Conduct-related threats such as collusion, unauthorized trading, benchmark manipulation and rogue trading put firms at risk. They’re difficult to prevent because they don’t follow a predictable pattern that can be modeled. Firms also need to address both sides of the compliance coin — i.e., known forms of market abuse (such as layering and spoofing) and hidden conduct-related threats.
To achieve this, many firms are adopting a risk-based approach to surveillance by analyzing patterns over time, enabling them to identify known and unknown threats as they develop. The emergence of “Big Data” and advanced analytics, such as behavioral analytics, is bringing risk-based surveillance within reach.