Optimising Trade Surveillance: Reducing False Positives & Boosting Operational Efficiency

Simon Smyth
Principal Business Analyst
First Derivative
First Derivative LinkedIn profile

The Hidden Cost of Inefficient Surveillance

For many financial institutions, trade surveillance operations are a significant cost centre, often burdened by inefficiencies that stem from legacy systems, manual processes, and, most notably, a high volume of false positives. These extraneous alerts divert valuable analyst time, inflate operational expenses, and can even desensitise teams to genuine risks, ultimately hindering effective market abuse detection.

Common Operational Challenges in Trade Surveillance

Organisations frequently face these operational hurdles:

• Excessive False Positives: Alert systems generating too many irrelevant flags, leading to analyst fatigue and wasted resources.
• Lack of Qualified Staff: Difficulty in recruiting and retaining skilled surveillance professionals, both for short-term projects and ongoing operations.
• Manual Processes: Over reliance on manual review and reconciliation, which is slow, error prone, and not scalable.
• Platform Complexity: Challenges in reliably and efficiently running existing surveillance platforms, especially while adapting to continuous regulatory changes.
• Siloed Data & Systems: Inability to effectively link trading and communications data or achieve cross-asset coverage due to fragmented data sources.

First Derivative’s Approach to Operational Excellence in Surveillance

First Derivative employs a multi-faceted approach to optimise your trade surveillance operational efficiency, leading to material reductions in false positives and streamlined workflows: