Sell-Side Technology Awards 2016: Best Sell-Side Market Surveillance Product — Nasdaq

Even as this category becomes increasingly competitive thanks to new entrants and new regulatory demands, Nasdaq's Smarts Trade Surveillance platform continues to stand out. The multi-asset, software-as-a-service (SaaS) offering covers 45 marketplaces, and counts 13 regulators as clients, in addition to another 100-plus market participants, worldwide. Daily, over 1000 surveillance professionals use Smarts to monitor trading on 114 venues globally, according to the company.

In October of last year, Nasdaq released a Smarts module for monitoring trading activity conducted through dark pools in order to help firms answer new and proposed regulatory mandates. It provides surveillance capabilities on market manipulation and abusive behavior such as price manipulation, insider trading, front running, and cross-market (lit versus dark) manipulation.

In November, the Bolsa Institucional de Valores (BIVA), backed by Central de Corretajes (Cencor), announced its plan to implement Nasdaq’s X-stream trading technology and Smarts surveillance system. Santiago Urquiza, chairman of Cencor, told Waters that Nasdaq won the contract because of its experience in maintaining and operating global exchanges. BIVA was originally going to build the solution in-house, but decided to implement Smarts and X-stream instead after a year-long request-for-proposal process. 

“The deep experience Nasdaq’s executive and development staff possess offers an invaluable asset in navigating the many complex decisions necessary for such a sophisticated project,” Urquiza said. “This level of expertise is not available from any other exchange technology vendor. Nasdaq’s highly integrated product offerings provide flexibility and scalability as our group continues to develop infrastructure for the Mexican and Latin American financial markets.”

Perhaps the greatest challenge when it comes to surveillance is being able to handle the sea of information. One has to identify pockets of risk, quickly and accurately, and be able to analyze that data and provide context that looks for irregular behavior behind specific actions. To this end, this year Nasdaq partnered with cognitive vendor, Digital Reasoning, with the aim of providing analysts and compliance teams with insights across communications and trade data to automatically prioritize areas for evaluation and investigations.

This was an investment into machine learning to parse through both structured and unstructured data to better identify suspicious activity across the trade lifecycle. Nasdaq also extended its coverage for precious metals and fixed-income derivatives this year. The company is also working with clients to help them prepare for the Financial Conduct Authority’s Market Abuse Regulation (MAR), set to be phased in later this year.

In last year’s Waters Rankings awards, Nasdaq also took home the award for best market surveillance provider.