Red alert: how Nasdaq’s Smarts became surveillance blind spot
Software that looks for shifty trades has been asleep on the job, affecting alerts for hundreds of products.
On July 8, users of Nasdaq’s Smarts software received an email. It said—not in these words—that the software had not been doing its job.
That’s a problem, because Smarts has a big job. The software promises to help market participants spot suspicious trading behavior—spoofing, frontrunning, insider trading, and more—that could be illegal. Firms that do not properly monitor their trading may be fined, and Smarts is arguably the dominant vendor in this market, with around 190 customers, comprising
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