Designed to meet the increasingly sophisticated requirements of global financial firms and regulators, TZEC integrates sophisticated analytics and machine learning to analyse, identify and predict the types of activities that are associated with instances of market abuse, offering firms access to continuously evolving behavioural-led insights.

Tackling key trade surveillance pain points

Since 2021, over $2.7bn in fines have been issued by global regulators for eComms surveillance failures, with $95m in fines handed out in the first five months of 2024 alone. With regulatory bodies such as the FCA, SEC, CFTC and FINRA intensifying their focus on eComms surveillance as part of broader market abuse detection strategies, firms are under increasing pressure to monitor the digital channels used by their teams to share information.

TZEC addresses these challenges by offering a highly configurable, holistic solution that uses eflow’s sentiment analysis tooling to accurately identify suspicious behaviour, link messages to associated trading activity, all while minimising the reporting of ‘false positives’ that can drain compliance resources. Unlike existing systems that merely provide ‘archive and search’ functionality, TZEC utilises eflow’s Client Lexicon Service to learn firm-specific vocabulary and slang terms that are unique to that organisation. These are then combined with other wider linguistic trends and industry terminology through eflow’s Global Lexicon Service, which enables TZEC to continuously evolve and improve surveillance outcomes based on behavioural-led insights.

Ben Parker, CEO and founder of eflow Global, commented: “As regulatory scrutiny intensifies, firms cannot afford to rely on outdated and fragmented surveillance tools. There’s an urgent need for a solution that goes beyond traditional siloed surveillance tools, which drain resources and require multiple teams to ‘join the dots’ between systems in order to detect market abuse. TZEC represents a significant advancement in our commitment to providing comprehensive, integrated, and intelligent surveillance solutions that not only meet but exceed regulatory requirements.”

“By leveraging advanced AI and machine learning, TZEC ensures that our clients can stay ahead of potential compliance issues and focus on their core business operations with confidence,” Parker continued.

Having been engineered to normalise all communications channels, TZEC also allows firms to add new messaging services with ease, future-proofing a firm’s eComms surveillance strategy. It also generates comprehensive digital audit trails to satisfy regulatory record-keeping requirements more efficiently and allows firms to fine-tune the platform’s configuration to their specific needs by experimenting with various parameters in an independent sandbox environment.

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 The new research from 250 senior compliance professionals in the financial services sector reveals that 75% of companies are worried about bots manipulating markets and being able to cover up their actions. 21% would go as far as saying they are ‘extremely worried’, and it poses ‘a real threat’ to the future of trading.

 When asked to what extent they believed financial professionals using AI bots to manipulate the market is an industry challenge, 94% acknowledged it as a challenge, with 36% stating it is on a significant scale.

The issues are detailed in the upcoming Global trends in market abuse and trade surveillance report, launching  in early February, which will present an extensive deep dive into the problems that regulated firms are experiencing across global markets. In this report, the use of AI (57%) will be cited as the most likely cause of compliance issues in the next 12 months, followed by global economic stability (56%).

 Ben Parker, CEO and Founder of eflow Global, commented: “We saw how a bot used made-up insider information to make an ‘illegal’ purchase of stocks without disclosing this information, at the recent AI Safety Summit. These are real threats, not just hype, fuelled by the recognition that the regulatory surveillance methods of old are insufficient in the face of evolving market dynamics.”

 He continued, “The good news is that AI will also deliver efficiencies and advanced capabilities for both firms and regulators, with firms turning to AI and RegTech to better monitor and combat market abuse. However, firms need a clear understanding of how these algorithms operate, as well as how more sophisticated technology will need to be deployed to protect them,” Ben added.

 Asked about their firm’s investment in compliance technology to protect their organisation from the challenges associated with AI bots, 92% of regulatory professionals stated they had already made an investment, with 41% describing it as ‘significant’

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