Welcome to the September edition of The Monitor.
September has been a busy but energizing month. Last week, Rob Cope, our Director of Markets and Operations Strategy and I had the chance to spend time with compliance leaders at the Apex CCO Roundtable in Austin, and I also attended a women’s leadership event that left me feeling especially inspired by the conversations and people in the room.
October is shaping up to be one of our busiest months of the year and I’m particularly looking forward to joining the PREDICT Conference panel to share a firm-level perspective on market integrity and surveillance in prediction markets.
Between those conversations and the SEC’s recent roundtable on 24-hour trading one thing is clear: the market landscape continues to evolve quickly. Longer trading hours, new products and new types of participants are creating new oversight questions for firms, but they also reinforce the importance of having technology that can evolve alongside them.
That’s a theme you’ll see throughout this month’s Monitor. I hope to see many of you on the road this fall.
— Lisa Balter Saacks, President, Trillium Surveyor
Celebrating National Compliance Officer Day
We love a good reason to recognize the people in our community, and International Compliance Officer Day on September 26 gave us the perfect opportunity.
We asked our community to nominate the compliance professionals who inspire them, and heard about mentors, colleagues, leaders and industry peers making an impact every day.
Keep an eye on our LinkedIn over the next few days as we continue to spotlight a few of the compliance professionals our community nominated.
Thank you to the compliance community for all that you do and thank you for celebrating with us!
Surveyor Product Perspective
Expanding Context with Behavioral Analysis
As markets and trading patterns change, including the move toward 23/5 trading beginning in December, context is becoming increasingly important in answering an age-old surveillance question: Is this participant behaving differently than usual?
Surveyor brings behavioral and market context together to help teams evaluate activity:
- Behavior shift detection: Activity is evaluated relative to an account’s historical trading profile, enabling alerts to be generated based on deviations from its established baseline.
- Historical data and labeled judgments: Surveyor can draw on deep historical and labeled judgements from prior reviews, adding more context as activity is reviewed over time.
- Built-in market context: Surveyor distinguishes between regular and overnight sessions and enriches each alert with liquidity, volume, and broader market conditions, so teams can see what was happening when the activity occurred. Because historical overnight market data is already in place, firms get that context from day one instead of waiting to build a baseline.
The same approach can apply across changing markets. For example, in prediction markets, a participant’s win rate over time adds context to timing, size, and other behavior; for 23/5 trading, the same view helps teams tell whether overnight activity is truly unusual for that participant or just a product of session condition.
Interested in how this approach could apply to your surveillance program, connect with our team.
Regulatory Radar
- SEC Prepares the Market for Round-the-Clock Trading
The SEC convened a roundtable on September 17 to discuss readiness for 24-hour trading, as the industry moves toward a 23-hour, five-day trading week. NSCC has already shifted clearing to a 24×5 model, with extended SIP operating hours targeting a December 6 launch. (Source: SEC) - Court Ruling Adds to Prediction Market Regulatory Debate The Sixth Circuit ruled that Kalshi’s sports-event contracts do not qualify as swaps under the Commodity Exchange Act and therefore do not fall within the CFTC’s exclusive jurisdiction on that basis. The ruling allows Ohio and Tennessee to apply their state gambling laws to the contracts, adding another development to the evolving regulatory framework around prediction markets. (Source: The TRADE)
- Rule 605 Reports Come Due
Firms that began collecting data under the amended rule on August 1 must make their first detailed and summary execution-quality reports, covering August activity, publicly available by the end of September. The deadline moves the industry from preparation into its first live test of the new reporting regime. (Source: SEC) - SEC Opens a Path for Tokenized Stock Trading
The SEC issued a five-year “Innovation Exemption” on September 17, granting tokenized securities venues conditional relief from exchange and dealer registration requirements to operate automated market makers and liquidity pools for tokenized NMS stock. The exemption runs through 2031 and comes with volume caps, symbol limits and transaction-reporting conditions. (Source: SEC) - FINRA Rethinks Best Execution
FINRA published Regulatory Notice 26-15 seeking industry input on modernizing its best execution guidance, including how firms should evaluate venue connections if Rule 611 is rescinded, and how existing principles should apply to institutional orders, extended-hours trading and AI. Comments are due September 25. (Source: FINRA)
Market Structure and Compliance Trends
SEC Roundtable on Preparations for 24-Hour Trading, Key Considerations
The SEC held its Roundtable on Preparations for 24-Hour Trading on September 17, bringing the industry together to discuss readiness as trading hours expand. The timing is important, with SIP operating hours for consolidated market data expected to expand to 23/5 on December 6.
For compliance teams, a few things stood out:
Overnight trading isn’t a thinner version of the day session. Different participants, motivations, liquidity and trading patterns shape activity overnight. Wider spreads and different volume patterns mean surveillance thresholds need to reflect the conditions of each session.
Behavioral context becomes more important. Firms need to understand whether activity is unusual for a particular participant and the market conditions at the time. An account’s own history can add important context when reviewing potentially anomalous activity.
Surveillance needs to cover every session. Firms should consider how overnight activity will be monitored, how issues are escalated and whether surveillance is tuned for the conditions during those hours.
Market data provides critical context. Liquidity, volume and other market conditions help teams understand what was happening around an order or trade. As trading hours expand, firms need that context across the full trading day.
As firms prepare for expanded trading hours, understanding what normal looks like across different sessions will be an important part of identifying unusual behavior.
Watch the full SEC Roundtable on Preparations for 24-Hour Trading
Thinking through your approach to 23/5? Reach out to our team to learn how we’re supporting our client community with extended-hours surveillance.
Poll
As trading expands toward 23/5, what creates the biggest oversight challenge for your firm?
- Surveillance coverage
- Market data & infrastructure
- Staffing & operations
- Overnight trading behavior
Participate in the community poll here.
Our Social Calendar
Where to Find Us This October
New York City
- PREDICT Conference | October 6–7 | Speaking
- STA Annual Market Structure Conference | October 15–17
- FIX Americas Trading Conference | October 29
- TabbFORUM Best Execution Symposium | November 2 | Sponsoring
Orlando
- NSCP National Conference | October 25–28 | Sponsoring
Chicago
- FINRA Small Firm Conference | October 27–28 | Sponsoring
Heading to one of these events? Reach out to set up time with the Surveyor team in person.
Let’s Connect!
As your markets and oversight needs evolve, let’s talk about how Surveyor can support your surveillance and best execution program. Connect with our team →