticon

URL: https://altairpanopticon.com/

Altair, a global technology vendor offering software and cloud solutions in product

development, data analytics and high-performance computing (HPC), acquired data

visualization & analytics software Panopticon in 2018 as part of Altair’s acquisition of

Datawatch. Altair Panopticon™ offers comprehensive capabilities for processing

streaming data and visualization of real-time operational, trading, and market data.

Panopticon – which is made of two modules: Panopticon Visual Analytics and

Panopticon Streams – enables building, modifying, and deploying of streaming

analytics and data visualization applications. Panopticon Streams offers

comprehensive capabilities for real-time streaming access to market & execution data,

fast stream processing, and building stream processing applications with zero code.

Panopticon Streams is Panopticon's stream processing engine. It allows federating

data from multiple streaming sources comprising real-time streaming feeds and time-

series databases. Built on Apache Kafka platform, Panopticon Streams can easily

create sophisticated stream processing applications without coding. Panopticon

Streams enables building complex data flows in minutes using a web browser.

Panopticon Visual Analytics enables connection to any data source, and accurate

visualization of time series data, and the building of Kafka-enabled analytics

dashboards. A preferred solution for capital markets, Panopticon Visual Analytics

offers continuous optimization of trading operations through monitoring trading

anomalies, investigating time series leading to anomalies, backtesting various

scenarios impact on future performance and optimizing model thresholds based on

backtesting. Panopticon Visual Analytics provides a wide variety of information

visualization techniques, including Treemaps, Heat Maps, Bullet Graphs,

Candlestick/OHLC Graphs, Price Bands, Waterfall Charts, and more. Panopticon

supports connection to any data source, including real-time message queues, time-

series databases, CEP engines, NoSQL sources, and any SQL database.

Altair Panopticon supports cloud deployment on AWS, Azure, Google Cloud, and

Oracle Cloud. It is also fully compatible with containerized cloud implementations

using Docker.

Panopticon integrates with Altair® Knowledge Studio® for real-time machine learning

model deployment on streaming data and visual monitoring of results. Knowledge

Studio is the company’s machine learning and predictive analytics solution. Powered

with advanced ML and AI capabilities, Altair Knowledge Studio enables low-code ML

modelling with intuitive graphic visualizations.

https://altairpanopticon.com/




Monitoring, 2020


Following is the analysis of Altair Panopticon capabilities in the trade surveillance and

monitoring market:

Panopticon monitors and analyses real-time trading & market data, and

provides faster, accurate & insightful decisions to reduce risk & operating cost.

The platform offers features, such as the ability to connect, process, and

visualize real-time streaming data, including feeds from Kafka, Solace,

kdb+tick, OneTick CEP, StreamBase, AMPS, ActiveMQ, and RabbitMQ.

Granular analysis of time-series data drag-and-drop visual analytics

dashboard, and code-free Kafka enabled platform are among the key

differentiators for the firm.

The recent release of Version 2020 of Panopticon is a fully web-native and

cloud-enabled platform that offers features, including creating & managing

analytical pipe-lines, analytical dashboards for polled-streaming real-time &

time-series data, managing workbook repositories and deploying ML-models

through R or Python.

Leveraging Altair's experience of over 20 years in the financial market, 35

years of advanced software development, and global presence in 25 countries,

Panopticon supports multiple use cases through its robust platforms, such as

electronic trading, compliance & surveillance, portfolio management and risk

& finance. From an industry vertical perspective, large global investment banks

are the current primary target sector for Panopticon, followed by hedge fund

& asset managers, FinTech software firms, exchanges, and regulators.

Panopticon is a popular and preferred solution with many global leading banks

using the platform to monitor and analyze real-time trading and market data.

The major roadmap highlights of Panopticon includes the launch of a multi-

tenant cloud-hosted version of the product to enable sales to smaller firms who

do not have extensive IT resources; additional functionality in stream

processing engine to enable shorter development cycles; more data

connectors; improvements in multi-server capabilities; improved load

balancing; simpler deployment; additional data visualizations; and expansion

in other verticals including manufacturing where Altair has a large footprint.




Monitoring, 2020

Research Methodologies

Quadrant Knowledge Solutions uses a comprehensive approach to conduct global

market outlook research for various technologies. Quadrant's research approach

provides our analysts with the most effective framework to identify market and

technology trends and helps in formulating meaningful growth strategies for our

clients. All the sections of our research report are prepared with a considerable

amount of time and thought process before moving on to the next step. Following is

the brief description of the major sections of our research methodologies.

Secondary Research

Following are the major sources of information for conducting secondary research:

Quadrant’s Internal Database

Quadrant Knowledge Solutions maintains a proprietary database in several

technology marketplaces. This database provides our analyst with an adequate

foundation to kick-start the research project. This database includes information from

the following sources:

• Annual reports and other financial reports

• Industry participant lists

• Published secondary data on companies and their products

• Database of market sizes and forecast data for different market segments

• Major market and technology trends




Monitoring, 2020

Literature Research

Quadrant Knowledge Solutions leverages on several magazine subscriptions and

other publications that cover the wide range of subjects related to technology

research. We also use the extensive library of directories and Journals on various

technology domains. Our analysts use blog posts, whitepaper, case studies, and other

literature published by major technology vendors, online experts, and industry news

publications.

Inputs from Industry Participants

Quadrant analysts collect relevant documents such as whitepaper, brochures, case

studies, price lists, datasheet, and other reports from all major industry participants.

Primary Research

Quadrant analysts use a two-step process for conducting primary research that helps

us in capturing meaningful and most accurate market information. Below is the two-

step process of our primary research:

Market Estimation: Based on the top-down and bottom-up approach, our analyst

analyses all industry participants to estimate their business in the technology market

for various market segments. We also seek information and verification of client

business performance as part of our primary research interviews or through a detailed

market questionnaire. The Quadrant research team conducts a detailed analysis of

the comments and inputs provided by the industry participants.

Client Interview: Quadrant analyst team conducts a detailed telephonic interview of

all major industry participants to get their perspectives of the current and future

market dynamics. Our analyst also gets their first-hand experience with the vendor's

product demo to understand their technology capabilities, user experience, product

features, and other aspects. Based on the requirements, Quadrant analysts interview

with more than one person from each of the market participants to verify the accuracy

of the information provided. We typically engage with client personnel in one of the

following functions:

• Strategic Marketing Management

• Product Management

• Product Planning

• Planning & Strategy

Feedback from Channel Partners and End Users




Monitoring, 2020

Quadrant research team researches with various sales channel partners, including

distributors, system integrators, and consultants to understand the detailed

perspective of the market. Our analysts also get feedback from end-users from

multiple industries and geographical regions to understand key issues, technology

trends, and supplier capabilities in the technology market.

Data Analysis: Market Forecast & Competition Analysis

Quadrant's analysts' team gathers all the necessary information from secondary

research and primary research to a computer database. These databases are then

analyzed, verified, and cross-tabulated in numerous ways to get the right picture of

the overall market and its segments. After analyzing all the market data, industry

trends, market trends, technology trends, and key issues, we prepare preliminary

market forecasts. This preliminary market forecast is tested against several market

scenarios, economic scenario, industry trends, and economic dynamics. Finally, the

analyst team arrives at the most accurate forecast scenario for the overall market and

its segments.

In addition to market forecasts, our team conducts a detailed review of industry

participants to prepare competitive landscape and market positioning analysis for the

overall market as well as for various market segments.

SPARK Matrix: Strategic Performance Assessment and

Ranking

Quadrant Knowledge Solutions’ SPARK Matrix provides a snapshot of the market

positioning of the key market participants. SPARK Matrix representation provides a

visual representation of market participants and provides strategic insights on how

each supplier ranks in comparison to their competitors, concerning various

performance parameters based on the category of technology excellence and

customer impact.

Final Report Preparation

After finalization of market analysis and forecasts, our analyst prepares necessary

graphs, charts, and table to get further insights and preparation of the final research

report. Our final research report includes information including market forecast;

competitive analysis; major market & technology trends; market drivers; vendor

profiles, and such others.

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