The umbrella group of global securities regulators published a set of recommendations Monday that aim to help supervisors develop the new sorts of tools needed to cope with increasingly automated, and fragmented, markets.

The board of the International Organization of Securities Commissions (IOSCO) published a final report that makes recommendations designed to help market authorities address the technological challenges of effective market surveillance in the current environment.

“An effective surveillance regime is needed to ensure that trading in a given market is fair and orderly, and that market authorities have the ability to detect or uncover market abuse. But in recent years, technological developments in securities markets render it increasingly difficult to achieve these goals,” it notes.

At the same time, markets have undergone a sweeping transformation in recent years, it says, as technological developments have altered trading strategies, increased the speed of trading, and changed the array of products traded. Additionally, securities trading has become more dispersed among exchanges and between various other trading venues, it says. “The markets have become more competitive, as exchanges and other trading venues compete aggressively for order flow by offering innovative order types, new data products and other services, and through fees or rebates,” it says.

Increased automation can also boost the risk of illegal, or otherwise inappropriate, conduct, IOSCO says, “because market participants have the ability to trade large volumes of numerous products in just fractions of a second.” And, this speed hampers the ability of regulators to monitor markets effectively.

“Current surveillance techniques, including the collection, storage and accessibility of data, may need to be enhanced to capture in a timely manner all of the information necessary to monitor efficiently and effectively trading activity that occurs in the current highly automated and dispersed markets,” it says.

The report also examines new regulatory tools for dealing with the challenges that regulators face, including the use of audit trail or surveillance data that permits the reconstruction of trades and order books; a single reporting point for transactions within a jurisdiction; and unique entity identifiers.