Trade surveillance is how brokers, banks and exchanges look for market abuse in their own flow. Rules and models scan orders and executions for patterns such as layering or trading ahead of client orders, and communications surveillance reviews emails, chats and recorded calls for the intent behind them. Alerts go to analysts, who decide whether to escalate and whether to file a suspicious transaction report.
The hard part is measurement. Confirmed abuse is rare, and a firm only knows about the cases its system caught, so it can measure precision but not what it missed. Regulators have found firms running faulty alerts for two years or more without noticing, which is why the MAS-SGX practice guide asks for more frequent review when a programme produces few exceptions.
Language models promise fewer false positives in communications review. A shorter queue is only an improvement if seeded test cases are still caught and a sample of unalerted activity still comes back clean.