Waters Rankings 2015: Best Market Surveillance Provider ─ Nasdaq

Nasdaq wins market surveillance category for second consecutive year.

Earl Monroe and Alan Shen

Nasdaq acquired the cross-market surveillance platform SMARTS five years ago, back in July 2010, which has since evolved to become the centerpiece of the exchange operator's surveillance technology offering, attracting a sizeable market presence-40 marketplaces, 11 regulators and 100 market participants across 65 markets globally, according to Nasdaq-and has helped the New York-headquartered exchange operator to win the best market surveillance provider category in the Waters Rankings for the second consecutive year.

The presence of nearly a dozen regulators in the Nasdaq client base is perhaps most telling of how the market evaluates the platform's capabilities, the UK's Financial Conduct Authority being one of the first and most vocal advocates of the system.

SMARTS' appeal lies in its breadth of functionality, with tailored offerings dedicated to regulators and trading venues, buy-side and sell-side participants, and FX specialists.
Indeed, it is a big ask to pinpoint an area of the capital markets that would not find a use for the platform. SMARTS provides real-time, cross-market, cross-asset surveillance, complimented with in-depth visualization tools that harness data gathered from both the markets and internal institutional feeds.

This is backed up by the SMARTS IQ Analytics engine, a pre-configured collection of trading and surveillance alert visualization dashboards, designed to detect behavior unsuited to codified alerts through a range of visualization maps. The increasing regulatory focus on trading generated from electronic trading platforms (algos) is a further risk area that is supported through the provision of real-time monitoring to the broker-dealer front office, aggregating data across multiple markets. A dedicated FX trade solution provides surveillance teams with a single view of trade data, alerting possible manipulation of rate fixes, insider trading and front-running.

Version eight of SMARTS is due for release in September and with Dodd-Frank and Mifid II regulations requiring market participants to examine a broad array of instruments beyond plain vanilla equities and their derivatives, the new version of the platform will include correlation matrix functionality enabling users to incorporate trading datasets across the scope of trading instruments that are financially correlated. A new alert calibration environment is also included in the release to meet increasing demand from market participants for a platform which enables on-going calibration and testing of alert scenarios.

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