The figures show surveillance spending — which grew rapidly because of the need for compliance with the EU’s Markets in Financial Instruments Directive (MiFID), introduced in 2007 — will climb 13% between 2009 and 2012 as outsourcing becomes more common. The report’s author Miranda Mizen said: “The ratio of internal versus external purchases will decline from 70% in 2009 to 53% in 2012.”

Mizen believes effective market surveillance is becoming a source of competitive edge for firms. She said surveillance needs have changed dramatically and that a single stock that used to trade on three venues might now trade on as many as 15.

“Changes in market structure have shifted the onus of surveillance, as individual markets may no longer have all the trading activity, brokers have clients across Europe and regulators have to learn to share,” she said.

According to Tabb, individual investors and boards of financial institutions now demand proof of the integrity of the environments in which they trade. Investors, meanwhile, want proof of best execution and comfort about the risk profile of their counterparties.

Mizen said: “Brokers point to surveillance programmes as essential to sound risk management, integrity of execution and appropriate and legal conduct both towards and by their clients.”