Waters Rankings 2014: Best Market Surveillance Provider — Nasdaq OMX

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Bill Nosal, Dwight Gooden, and Robert Lang

Given the complexity of modern markets and the penalties for regulatory infractions, it’s impossible to ignore the need for a competent market surveillance system. Just going through the motions won’t work, however, and the need for sophisticated, cross-market surveillance is simply the norm rather than an ideal state. In this field, Nasdaq OMX’s Smarts suite continues to dominate, securing the award in this year’s market surveillance category.

Acquired in 2010, Nasdaq has placed the Smarts platform at the center of its product suite. The proof is in the pudding, as the adage goes, but in this case it is Smarts’ varied client base that illustrates the extent to which the platform has found traction across the capital markets. The Broker variant serves over 60 broker-dealers across 55 markets, while its Integrity release is designed for use by exchanges and regulators themselves—one of the firm’s banner clients is the UK’s Financial Conduct Authority (FCA). Indeed, FCA chief Martin Wheatley recently used the example of Nasdaq OMX’s software to demonstrate the technical fluency of the regulator, and it’s hard to think of higher praise in this area of market operations.

More important than who uses the Smarts platform is what it can do for those users. Smarts supports real-time, cross-market, cross-asset surveillance, with the proven capability to handle billions of messages per day. At the firm level, it provides organizations with the opportunity to implement an effective surveillance and investigation regime outside of exchanges and regulators, supporting intelligent alerting and market analysis to determine when exchange-set rules or regulatory boundaries have been breached. In keeping with current trends, the software is delivered purely through a browser-based application, with no on-premises installation required.

Moving beyond Smarts’ core functionality, its partnership with Smarsh gives it strong communication-monitoring capabilities and archiving across all media, including voice, text message, and social networking sites. Its recent alliance with Catelas adds behavioral analysis and cognitive technology to the overall package, designed to illustrate relational linkages between employees and external clients. Likewise, Nasdaq’s OMX’s recent development of a foreign-exchange surveillance platform in conjunction with a number of dealer banks, continues to sharpen the platform’s edge, along with its research partnership with Sirca and the Capital Markets Cooperative Research Center.

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