Buy-Side Technology Awards 2016: Best Buy-Side Market Surveillance Tool/Platform—Nasdaq SMARTS

Regulators are just as keen to make sure hedge funds and traditional asset managers are doing all they can to make sure no one within their firm is manipulating the markets.

In light of that trend, Waters deemed it necessary to add a category for best market surveillance tool/platform to the Buy-Side Technology Awards. It seems fitting that the first vendor to take home that honor is Nasdaq with its Smarts Trade Surveillance platform, which has spent plenty of time in the winners’ circle for the same category at the Waters Rankings and Sell-Side Technology Awards.

Arguably the most important part of a market surveillance tool is the breadth of coverage it provides. Nasdaq Smarts certainly checks that box, offering real-time, cross-market surveillance for 44 marketplaces, 13 regulators and over 125 market participants. Smarts looks to address the specific needs of the buy side, instead of simply hoping the features implemented for the sell side translate across the aisle.

Part of that includes proper data management. Smarts has integrated data sourced from buy-side order management systems/execution management systems. The management of parent orders has also been a key feature. Each data point of the trade lifecycle—from parent order to child order to trade execution—is captured. Alerts are built in to identify market abuse scenarios with respect to each data point.

Analytics are also incorporated to allow users to view a trade’s impact on volatility and volume in the market. An alert suite notifies the user of unusual volumes or potential manipulation, including insider trading, benchmark fixing or layering/spoofing.

Smarts looks to address the specific needs of the buy side, instead of simply hoping the features implemented for the sell side translate across the aisle.

There is also a visualization feature that allows a parent order to be shown with market context. Execution quality analytics are also available for the executing broker and trader or portfolio manager. 

Smarts has also looked to adopt the most innovative technology going forward. This spring, Nasdaq announced a partnership with Digital Reasoning, which offers a cognitive computing solution. This will allow users to analyze trade and communication data, offering them even deeper insight into potentially suspicious activities.