FSA Takes Nasdaq OMX Platform for Market Surveillance

Paul McKeown, vice president of market technology of Nasdaq OMX, tells Sell-Side Technology that the FSA was most impressed by the global scale of Smarts Integrity; the fact that it is an integrated, cross-market offering; and that it can process large volumes of transactional data.

"The FSA is a big regulator regulating a very large market," McKeown says. "So they needed a technology platform that would support large volumes and Smarts Integrity has proven itself in very high-volume marketplaces."

McKeown adds that the tool comes equipped with reporting capabilities and it can monitor "unusual" instruments such as contracts for difference (CFDs) and spread betting.

Nasdaq OMX has continued to expand the Smarts solution. With derivatives now a core part of the offering, they have also added a market operations module, which amongst other things will allow regulators and exchanges to monitor overall market activity including things such as ensuring participants are meeting their market making obligations.

"The FSA can carry out monitoring across the entire financial market, all the transactions that are done, to look for market abuse such as insider trading and front-running," he says. "It's providing a level of transparency to the marketplace to ensure that the regulator is doing its job properly."

Nasdaq OMX currently has 32 exchanges and 11 regulator signed as clients for Smarts Integrity. For its Smarts Broker business it currently has 65 broker-dealer customers. Nasdaq acquired Smarts a little over two years ago.

McKeown says for future enhancements, Nasdaq is working on continuing to build on its volume-handling abilities, and will eventually look to add support for over-the-counter (OTC) contracts, as well as move into the fixed-income and commodities asset classes.