Aite Matrix: Intelligent Trade Surveillance

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Aite Matrix: Intelligent Trade Surveillance

This excerpt provided compliments of this Best-in-Class vendor:

JULY 2021

Vinod Jain

Aite Matrix: Intelligent Trade Surveillance JULY 2021

© 2021 Aite Group LLC. All rights reserved. Reproduction of this report by any means is strictly prohibited. 101 Arch Street, Suite 501, Boston, MA 02110 • Tel +1.617.338.6050 • Fax +1.617.338.6078 • [email protected] • www.aitegroup.com

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TABLE OF CONTENTS INTRODUCTION .............................................................................................................................................. 4

METHODOLOGY ........................................................................................................................................ 4

THE PLAYERS ................................................................................................................................................... 6

THE MARKET ................................................................................................................................................... 9

KEY STATISTICS ............................................................................................................................................. 10

ANNUAL REVENUE ESTIMATES ANALYSIS ............................................................................................... 10

PROFITABILITY ANALYSIS ........................................................................................................................ 10

GROWTH RATE ANALYSIS ....................................................................................................................... 11

RESEARCH AND DEVELOPMENT (R&D) INVESTMENT ANALYSIS ............................................................ 12

CLIENT BREAKDOWN BY TYPE ................................................................................................................. 12

CLIENT BREAKDOWN BY TOOLS USED .................................................................................................... 13

CLIENT BREAKDOWN BY REGION ............................................................................................................ 14

ANNUAL CLIENT RETENTION RATE ......................................................................................................... 14

AVERAGE NEW CLIENT WINS .................................................................................................................. 15

DEPLOYMENT OPTIONS ANALYSIS .......................................................................................................... 16

AITE MATRIX EVALUATION ........................................................................................................................... 17

THE AITE MATRIX COMPONENTS ANALYSIS ........................................................................................... 17

THE AITE MATRIX RECOGNITION ............................................................................................................ 18

BEST IN CLASS: NICE ACTIMIZE ..................................................................................................................... 21

CONCLUSION ................................................................................................................................................ 25

ABOUT AITE GROUP...................................................................................................................................... 26

AUTHOR INFORMATION ......................................................................................................................... 26

CONTACT ................................................................................................................................................. 26

LIST OF FIGURES FIGURE 1: ANNUAL REVENUE ESTIMATES BREAKDOWN ............................................................................. 10

FIGURE 2: VENDOR PROFITABILITY ............................................................................................................... 11

FIGURE 3: GROWTH RATE BREAKDOWN ...................................................................................................... 11

FIGURE 4: PERCENTAGE OF REVENUE INVESTED IN R&D ............................................................................. 12

FIGURE 5: CLIENT BREAKDOWN BY TYPE...................................................................................................... 13

FIGURE 6: CLIENT BREAKDOWN BY TOOLS USED ......................................................................................... 13

FIGURE 7: CLIENT BREAKDOWN BY REGION ................................................................................................. 14

FIGURE 8: CLIENT RETENTION RATE ............................................................................................................. 15

FIGURE 9: AVERAGE NEW CLIENT WINS ....................................................................................................... 15

FIGURE 10: DEPLOYMENT OPTIONS ............................................................................................................. 16

FIGURE 11: AITE MATRIX COMPONENTS ANALYSIS BY HEAT MAP .............................................................. 17

FIGURE 12: TRADE SURVEILLANCE AITE MATRIX .......................................................................................... 19



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LIST OF TABLES TABLE A: EVALUATED VENDORS ..................................................................................................................... 6

TABLE B: THE MARKET .................................................................................................................................... 9

TABLE C: KEY STRENGTHS AND CHALLENGES—NICE ACTIMIZE ................................................................... 24



4

INTRODUCTION

The COVID-19 pandemic has changed the global economy. Across the financial industry, business

resiliency and compliance to regulatory initiatives have enhanced the expectations of regulators

and C-suite executives from compliance professionals and associated investment personnel. The

increasing trading activities and variation in traded products have increased the pressure on

trade and market surveillance compliance functions.

The siloed approach to trade, communication, and market surveillance has led to challenges in

achieving transparency and visibility in data across multiple venues and asset classes. Further,

the complexity of the asset class traded, trading patterns, and communication channels have

increased the amount of data and variation in data types required to effectively conduct the

surveillance program. The current model of siloed surveillance approach is not sustainable in the

long run.

Going forward, firms will need to focus more on risk-based surveillance programs, increase the

capability to link structured data with unstructured data to achieve a complete view of activity,

develop models to build surveillance for the new asset class, and strive toward more automation

in the traditional alert-based surveillance programs.

For consumers, solutions will either be bundled as part of larger product sets or provided as

stand-alone products by specialized providers. This can include offerings from firms that

specialize in one or more of the following areas: governance, risk, and compliance (GRC);

business intelligence; trading or trading behavior; trading technology; and risk and data

management.

As part of customers’ larger technology budgets, firms that select to internally source or use less

than optimal trading surveillance are potentially putting their firms at risk of financial,

reputational, or regulatory harm. Further, such firms may face the pressure of allocating larger

investments to maintain the software with limited enhancements as markets develop and

sophistication in trading techniques increase over time.

Fortunately, many providers can alleviate concerns and reduce this burden. With a keen focus on

the vendor landscape, this report continues Aite Group’s analysis of the latest trends around the

trade and market surveillance topic. This Impact Report highlights areas of the business that

surveillance technology providers are addressing and how solutions are evolving alongside

industry developments. It also addresses answers to relevant questions for those seeking a

solution, such as: What are the drivers today for trade and market surveillance providers? What

are capital markets firms thinking about when it comes to trade and market surveillance

technologies? And who are the key providers for trade and market surveillance solutions?

METHODOLOGY

Leveraging the Aite Matrix, a proprietary Aite Group vendor assessment framework, this Impact

Report evaluates the overall competitive position of each vendor, focusing on vendor stability,

client strength, product features, and client services.



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The following criteria were applied to develop a list of vendors for participation:

• Vendor solutions having market abuse and trade surveillance capabilities

• The existing client base using the solutions to monitor and comply with market

abuse and trade surveillance requirements

Participating vendors were required to complete a detailed product request for information (RFI)

composed of both qualitative and quantitative questions, conduct a minimum 60-minute

product demo, and provide active client references.



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THE PLAYERS

This section presents comparative data and profiles for the individual vendors that participated

in the Aite Matrix evaluation. This is by no means an exhaustive list of vendors, and firms looking

to undergo a vendor selection process should conduct initial due diligence before assembling a

list of vendors appropriate for their own unique needs. Table A presents basic vendor

information for the participating solutions.

Table A: Evaluated Vendors

Firm Headquarters Years in business

Target market Number of employees

Abel Noser Solutions

New York 46 Broker-dealers and investment managers

62

ACA Compliance Group

New York 18 All types of financial services firms

700

BAE Systems Guildford, U.K. 51 Tier-1 and Tier-2 banks, capital markets, investment and asset managers, and investor services

83,500

Bloomberg L.P. New York 40 Buy-side and sell-side firms 20,000

b-next Herford, Germany Over 30 Commodities and energy industries, global investment and retail banks, independent brokers, Tier-1 buy-side companies, insurance firms, exchanges, regulators, and hedge funds

Over 70

Eventus Systems Austin, Texas 6 Banks, exchange/alternative trading systems (ATSs), regulators, futures commission merchants (FCMs), clearing firms, broker-dealers, proprietary trading groups, buy-side firms, and corporations

25

Features Analytics

Nivelles, Belgium 7 Banks, regulators, market infrastructures, brokers, asset managers, energy traders and exchanges

9

FIS Jacksonville, Florida

53 Broker-dealers, trading, and other sell-side firms

More than 55,000



7



GMEX Group London 9 Exchanges, trading venues, clearinghouses, depositories, registries, warehouse receipt platforms, and digital custodians

25

Intellect Design Arena

Chennai, India 7 Midsize to large brokerage houses

More than 4,500

KX Newry, Northern Ireland

25 Banks, buy-side firms, regulators, and exchanges

2,500

LIST Pisa, Italy 36 Traditional market centers, OTC execution venues, digital exchanges, institutional brokers, retail brokers, regulators, clearinghouses and depositories, and buy-side firms

450

Nasdaq New York 50 Market centers, regulators, clearinghouses/ depositories, interdealer brokers, digital asset trading; gaming/betting operators, buy-side and sell-side trading firms, and investment banks

More than 5,000

NICE Actimize U.S.: Hoboken, New Jersey

Corporate: Ra'anana, Israel

22 Institutional brokers, retail brokers, investment advisors, crypto-exchanges, insurance companies, regulators, and buy-side and sell-side brokers

More than 6,800

OneMarketData LLC

Hoboken, New Jersey

17 Market centers and market participants

Not provided

Quantexa London 5½ Banking and financial services, insurance, government, and telco and technology

350

S3 Austin, Texas 20 Primary: U.S. and Canadian banks and broker-dealers and exchanges, asset managers, mutual funds Secondary: Buy-side firms

17



8



Scila AB. Stockholm 13 Exchanges/marketplaces, regulators, all kinds of market participants, and all asset classes

55

SteelEye London 4 Any regulated financial firm subject to Markets in Financial Instruments Directive (MiFID) II, MAR, Dodd-Frank, Senior Manager & Certification Regime (SM&CR), and EMIR regulations to name a few (relevant for most internationally regulated firms)

63

Source: Vendors



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THE MARKET

Many market trends have impacted the evolution of holistic surveillance that includes trade,

market, and communication surveillance solutions since the pandemic and financial crisis.

Both external regulators and internal compliance teams are continually trying to play catch-up

with rogue traders’ trading activity who have a better understanding of the internal risk

management systems. The regulatory rules are designed to have established and maintained a

system to supervise the activities and comply with the laws and regulations. While the regulators

continue to play catch-up, bad actors wanting to game the system or have market-abusive

intentions will always be in front of the regulators.

Surveillance programs are designed for anticipated future vulnerabilities with current business

setup, processes, systems, and data. Compliance professionals define the firm’s compliance and

trade surveillance requirements to meet external regulators’ requirements and to comply with

firms’ internal policies. Solution providers have evolved their compliance solutions to offer more

sophisticated detection methods, robust surveillance protocols, and new technology solutions to

enable firms to achieve compliance with optimal cost.

The following market trends are shaping the present and future of the trade, market, and

communication surveillance market (Table B).

Table B: The Market

Market trends Market implications

More investment in surveillance technology by financial institutions

Post-pandemic, there is a greater need to monitor surveillance programs to cover all aspects associated with remote work-from-home technology platforms.

Focus on data integration and data quality There is a need for a holistic platform that can integrate structured and unstructured data across multiple sources. Clean data is a prerequisite to conducting alert analysis.

Preference to cover more asset classes As new products are being traded in the market, there is a need to cover surveillance across asset classes—equity, fixed income, over-the-counter (OTC) derivatives, alternative investments, and crypto-assets.

Preference of buy over build The vendor community continues to offer surveillance technology platforms with the latest technology advancements, including cloud, API for integration, and a pricing structure that may be difficult for firms to build in-house.

More demand from regulatory and internal compliance requirements

In response to the regulatory requirements, internal compliance requirements, and the need for business resiliency, there is more demand from compliance teams to have a sustainable surveillance program.

Source: Aite Group



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KEY STATISTICS

This section provides information and analysis on key market statistics as well as projected IT

spending related to the vendor market.

ANNUAL REVENUE ESTIMATES ANALYSIS

Out of 19 vendors, 47% achieved revenue of more than US$50 million, 21% achieved revenue of

more than US$10 million but less than US$50 million, and 32% of the vendors have revenue less

than US$10 million. This indicates that there are multiple firms in the startup phase providing

functionality based on the latest technology and exploring business opportunities. On the other

side, large players have demonstrated double-digit growth, in which clients are preferring

scalable and proven technology for surveillance activities. This shows that clients on one side are

ready to partner with new firms and at the same time support large players (Figure 1).

Figure 1: Annual Revenue Estimates Breakdown

Source: Vendors

PROFITABIL ITY ANALYSIS

All vendors, large or small, have shown positive profitability, indicating better management of

costs involved in providing the software to clients. This proves better utilization of third-party

internal resources and delivery of truly client-prioritized functionalities. Due to changing

demands for better trade, market, and communication surveillance solutions, vendors dealing

with more clients can identify common functionality demand in the market versus one-off

demanded functionality (Figure 2).

Less than US$10 million32%

US$10 million to US$50 million

21%

More than US$50 million47%

Annual Revenue Estimates Breakdown(N=19 vendors)



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Figure 2: Vendor Profitability

Source: Vendors

GROWTH RATE ANALYSIS

The majority (95%) of the vendor respondents have experienced double-digit growth from 2019

to 2020, indicating strong market growth and demand for surveillance vendor platforms. Out of

19 vendors, 14 had a very strong and healthy growth rate of more than 15%, while four had a

growth rate between 10% and 15%. Only one vendor had a growth rate of less than 10%.

Overall, the trade surveillance market experienced a very healthy average growth rate of 18% for

2020 and progressing on a similar path in 2021 (Figure 3).

Figure 3: Growth Rate Breakdown

Source: Vendors

Negative16%

Positive84%

Vendor Profitability(N=19 vendors)

Note: No vendor is at breakeven

Less than 10% 5%

10% to 15% 21%

Greater than 15%74%

Growth Rate Breakdown(N=19 vendors)

Note: No vendor reported a negative to no growth



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RESEARCH AND DEVELOPMENT (R&D) INVESTMENT ANALYSIS

Based on the information on the investments allocated to R&D investment analysis and Aite

Group estimates, out of 19 vendors, 12 vendors allocate more than 15% of their revenue toward

R&D to be able to provide new functionality and new models to meet client demands. Maybe

due to the size of the overall parent revenue, some vendors might have allocated less than 10%

to R&D, but overall, a significant portion of the revenue is allocated to R&D to be able to support

more asset classes and new surveillance models and provide more configurable functions and

enhanced scalability via cloud offerings (Figure 4).

Figure 4: Percentage of Revenue Invested in R&D

Source: Vendors

CLIENT BREAKDOWN BY TYPE

Market trade and communication surveillance are more prominent in sell-side firms, buy-side

firms, and exchanges, indicating the strong compliance need in these segments. Due to the

nature of the business, clearinghouse and depository institutions do not have to invest much in

compliance and monitoring solutions as compared to the others (Figure 5).

Less than 10%5%

10% to 15%32%

More than 15%63%

Percentage of Revenue Invested in R&D(N=19 vendors)



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Figure 5: Client Breakdown by Type

Source: Vendors

CLIENT BREAKDOWN BY TOOLS USED

There is a strong demand for vendor products offering trade and market surveillance

functionality. Based on the responses provided by vendors, 55% of the clients are using trade

and market surveillance functionality, followed by 27% of the clients using it for trading, order

analytics, or order reporting, and 10% of the clients are using it for voice recording and analytics

and e-communications surveillance (Figure 6).

Figure 6: Client Breakdown by Tools Used

Source: Vendors

39%

24%

12%

7%

2%

2%

1%

1%

11%

Institutional broker

Buy-side firms

Retail broker

Traditional market centers

Digital exchanges

Regulators

Clearing houses/depositories

OTC execution venues

Other

Client Breakdown by Type(n=766 identified clients)

36%

19%

17%

10%

6%

4%

7%

Trade surveillance tools (internal)

Market surveillance tools (external)

Trading/order analytics

Trading/order reporting

Voice recording and analytics

E-communications

Other

Client Breakdown by Tools Used(n=1,543 identified clients)



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CLIENT BREAKDOWN BY REG ION

Adoption of trade and market surveillance solutions is prevalent in the United States, Western

Europe, and Canada. The clients based in the U.S. and Canada lead the adoption with 62% of the

market participants followed by Western Europe with 29%. Considering the average growth rate

of 18% experienced by most software vendors, there is still a higher demand for trade and

market surveillance solutions to evolve and meet client demands in the U.S., Western Europe,

and Canada (Figure 7).

Figure 7: Client Breakdown by Region

Source: Vendors

ANNUAL CL IENT RETENTION RATE

Traditionally, Aite Group has always observed a very high retention rate in trade and market and

communications surveillance software platforms, as these solutions are closely integrated with

the system of records. Third-party vendors can meet client demands and can offer the required

functionality, easily providing very little incentive for clients to evaluate and consider other

software vendors (Figure 8).

37%

29%

25%

4%

2%

2%

1%

0.3%

0.1%

United States

Western Europe

Canada

Asia-Pacific, developed

Asia-Pacific, emerging

Eastern Europe

Middle East

Africa

Latin America

Client Breakdown by Region(n=1,069 identified clients)



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Figure 8: Client Retention Rate

Source: Vendors

AVERAGE NEW CLIENT WINS

The demand for trade and market surveillance solutions has increased, and thus most of the

software vendors had a net new addition of clients. No software vendor that responded to this

question reported a negative average of net new clients, suggesting firms are adopting market

surveillance solutions for valid functions (Figure 9).

Figure 9: Average New Client Wins

Source: Vendors

Less than 75%5%

75% to 90%11%

More than 90%84%

Client Retention Rate(N=19 vendors)

5 or less46%

6 to 1527%

More than 1527%

Average Net New Client Wins(n=11 vendors)



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DEPLOYMENT OPTIONS ANALYSIS

The cloud adoption journey continues in the trade and market surveillance segment, which

reduces the total cost of ownership and provides an ability to integrate with other source

systems more effectively. Some firms have also preferred to have a hosted solution within the

firm, but that could be within a private cloud. Only 20% of the identified clients preferred

complete on-site solutions (Figure 10).

Figure 10: Deployment Options

Source: Vendors

Cloud57%

Hosted23%

On-site20%

Client Deployment Options(n=1,326 identified clients)



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AITE MATRIX EVALUATION

This section breaks down the individual Aite Matrix components, drawing out the vendors that

are strong in each area and how they are differentiated in the market.

THE AITE MATRIX COMPONENTS ANALYSIS

Figure 11 overviews how each vendor scored in the various areas of importance. Each vendor is

rated, in part, based on the data provided when responding to the RFI distributed by Aite Group

as well as on product demos and follow-up discussions as part of the Aite Matrix process.

Ratings are also driven by the reference customers of the examined vendors to support a multi-

dimensional rating.

Figure 11: Aite Matrix Components Analysis by Heat Map

Source: Vendors, Aite Group

V E N D O R S T A B I L I T Y

The vendor stability category speaks to the overall business of the market abuse and trade

surveillance solutions provider under study. Firms that score well in this section tend to be

larger, profitable, well-established players in the market. Companies that were ranked with a

score of 90% or greater, such as NICE Actimize, had strong third-party risk management practices

and received high marks from clients about the strength of their respective management teams.

C L I E N T S T R E N G T H

Factors such as the number of trade surveillance clients, the diversity of the client base for

attribution solutions, and the client global footprint are considered to calculate the client

strength ranking. Additionally, client tenures and retention rates are considered. Perhaps most

VendorsVendor

stability

Client

strength

Client

service

Product

features

Abel Noser Solutions 89% 82% 74% 75%

ACA Compliance

Group93% 82% 85% 74%

BAE Systems 83% 76% 78% 78%

Bloomberg L.P. 95% 96% 90% 85% Legend:

b-next 86% 88% 79% 87% 91% - 100%

Eventus Systems 81% 91% 85% 87% 81% - 90%

GMEX Group 77% 90% 75% 84% 65% - 80%

Intellect Design Arena 88% 80% 66% 78%< 65%

LIST 88% 93% 79% 83%

Nasdaq 90% 96% 86% 88%

NICE Actimize 94% 90% 88% 91%

OneMarketData LLC 92% 84% 87% 92%

Quantexa 79% 78% 86% 79%

SteelEye 76% 82% 82% 93%

BEST IN CLASS

INCUMBENT/EMERGING



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importantly, user feedback linked to a good reputation and less likelihood of system replacement

placed firms such as NICE Actimize at the top of the leader board with a score of 90% or more.

C L I E N T S E R V I C E

Client service is the hardest category in which vendors can score well. The level of

support/support models is measured in this bucket alongside pricing associated with the

solution. Users are asked how they feel about the quality of a vendor’s service and support, their

ability to deliver on promises, and cost value. In some cases, vendors fall short of expectations,

and their clients are eager to tell Aite Group analysts all about it.

NICE Actimize is among the leaders in this category with a score of 88%. Overall the score

indicates very close competition between vendors to provide client service. In all cases, users

remarked that they were very happy with the level of service and support tied to trade

surveillance solutions and felt the value they were receiving justified the cost. Additionally,

expectations were well-managed when it came time to deliver on promises.

P R O D U C T F E A T U R E S

The final category, product features, measures key features and functionality available in each

vendor solution. Additionally, several user scores are considered. Vendors that received the

highest marks—NICE Actimize among them—all scored 91% or greater. They achieved high

scores when it came to supporting the need for customization or responsiveness to suggested

product changes. These vendors made implementations and upgrades as smooth as possible.

Finally, users were very positive about the vendors’ features and functionality, such as the ability

to provide communication and trade surveillance together, and they were happy with the way

they interfaced with data and analytics.

THE AITE MATRIX RECOG NITION

To recap, the results of the Aite Matrix recognition are driven by three major factors:

• Vendor-provided information based on Aite Group’s detailed Aite Matrix RFI

document

• Participating in vendors’ client reference feedback and/or feedback sourced

independently by Aite Group

• Analysis based on market knowledge and product demos provided by participating

vendors

Figure 12 represents the final Aite Matrix evaluation, highlighting the leading vendors in the

market.



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Figure 12: Trade Surveillance Aite Matrix

Source: Vendors, Aite Group

B E S T - I N - C L A S S V E N D O R : N I C E A C T I M I Z E

The SURVEIL-X Holistic Conduct Surveillance Suite from NICE Actimize provides a holistic

surveillance offering. The solution is intended for detecting risky behavior stemming from

communications and trading in all major asset classes. SURVEIL-X supports market abuse

detection, trade surveillance capabilities, and communication surveillance capabilities, and it is

fully integrated with the NICE Actimize Risk Case Manager (ActOne). All of this is supported by

advanced 150 analytical models and 180 real-time data sources, which make this an appealing

offering to clients.

• Vendor strength: NICE Actimize scored 94%, which is the best-in-class category for

vendor stability. This was backed by strong double-digit growth in the last year and is

always a contender when a client is evaluating trade surveillance solutions.

INCUMBENT

CONTENDERS

Pro

du

ct

pe

rfo

rma

nc

e

Vendor strength

EMERGING

Abel Noser

Solutions

ACA Compliance

Group

BAE Systems

Bloomberg L.P.

b-next

Eventus Systems

GMEX Group

Intellect Design Arena

LIST

Nasdaq

NICE Actimize

OneMarketData LLC

Quantexa

SteelEye



20

• Product performance: NICE Actimize scored 91% in the product features category,

90% in the client strength category, and 88% in the client service category. Clients

appreciated the consistency shown by NICE Actimize to add new functionality such

as integrated ML for anomaly detection, model optimization, and surveillance. It

contributes a significant amount toward the product R&D budget.



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BEST IN CLASS: NICE ACTIMIZE

NICE Actimize provides real-time, cross-channel fraud prevention, AML detection, and trading

surveillance solutions. The company NICE was founded in 1986, and Actimize was founded in

1999.

B A S I C F I R M A N D P R O D U C T I N F O R M A T I O N

• Headquarters: Hoboken, New Jersey

• Founded in: 1986 (NICE); 1999 (Actimize)

• Product launched: 2007

• Number of employees: More than 6,800

• Key financial information: For 12 months ended December 31, 2020, annual

revenue was US$1.648 billion with contribution from services at 42%, products at

11%, and cloud at 47%, with recurring revenue of 79%.

• Product names: SURVEIL-X Holistic Conduct Surveillance Suite, SURVEIL-X Markets,

SURVEIL-X Communication, SURVEIL-X Suitability, and NTR-X Communication

Recording and Assurance

• Target customer base: Financial services, sell-side and buy-side firms, wealth

management, exchanges, regulators, energy, and insurance, plus any firm that needs

surveillance protection, specifically to identify risk and to mitigate violations as well

as to monitor entities (persons, trading desks, branches) and events (a trade) that

could prove harmful

• Number of clients: Surveillance has 80 clients; All compliance and recording

(including NTR) has 625 clients

• Global footprint: NICE Actimize has a presence within all key client regions including

the U.S., Canada, Europe, the Asia-Pacific, Latin America, the Middle East, and Africa.

• Current version: SURVEIL-X Version 2020

• Pricing structure: For on-premises deployments, NICE Actimize offers perpetual

licenses specific to the asset class and set of instruments. Pricing bands differ based

on the size of the firm. For cloud-hosted services, NICE Actimize offers fixed annual

subscription pricing in a turnkey solution that includes market data, analytics, and an

integrated case manager. Price bands are based on the firm’s message volume, and a

standard onboarding fee applies.



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K E Y F E A T U R E S A N D F U N C T I O N A L I T Y B A S E D O N P R O D U C T D E M O

The SURVEIL-X Holistic Conduct Surveillance Suite from NICE Actimize provides holistic

surveillance offerings for sell-side and buy-side firms, broker-dealers, asset managers, wealth

managers, exchanges, regulators, and clearing firms. It supports firm-level monitoring, market

surveillance, communication surveillance, trade reconstruction, sales practices and suitability,

and Regulation Best Interest compliance. The SURVEIL-X solution is intended for detecting risky

behavior stemming from communications and trading in all major asset classes. It complies with

major global regulations including MiFID II, Dodd-Frank, and Regulation Best Interest, ASIC,

HKMA, and FCA’s SM&CR. SURVEIL-X can monitor connected actions across sources (e.g.,

including trade and communication data including behavioral and voice) and generate a single

alert with all the applicable data.

• Holistic conduct surveillance capabilities: SURVEIL-X provides coverage across

trading, markets, and communication (voice, e-communications, chat) surveillance.

Market surveillance is part of SURVEIL-X, and it monitors trades across the full trade

life cycle with order and execution-based analytic models.

• Communication surveillance: SURVEIL-X also supports communication surveillance

capabilities with the ability to monitor more than a dozen communication types

including electronic and voice communication. Monitoring capabilities leverage NLP

techniques, and its models are tuned specifically for the financial market context;

this helps it identify the context in communication information in multiple

languages. SURVEIL-X supports analysis of over two dozen languages, and it can also

support voice-to-text conversion of communication data.

• Integrated case management (ActOne): SURVEIL-X is fully integrated with the NICE

Actimize Risk Case Manager (ActOne) that supports centralized and web-based case

management, trade reconstruction including interactive market replay, and visual

alerting and storytelling. The visual analysis of alerts and cases can incorporate

information from a range of sources and is intended to expedite the investigation

process.

• Data and advanced analytics: SURVEIL-X leverages multi-dimensional data, and it

includes a market data service that connects to over 180 real-time data sources

including Level II data on OTC and exchange trades instruments, news sentiment,

and rating and benchmark data. Furthermore, the platform can ingest, clean,

standardize, enrich, and integrate several types of structured and unstructured data

for analysis, such as trades, order, and execution; electronic communication such as

email, chats, social media; voice conversations including voice-to-text conversion;

and additional data or documents such as HR data, compensation information, and

so on.

• Analytical models: The SURVEIL-X solution comes with over 150 out-of-the-box

analytical models including traditional rules-based models as well as new AI- and

ML-powered models. AI models leverage anomaly detection, smart classification,

advanced speech, and behavioral analytics, and NLP capabilities. AI-powered multi-

dimensional analytics can correlate and analyze communications, trading data, and

other data sources to improve detection accuracy and detect previously unknown



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suspicious activities. Furthermore, AI and intelligent automation capabilities are

embedded in the case manager to gather all the information related to an alert or

case and display the full story detailing an alert or a case.

• NICE Actimize is a provider of both cloud and on-premises enterprise software

solutions.

• NTR-X is a centralized recording and assurance solution that supports new modes

and channels of communication, remote and virtual front-office and back-office

trading environments. It also provides a centralized administration of reporting and

audit requirements by global regulators. Some of the key features of NTR-X involve

the ability to proactively identify unrecorded calls during the trading day and the

ability to re-create large productions. NTR-X offers communication recording and

archiving compliance assurance and transcription services. It can be deployed on

cloud, hybrid, or on-premises.

T O P T H R E E S T R A T E G I C P R O D U C T I N I T I A T I V E S C O M P L E T E D O V E R T H E

P A S T 1 2 T O 1 8 M O N T H S

• Integrated ML for anomaly detection, model optimization, and surveillance

• Cloud platform for data connectivity and allowing customers to build data-driven

analytics using a self-development platform

• Integration into case management platform

T O P T H R E E S T R A T E G I C P R O D U C T I N I T I A T I V E S I N T H E N E X T 1 2 T O 1 8

M O N T H S

• Advanced rule authoring tool, tuning, and simulations

• Increasing the number of modalities NTR-X can capture of regulated employee

communications

• Expanding the conduct solution set

C L I E N T F E E D B A C K

Clients have expressed very high satisfaction with the quality of management, its reputation, and

client servicing, product features, and functionality. As with most of the existing vendors, clients

have expressed high satisfaction with the solution and are not looking to replace the product

with another vendor solution.

Only a few clients expressed a need for more support during version upgrade rollout. In

response to market demand, its customers are also looking for more integrations with other

enterprise data sets, more models to address their requirements, and the ability for do-it-

yourself analytics development without needing to rely on their vendor.

Some clients opted for NICE Actimize solutions as the previous solution provider was focused on

AML and not on market abuse. Many of the customers selected NICE Actimize due to its

management support, client service, and product functionality.



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Table C displays the vendor’s strengths and challenges.

Table C: Key Strengths and Challenges—NICE Actimize

Strengths Challenges

Extensive coverage of asset class, venues, models, and communication types and support by a strong delivery team

Change in market conditions, unforeseen regulatory change, and decrease in clients’ budgets to meet surveillance needs

Ability to reconstruct the event to demonstrate the true intent of the trading activity

Offers a combination of trade surveillance, communication surveillance, multi-dimensional analytics, and a powerful case management solution

Source: Aite Group



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CONCLUSION

Buyers:

• A simple approach to surveillance will not suffice. Technologies that monitor and

alert to potential dangers will continue to require a cutting-edge approach that

incorporates many varieties of data inputs. There is a clear demand for platforms

that can integrate structured and unstructured data and re-create the whole trading

scenario.

• Take notice of the unique offerings and various approaches. Advanced techniques

to detect anomalous behaviors will bring trade and market surveillance to the next

level. To remain competitive, providers should meet the demand for a more

sophisticated approach, such as risk-based surveillance, holistic monitoring service,

cross-asset class support, and detection, when the surveillance model’s

configuration is causing suppression of alerts.

• Stay alert with constant watch over the surveillance program. The number of alerts

coming from surveillance systems can consume a significant amount of time and

cost to resolve. The traditional approach of alerts at the trade level should be

combined with an alert at the cross-asset class event level is required to meet the

surveillance program need.



26

ABOUT AITE GROUP

Aite Group is a global research and advisory firm delivering comprehensive, actionable advice on

business, technology, and regulatory issues and their impact on the financial services industry.

With expertise in banking, payments, insurance, wealth management, and the capital markets,

we guide financial institutions, technology providers, and consulting firms worldwide. We

partner with our clients, revealing their blind spots and delivering insights to make their

businesses smarter and stronger. Visit us on the web and connect with us on Twitter and

LinkedIn.

AUTHOR INFORMATION

Vinod Jain

+1.732.331.2928

[email protected]

CONTACT

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Aite Group Sales +1.617.338.6050

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Aite Matrix: Intelligent Trade Surveillance

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