Nasdaq Deploys Advanced AI Into Its Market Surveillance
Targeting Manipulation And Insider Trading
Nasdaq has launched a groundbreaking addition to its market surveillance technology, introducing a potent AI feature set to transform the detection and investigation of market abuse worldwide.
Through the integration of generative AI, Nasdaq aims to expedite the process of identifying potential market manipulation and insider trading and enhance the overall integrity of global financial markets.
The new AI functionality promises to elevate market abuse investigations’ quality, speed, and efficiency, offering regulators and marketplace participants a powerful tool for safeguarding market integrity.
Nasdaq’s latest solution leverages generative AI to streamline the triage and examination process, enabling clients to monitor and detect illicit activities within financial markets more effectively.
During rigorous proof-of-concept testing, surveillance analysts reported a remarkable 33% reduction in investigation time and marked improvements in overall outcomes.
US Equity Market
This significant leap in investigation efficiency underscores the transformative potential of Nasdaq’s AI-powered enhancement, slated for deployment in US equity market surveillance.
Ed Probst, Senior Vice President and Head of Regulatory Technology at Nasdaq stressed the critical role of trust in capital markets.
He said: “Market abuse poses a substantial global challenge, necessitating increasingly sophisticated solutions for mitigation. As a leading regulatory technology provider, Nasdaq is uniquely positioned to harness technology’s power to uphold market integrity worldwide.”
In today’s regulatory landscape, international authorities mandate financial institutions to maintain robust surveillance systems capable of detecting and deterring market abuse across diverse asset classes and jurisdictions.
Nasdaq’s AI-driven innovation aims to address these imperatives by empowering analysts with advanced capabilities for swiftly and accurately distilling, analysing, and interpreting vast amounts of data.
Analysts’ Painpoints
Traditionally, analysts confronted with automated alerts of suspicious activity embark on a labour-intensive process of collating evidence from disparate sources. Nasdaq’s enhanced functionality, built on Amazon Bedrock, an AWS service renowned for secure generative AI applications, promises to transform this process.
Analysts can now form detailed initial assessments with unprecedented efficiency by automating the synthesis of regulatory filings, news sentiment analysis, and other pertinent data points.
Tony Sio, Head of Regulatory Strategy and Innovation at Nasdaq, underscored the significance of technological innovation in combating evolving threats.
Sio said: “Our commitment to innovation enables us to offer advanced tools for tackling market abuse, thereby fortifying the global financial system against emerging risks.”
Scott Mullins, General Manager of Worldwide Financial Services at AWS, echoed this sentiment, highlighting Nasdaq’s pioneering efforts in leveraging cloud and AI technology to enhance market stability and security.
Nasdaq’s foray into AI integration is a cornerstone of its broader strategy to modernise and fortify global capital markets infrastructure. By harnessing AI across various business units, Nasdaq aims to enhance market fairness, liquidity, and efficiency while upholding the highest standards of integrity and accountability.
Diverse Domains
The company’s AI initiatives span diverse domains, including options exchanges, investor relations intelligence, and financial crime management technology.
Notable advancements include the introduction of Dynamic MELO, the first SEC-approved AI order type, and the deployment of Strike Price Optimisation to align options exchange strategies with market demand.
Furthermore, Nasdaq’s Investor Relations Intelligence team has leveraged AI to efficiently unearth proprietary insights, culminating in the launch of Nasdaq Sustainable Lens, an AI-powered ESG intelligence solution designed to empower clients with actionable insights on regulatory compliance and competitive intelligence.
In financial crime management, Nasdaq’s acquisition of Verafin has enhanced its capabilities by introducing Entity Research Copilot, a pioneering AI-driven solution automating financial institutions’ compliance tasks and daily workflows.
As Nasdaq continues to spearhead AI innovation across its ecosystem, the company reaffirms its commitment to advancing market integrity, resilience, and transparency in the digital age.
Through strategic investments in technology and unwavering dedication to innovation, Nasdaq charts a course towards a more secure and equitable financial future.
Featured image: Nasdaq’s foray into AI integration aims to modernise and fortify the infrastructure of global capital markets. Credit: Sophie Backes
