ALGORITHMIC SURVEILLANCE IN EMERGING MARKETS: A COMPARATIVE ANALYSIS OF THE PSX-NTS TRANSITION AND THE REGULATORY GOVERNANCE BOTTLENECK

Abstract

The rapid rise in high-frequency trading (HFT) and sophisticated algorithmic strategies calls for a paradigm shift in market surveillance. The inherent inflexibility of Rule-Based Systems (RBS) and consequent high false-positive and false-negative detections against evolving trading abuses is now frequently accepted as unsuitable.  The NTS's ability to capture high-frequency, tick-level data on the order book represents the indispensable foundation for this shift. Overall, this research argues that with the NTS, PSX surveillance is transitioning from a reactive, threshold-based operating model to a predictive pattern-based approach, thereby improving market quality. The key message is that while the technical infrastructure is now in place, the ability to make the transition depends solely on overcoming non-technical governance hurdles.