Trading Technologies is porting its integrated surveillance offering to asset classes beyond futures.
As regulation in the US, UK and Europe has increased in recent years, securities firms have invested more in operations, compliance and trade surveillance. And rather than just checking a regulatory box, technological advances are enabling firms to realize a return on their investment and even a competitive advantage.
Investment in operations and compliance technology is a 2025 market structure trend to watch, according to Crisil Coalition Greenwich. In a January report, the consultancy noted that firms are spending money to shore up the back office, a historically under-resourced area compared with the revenue-generating front office.
“Making money can’t happen if the foundation is weak,” the report stated. “Those that look closely at operations and compliance infrastructures understand the goal is not just cost reduction, but scale, risk reduction and enabling strategic goals. That’s why mainframes are giving way to the cloud, exception alerts to AI monitoring and margin management spreadsheets to portfolio management systems that help optimize collateral.”
Compliance and trade surveillance is a focus area for Trading Technologies, a SaaS provider to the global capital markets industry. Traders Magazine spoke with Nick Garrow, EVP Chief Revenue Officer & Head of EMEA, and Jay Biondo, Head of Surveillance, to learn more about the state of the business and the technology.
What is the background of Trading Technologies’ trade surveillance, and how does it translate to the present day?
Nick Garrow: TT bought Neurensic in 2017. Neurensic was a pioneer in using machine learning solutions for trade surveillance. We then acquired Abel Noser in 2023, and they had a compliance offering as well. We now have a business that services more than 100 customers who use our trade surveillance tools on a day-to-day basis. We have a good customer base, spread all over the world, spanning buy side and sell side. We have a range of different customers and a proven product.
What we’re doing now is bringing together our two unique offerings in trade surveillance. We’re leveraging the machine learning capabilities of the Neurensic product with our configurable models. We’re bringing the best of both worlds in trade surveillance. We can have machine learning to identify false positives, and configurable models to build sets of models around this.
We’re one of the few providers in the marketplace who offer this combination. Our fundamental value proposition is that we will cut down the number of false positives that a compliance officer has to deal with daily. We score, highlight and show, in a clear and
intuitive way, where the biggest risk of trade abuse is for the client. What we are trying to do is greatly reduce the amount of time trade surveillance staff has to spend sorting through hundreds of false positives.
Are there commonalities between compliance / trade surveillance, and other TT businesses?
Nick: This business is similar to TT’s business in data and analytics, and also our business in quantitative solutions and algorithms, in that in each business it’s about ingesting data, running it through a machine, and generating an output. The data and analytics output is transaction cost analysis; the output in quant solutions and algos is great optimization; the output in this area is a trade surveillance solution.
So there’s a theme that runs across these three lines of business. They’re all really built on data, data aggregation, and data smarts.
What are themes for 2025?
Nick: We have a roadmap laid out for this year. We’re promoting one single product to the marketplace, TT Trade Surveillance, which is basically a one-stop shop for multi-asset trade surveillance. We’re bringing that to market now – we’ve had a lot of good feedback and good engagement with some big tech customers, which we’ve been onboarding.
A major market theme out there today is cross-product, cross-market risk proofing and abuse detection. Of course regulators look at what you do on one exchange or with one product, but they’re also looking at what you do as you trade multiple products across multiple trading venues. Another theme is regulators looking at what you do on regulated markets in conjunction with your activity in OTC markets.
Tied in with those is the theme around voice communications, or v-comms and e-comms trade surveillance. It’s great for a firm to surveil and ingest trades, but regulators also want to see a control framework that shows you have all your voice communications and e-communications, your Slack, your email, everything else – all coming into the same data center. And then you have to be able to stitch all this data together and make sure that you understand and explain your trading operations, globally. It’s a lot.
What’s the competitive landscape in trade surveillance?
Nick: Right now in the marketplace there are a few big global players – NICE Actimize, Nasdaq Smarts, and FIS. And then you have the mid-range providers which we compete with, like Scila. After that you have a pile of new entrants, regtech and fintech startups who offer what looks like good technology at a very low price. But we’ve heard from many customers that these offerings are more like tick-the-box trade surveillance, and if you go beneath the surface, they don’t stand up to scrutiny.
Jay, what is your professional background?
Jay Biondo: I joined TT with Neurensic. Prior to that, I was a chief compliance officer at some proprietary trading firms here in Chicago, including Alston Trading; before that, I was a regulator for a few years at NYSE Arca and FINRA.
I joined Neurensic because of the very innovative concept of applying machine learning to trade surveillance. Fast forward to today, and I think the critical piece is that we have fully integrated what we had designed at that startup company, onto the TT platform.
How is TT expanding its surveillance offering?
Jay: We have focused primarily on futures, taking what we built at a startup like these machine learning models which looked for patterns and spoofing in futures data. We have had a lot of success with that.
But what we have found is that people don’t want to just monitor spoofing in futures. They want to look at all types of manipulation, like for example marking the close, or influencing the open, or front running, and they want to look beyond futures – they want to see equities, equity options, fixed income, and FX. So what we’ve done over the past seven years is build out our model suite where we have out-of-the-box and configurable models that we can also apply to other asset classes.
Last June we announced that we were expanding our trade surveillance into equities, equity options, fixed income and FX. A lot of people in the industry still associate us with futures, which is understandable as futures has been our core business for a long time. But right now we’re making a big push outside futures and into other asset classes, and it’s been very well received by the industry.
