Your Guide to Building a Strategic Trade Surveillance Program

A robust trade review surveillance system is a foundational element of any compliance program in the financial services industry. The following cornerstones form the backbone of such a system, ensuring firms can uphold market integrity, detect misconduct, and comply with regulatory expectations.

Laying the Foundation: Policies and Ethical Standards

A good supervisory trade review program begins with a firm’s commitment to ethical trading practices, codified in its written supervisory procedures (WSPs). These policies set the tone from the top, defining prohibited activities, thresholds for investigation, and escalation paths. A good program ensures that surveillance is not a check-the-box activity, but a strategic function aligned with the firm’s risk appetite and regulatory obligations.

This framework evolves alongside the business. As trading strategies become more sophisticated or as new asset classes are introduced, the system must be recalibrated to ensure continued effectiveness.

The Critical Role of Quality Data

The most important part of the surveillance system is the data that is collected to be reviewed. A trade surveillance program is only as good as the information it can process. This includes data from multiple sources—order and execution data, market data, customer account information, communication logs, and more.

Detecting Risk Through Intelligent Alerting

Trade information must be presented in a common format to enable accurate analysis. Without clean, complete, and consistent data, alerts may be misleading—or worse, entirely absent. Integration with Order Management Systems, Execution Management Systems, and Customer Relationship Management Systems ensures surveillance extends beyond isolated trades and into the full context of client and trader behavior.

Once the trade data is collected and presented, the system uses rule-based logic, statistical models, and increasingly, machine learning to detect patterns. The best systems don’t simply flood analysts with raw alerts—they prioritize them based on risk.

A trade that deviates from a customer’s risk profiles or size parameters set by the firm based on security type or matches known patterns of manipulation might be flagged more prominently. Clearly identified parameters help compliance teams cut through the noise, enabling them to spot genuine concerns efficiently.

Case Management and Documentation: Closing the Loop

Trade surveillance doesn’t end with an alert. Firms need a centralized case management system that allows compliance staff to prioritize, investigate, and resolve issues systematically. This includes the ability to assign cases, document findings, attach relevant communications or trade logs, escalate concerns, and record decisions. Regulators expect an auditable trail that shows not just that a firm had alerts—but that it took meaningful action.

Adaptability: Stay Current with Evolving Regulations

Finally, a key cornerstone is adaptability. Markets evolve, and so do regulatory expectations. Whether it’s SEC Rule 15c3-5 on market access controls, FINRA Rule 3110 on supervision, or global standards like MAR and MiFID II, surveillance systems must stay current.

This means tuning thresholds, updating logic to reflect new types of trading, and reviewing past performance of alerts to minimize false positives. Internal audits and periodic regulatory exams all drive the system’s continuous improvement.

Trade Surveillance as a Strategic Asset

A trade review surveillance system, when built on these cornerstones, is not just a defensive measure—it becomes a strategic asset. It helps firms protect clients, ensure fair markets, and earn the trust of regulators. From policy to practice, from data to decision-making, each element weaves together to create a compliance narrative that is both proactive and resilient.

Expertise and Technology That Strengthen Surveillance

Oyster Consulting’s trade surveillance experts bring deep industry experience and practical insight to help firms strengthen their supervisory systems. Whether you need a review of your current WSPs, an evaluation of your surveillance logic, or support selecting and implementing surveillance technology, Oyster provides tailored solutions to match your business model and regulatory requirements.

How Oyster Solutions Software Supports Trade Supervision and Surveillance

Oyster Solutions, our governance, risk, and compliance (GRC) platform streamlines and strengthens trade supervision by centralizing data, workflows, and documentation in a single, integrated system.

With automated surveillance tools, customizable alert thresholds, and built-in case management, compliance teams can quickly identify and respond to potential issues without sifting through overwhelming volumes of data. The platform’s dynamic dashboards and reporting capabilities provide real-time visibility into trading activity, helping firms maintain compliance with rules and regulations. By integrating with existing trade and communication systems, Oyster Solutions enables firms to build a surveillance program that is efficient, auditable, and scalable.