The first of two categories decided by the Waters journalists, announced on the afternoon of the BST Awards luncheon in London on November 2, where the previous 35 winners were considered as potential recipients, goes to Nasdaq, thanks to its Buy-side Compliance offering. Up to now, the firm’s suite of risk and surveillance offerings was headlined by its outstanding Smarts platform, which has dominated the Waters Rankings in recent years. In fact, since 2012 when the market surveillance category was first introduced, there has only ever been one winner: Smarts. But the firm’s Buy-side Compliance platform is now also in the limelight, thanks to Nasdaq’s September 2017 acquisition of London-based buy-side behavioral analytics specialist, Sybenetix, which resulted in Compass, Sybenetix’s buy-side-specific trade surveillance platform, changing hands.
This year’s win, however, was far from a one-horse race, as FlexTrade, Eze Castle Integration and Dash Financial Technologies came into consideration as potential recipients by virtue of their double wins, while Duco and AxeTrading were also considered. But it was the Buy-side Compliance platform’s topicality and the ingenuity by which it efficiently addresses a number of the buy side’s most pressing needs that got it over the line.
It is no secret that the US exchange operator has been eyeing the buy side in recent years, looking for a buy-side-specific surveillance offering to help support firms’ internal and external regulatory obligations, rather than extending Smarts to the asset management industry. Nasdaq Buy-side Compliance does just that: It provides traditional asset managers and hedge funds with behavioral profiling algorithms to address the Market Abuse Regulation, which came into effect in July 2016, and Mifid II regulatory requirements. The behavioral analytics model applies algorithms to individual decision making to provide a holistic behavioral analysis of possible instances of market abuse, and to more accurately detect cases of market manipulation. As James Rundle explains in his write-up on page 48, the platform isn’t just a standard surveillance offering that checks whether portfolio managers’ trading patterns fit the typical definition of layering, spoofing or other forms of market abuse—it also drills down into the individual traders’ traits, identifies when behavior is outside of the norm, and applies advanced analytics to detect the true nature of intent in trading. And while the platform’s client numbers are currently modest, if Smarts’ success is anything to go by, those numbers will have grown appreciably by this time next year.
By winning this category, Nasdaq joins an elite group of past recipients, including Advise Technologies (2012); LCH.Clearnet (2013); Vermilion Software (2014); Algomi (2015); Commcise (2016); and last year’s winner, Thasos Group.
Bryan Cross, who heads UBS Asset Management's QED group, joins to discuss alternative data and AI.Subscribe to Weekly Wrap emails
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