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SPARK Matrix : Trade Surveillance andMonitoring, 2020Key Market Drivers and TrendsThe followings are the dominant technology and market development influencing theoverall global trade surveillance and monitoring solution and market growth:Growing Sophistication of Trade Surveillance and MonitoringSolutions Powered by Advanced Analytics, AI, ML, and ProcessAutomation TechnologiesDriven by the continued complexities of the regulatory environment, organizations areexpected to continue to face challenges in meeting ever-increasingly compliancerequirements. Financial organizations are currently replacing their legacytechnologies and looking at evaluating advanced trade surveillance and marketcompliance solutions to implement proactive surveillance strategy and improvecompliance infrastructure.The vendors are increasingly embracing sophisticated technology innovationspowered by advanced technologies, including artificial intelligence (AI), machinelearning (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 theoverall operational efficiency. These technologies are prominent inclusion in variousvendor's product roadmap. However, from incorporating advanced technologiesperspective, the current technology maturity, and breadth and depth of solutionportfolio may differ by different vendors offerings.Growing Importance of Holistic Surveillance Solution withIntegrated Markets and Communications SurveillanceElectronic communication is a significant part of trading activity comprising of email,instant messenger, text and voice. It uncovers malicious trading behavior, such asinsider trading, rogue trading, and others. Also, it is critical to mitigating conduct,financial and reputational risks. Leading vendors continue to incorporate and improvee-communication surveillance capabilities leveraging contextual analytics, behavioralanalytics, and advanced predictive analytics.Although, most buy-side and sell-side firms maintain separate communicationmonitoring system; when integrated with trade monitoring systems, it provides greaterefficacy and depth of coverage of data from omnichannel sources. Integratedcommunication and trade surveillance results in better and quicker investigations bybringing together trade, text, voice, and video communications data. A standalonesolution for communication and market surveillance adds to significant operationalefficiency with manual operations for data collection, correlation, visualization,investigation, and analysis. Therefore, an increasing number of trade surveillance andCopyright 2020 Quadrant Knowledge Solutions Private LimitedFor Citation, info@quadrant-solutions.com9

SPARK Matrix : Trade Surveillance andMonitoring, 2020monitoring vendors striving to offer holistic trade surveillance and monitoring solutionwith integrated communication surveillance capability. The holistic surveillancesolution brings together market, communication, and other surveillance data in asingle place which performs AI-powered analytics to offer integrated visualization andprovide intelligent alerts with minimum false positives.Trade Regulations and Compliance Requirements areIncreasingly Becoming ComplexShifting trade patterns and increasing regulations have intensified the complianceburden on capital firms, hedge fund and conventional asset managers. Historically,only sell-side firms used trade surveillance solutions. However, in recent times withseveral revised regulations in financial instruments, such as Reg BI, MiFID II, MAR andDodd-Frank, buy-side firms are increasingly focusing on adopting advanced tradesurveillance and monitoring solutions. Furthermore, guidelines from regulatoryagencies, such as CFTC, SEC, FINRA in the US and ESMA, FCA & other regulators inthe 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, noncompliance means a higher risk of market abuse, huge penalty, negative publicity,and such others.Cloud-Based Deployment is Expected To Grow SignificantlyDuring the Forecasted years.Large enterprises from various industries are moving towards a cloud-first strategyfor deployment of enterprise software and business systems. However, cloud-basedsolution is still in the emerging stage with most of the large banking organizations stillprefer on-premise deployment. Growing complexities of global and regionalregulations, data security, and privacy issues continue to impact the adoption of cloudfirst strategies by large financial service organizations. However, driven by theadvancements in security technologies and growing confidence of cloud platforms,the scenario is gradually shifting. Global financial service organizations areincreasingly gaining confidence in cloud security and are moving towards cloudbased deployments.Cloud-based deployment offers a significant advantage in terms of scalability andcost-effectiveness. Additionally, vendors ensure that organizations always haveaccess to the latest version of the solution with regular updates, maintenance, andsupport services. Further, small and mid-sized businesses often lack resources indeploying cutting-edge technologies and are associated with the same sets ofoperational challenges as large organizations. Thereby, SMB organizations usuallyCopyright 2020 Quadrant Knowledge Solutions Private LimitedFor Citation, info@quadrant-solutions.com10

SPARK Matrix : Trade Surveillance andMonitoring, 2020prefer cloud-based deployments to cut down their operational costs and fulfil all theirunmet needs with a low monthly/yearly charge.Increasing Demand For Intraday Liquidity Management AndReal-Time ReportingIntraday liquidity monitoring and management is increasingly becoming crucial inrecent market behavior; firms may be required to shift from submissively measuringebbs to manage and maximize intraday liquidity usage. Financial organizations shouldadopt intraday liquidity management, real-time reporting, and risk managementsolutions to fulfil payment and settlement obligations in a timely manner and enableseamless payment functioning and settlement processes. Managing liquidity offersbenefits such as ensuring accurate intraday forecasting with real-time data points, theearly outset of analytics activities using real-time data, constant monitoring of netcumulative cashflow across the day, and capturing real-time data connected to allsources and boost overall operational efficiency.Increasing Demand For 360 Degree Trade SurveillanceDriven by complex regulatory compliances and increasing instances of trademalpractices, vendors are offering holistic Trade Surveillance & Monitoring solutionswith 360-degree surveillance. These trade surveillance solutions monitor & analyzetransactions, 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, andbetter identify patterns for trade surveillance. Demand for robust trade surveillancesolutions that gathers data from all different channels such as trade and order data,social networking sites data, voice communications and behavioral data is increasingrapidly. 360-degree surveillance offers analytical insights to data captured in real-timefrom market activity, sentiments, and trading behavior at multiple touchpoints in theclient lifecycle.Migration from Reactive Surveillance To An Integrated ModelCombining Investigative, Reactive, And Proactive SurveillanceWhile currently, a majority of organizations are using a reactive approach to tradesurveillance with post-trade controls, there is increasing traction for proactivesystems. With a proactive approach, firms can identify new profiles and risk indicatorsbefore market abuse takes place. The proactive system leverages advanced datamining techniques and unsupervised machine learning. Organizations are leaningtowards an integrated model, with capabilities for investigative, reactive, and proactivesurveillance. Merging real-time data and proactive surveillance with advancedCopyright 2020 Quadrant Knowledge Solutions Private LimitedFor Citation, info@quadrant-solutions.com11

SPARK Matrix : Trade Surveillance andMonitoring, 2020analytics will identify suspicious behavior patterns of individual and collectivetendencies prior to incidence.The convergence of Automation, Machine Learning, and AIFinancial crime and compliance vendors are increasingly leveraging automation,machine learning, and AI in automating repetitive tasks and manual processes toimprove process efficiency, resource utilization, and productivity. Automation and AIcan significantly improve organizations efficiencies in detecting and mitigating risks.Risk investigation team often require a comprehensive analysis of the numerous datasources to triage a high volume of alerts based on their risk scores. Financial crimeand compliance management platform can leverage automation and AI to integratedata from multiple sources to drive actionable intelligence in detecting, analyzing,investigating and resolving a large volume of alerts and cases. It may also assistanalysts in selecting appropriate analytics models to be used specifically to varioususe cases. By automating manual, repetitive tasks in various investigation processesand providing data-driven insights, it can significantly improve analyst's productivity totriage a large volume of alerts.Figure: MegaTrend and Technology ConvergenceSecurity and Risk Management Technologies are Becoming Collaborative, Automated, andIntelligentCopyright 2020 Quadrant Knowledge Solutions Private LimitedFor Citation, info@quadrant-solutions.com12

SPARK Matrix : Trade Surveillance andMonitoring, 2020Vendors are also leveraging automation and AI to help data scientists automate datascience workflow, feature engineering, and create machine learning models at a fasterrate. As per Quadrant's analysis of the overall market, security and risk managementtechnologies are becoming collaborated, automated and intelligent. Adoption ofautomation, machine learning, and AI is amongst the most significant trend and isexpected to influence the several security and risk management technology marketsduring 2020-2025. Machine learning and artificial intelligence are expected to drivethe next generation of risk management solutions with the emergence of self-awareplatform integrating human, data, and technologies.Copyright 2020 Quadrant Knowledge Solutions Private LimitedFor Citation, info@quadrant-solutions.com13

SPARK Matrix : Trade Surveillance andMonitoring, 2020Market Adoption and Deployment TrendsDriven by the impact of Covid-19 on the global economy, industry, and infrastructure,Quadrant Knowledge Solutions have revised the market forecast estimates for all thetechnology market. The global economy, along with industries, is facing significantchallenges and are expected to post negative growth. The global trade surveillanceand monitoring market, which has grown by 14.3% in 2019, is expected to grow at aCAGR of 10.4% from 2020-2025. Driven by the extended lockdown imposed by globaleconomies around the world and continued uncertainty around Covid-19, thetechnology investments in 2020 are significantly impacted. The global tradesurveillance and monitoring market is expected to shrink by 2.2% in 2020. Quadrantanalysts believe that from the year 2021 onwards, the technology investments will riseagain, mainly driven by the pent-up demand and economic recovery for the keymarket. The trade surveillance and monitoring market is valued at 764.4 million in2019 and is expected to reach 1.38 billion by 2025.The primary drivers for the adoption of trade surveillance and monitoring solutioninclude innovation around advanced analytics, automation, and cognitive technologiesfor effective proactive surveillance; product enhancements by leading vendors toprovide holistic surveillance technologies are improving market penetration againstin-house built solutions, growing adoption of the cloud-based solution; ever-increasingpressure from global regulatory agencies; and such others.Trends by Deployment TypeOn deployment types, the global trade surveillance and monitoring market continueto be dominated by on-premise deployments capturing 80.8% of the total marketcompared to 19.2% of the cloud-based deployments in 2019. However, from thetrends 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 ata CAGR of 15.2% compared to a CAGR of 9.1% for an on-premise deployment duringthe forecasted years of 2020-2025.Copyright 2020 Quadrant Knowledge Solutions Private LimitedFor Citation, info@quadrant-solutions.com14

SPARK Matrix : Trade Surveillance andMonitoring, 2020Figure: Market Adoption TrendsTrade Surveillance and Monitoring market is expected to grow at a CAGR of 10.4% from aforecasted period of 0.020212022202320242025Copyright 2020 Quadrant Knowledge Solutions Private LimitedFor Citation, info@quadrant-solutions.com15

SPARK Matrix : Trade Surveillance andMonitoring, 2020Figure: Revenue and Deployment TrendsBy 2025, cloud-based deployment is expected to capture around 24.8% of the total market.1200.0Revenue (millions of yright 2020 Quadrant Knowledge Solutions Private LimitedFor Citation, info@quadrant-solutions.com16

SPARK Matrix : Trade Surveillance andMonitoring, 2020Regional Trends and ForecastsThe Americas and the EMEA region primarily dominate the trade surveillance andmonitoring 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 marketthroughout the forecasted years. The market in the Americas region is expected togrow at a CAGR of 10.7% from 2020-2025 to exceed a market size of over 670.6million by 2025.EMEA market growth is primarily driven by increasing adoption in markets, includingGermany, UK, France, and Italy. The market in Middle East countries and South Africais also expected to pick up during the forecasted years. The market in the EMEAregion is expected to grow at a CAGR of 10.5% from 2020-2025 to exceed a marketsize of 592.0 million by 2025.Driven by the growing cases of market abuse and frauds along with growingcomplexities of regulatory compliance requirements, trade surveillance andmonitoring solution market in the APAC region is getting significant traction. Severallarge enterprise organizations in the APAC region are actively evaluating advancedtrade monitoring solution to strengthen their technology infrastructure for proactivesurveillance and regulatory compliance. Trade surveillance and monitoring solutionmarket in the APAC region, which constitutes 9.8% of the total market in the year2019, is expected to grow at a CAGR of 8.3% during 2020-2025 driven by rapidadoption in Japan, Australia, New Zealand China, and improved penetration rate inSouth East Asia.Copyright 2020 Quadrant Knowledge Solutions Private LimitedFor Citation, info@quadrant-solutions.com17

SPARK Matrix : Trade Surveillance andMonitoring, 2020Figure: Market Forecast by Geographical RegionsThe Americas and the EMEA region primarily dominate the trade surveillance and monitoringmarket.800.0700.0Revenue (millions of 7356.3390.2448.7518.3593.4670.6Copyright 2020 Quadrant Knowledge Solutions Private LimitedFor Citation, info@quadrant-solutions.com18

SPARK Matrix : Trade Surveillance andMonitoring, 2020Competitive Landscape and AnalysisQuadrant Knowledge Solutions conducted an in-depth analysis of major tradesurveillance and monitoring vendors by evaluating their products, market presence,and customer value proposition. The evaluation is based on the primary research withexpert interviews, analysis of use cases, and Quadrant's internal analysis of the overallmarket. This study includes analysis of key vendors, including Altair Panopticon, bnext, BAE Systems, FIS Protegent, Intellect Design Arena, Nasdaq, NICE Actimize,SIA, and Trillium Surveyor.Key Competitive Factors and Technology DifferentiatorsThe following are the key competitive factors and differentiators for the evaluation oftrade surveillance & monitoring Solutions and vendors. While the majority of tradesurveillance & monitoring solutions may prov

SPARK Matrix : Trade Surveillance and , 2020 Executive Overview . Some of the advanced analytics tools used by trade surveillance & monitoring solutions are predictive analytics, sentiment analytics, big data analytics, real-time streaming analytics, behavi