The market surveillance technology field is a crowded one, with at least 15 major contenders vying for a piece of the lucrative pie, according to recent research from Chartis. Yet one firm has consistently emerged at the top of this field throughout the history of the Sell-Side Technology Awards, winning the category every year since 2014—Nasdaq, with its Smarts Trade Surveillance platform.
Used by over 150 firms, including buy- and sell-side trading outfits, regulators and marketplaces, Smarts has established itself as the preeminent surveillance platform within the capital markets. Its range covers traditional asset classes such as equities, currencies, futures and options and commodities, but this year it will expand further into over-the-counter derivatives, with exotics coverage planned for the second half of 2019. Virtual currencies—currently part of its foreign exchange module—will get their own standalone module in the near future, too.
But where Smarts really shines isn’t in how many different instruments it covers or the number of markets it connects to—more than 180 at last count—but rather in its nuanced use of emerging technologies.
The coming year will see Nasdaq branch out from some of the more tentative steps in artificial intelligence and data analysis it has taken in recent years, most notably through the use of behavioral science to detect market abuse, and machine learning to more effectively categorize alerts into a more proactive form of market surveillance. This isn’t just marketing talk—the modules in development are designed to move Smarts from being a pure-play surveillance technology through to a more general, compliance-driven platform.
“With some of our prototypes, we have been stepping even further outside of our comfort zone in pure trade surveillance, looking at the whole space monolithically and trying to help disrupt it, and really drive it forward with new ways of working,” says Valerie Bannert-Thurner, global head of risk and surveillance solutions at Nasdaq.
The strategy for Smarts to accomplish this is multifaceted and includes developments around how it handles case-building functionality into suspicious activity reports, through to its use of cognitive technology to better link together disparate data. “What we see is that the different compliance and financial crimes silos are converging,” Bannert-Thurner says. “We want to be ahead of that game. From a detection perspective, but then also from an investigations perspective, we want to be the platform that our customers use to bring those data points together.”
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