Market abuse surveillance is the monitoring that brokers, banks, asset managers and trading venues carry out on orders, trades and staff communications to detect insider trading and market manipulation. Automated systems scan order and trade data for patterns such as spoofing, layering of orders, trading ahead of client orders and unusual dealing before price-sensitive announcements. Alerts are reviewed by a compliance team, which closes them with a recorded reason or escalates them.
It is the firm-level counterpart of the wider market surveillance run by exchanges and regulators. In the European Union and the United Kingdom, the Market Abuse Regulation requires anyone professionally arranging or executing transactions to have effective systems to detect suspicious orders and transactions and to report them to the regulator without delay. Specific techniques, such as wash trading detection, sit within the same programme, as does the monitoring of voice and electronic communications.