Nasdaq's SMARTS Launches Trade Surveillance Monitoring for Dark Pools
October 08 2015 - 6:01AM
Nasdaq (Nasdaq:NDAQ), the world's leading provider of trade
surveillance technology to marketplaces, regulators and market
participants, has officially launched new trade surveillance
monitoring capabilities for dark trading activity alongside its
award-winning SMARTS Trade Surveillance platform.
"Trade surveillance can no longer be limited to lit trading,"
said Rob Lang, Vice President, Business and Product Development,
Risk & Surveillance Solutions, Nasdaq. "Regulators globally are
taking a more active role in monitoring and enforcing greater
transparency in the trading of listed instruments away from lit
venues generally, and of trading behaviors within dark pools
specifically. We see the need to address these new demands and
support dark venue operators and those executing in the dark to
boost their surveillance capabilities and help them stay in
compliance."
The new module, SMARTS Surveillance for Dark Pools, helps
Multilateral Trading Facilities (MTF), Alternative Trading Systems
(ATS), Crossing Networks, and market participants internalizing
order flow or trading in external dark venues to monitor for
potentially abusive behavior taking place in the dark.
Jurisdictions such as Hong Kong, Australia and Europe, amongst
others, have already passed regulatory mandates in relation to dark
trading. SMARTS Surveillance for Dark Pools will better position
dark venue operators and participants to more effectively meet
requirements and demonstrate a proactive approach to surveillance
of dark trading.
- For dark venue operators, like MTFs and ATSs, these
capabilities will enable them to monitor trading across all of
their clients, like an exchange, to ensure market integrity. Using
SMARTS, venue operators that also own broker-dealers would also be
able to demonstrate that internal desks are not trading ahead of
client orders on knowledge, further improving the integrity of the
pool.
- For Crossing Networks or Systemic Internalization, the solution
helps demonstrate system integrity in that the liquidity pool
operates as advertised, in addition to helping identify potentially
malicious behavior that is hidden in the network or any mispricing
or fair pricing issues for trades that executed internally.
- For executing brokers, SMARTS Surveillance for Dark Pools
enables firms the same cross-market, cross-asset monitoring and
alerting capabilities as have proven successful in lit markets,
with the ability to view dark executions within the full context of
all of the markets traded.
SMARTS Surveillance for Dark Pools covers the full range of
market manipulation and abuse behaviors from price manipulation to
insider trading, front running, and cross-market (lit vs dark)
manipulation, amongst others.
"In order to ensure integrity and compliance, dark venue
operators and participants internalizing or crossing order flow, or
externally participating in dark venues, need to have processes and
systems in place to monitor activity for manipulative trading,"
said Michael O'Brien, Head of Product Development, SMARTS Trade
Surveillance. "Not only does this support regulatory compliance
needs, it is simply good business practice, particularly in a
quickly evolving marketplace like dark pools."
SMARTS Surveillance solutions power monitoring capabilities for
more than 100 market participants across 65 markets, and over 50
marketplaces and regulators.
For more information, visit business.nasdaq.com/tech.
About Nasdaq
Nasdaq (Nasdaq:NDAQ) is a leading provider of trading, clearing,
exchange technology, listing, information and public company
services across six continents. Through its diverse portfolio of
solutions, Nasdaq enables customers to plan, optimize and execute
their business vision with confidence, using proven technologies
that provide transparency and insight for navigating today's global
capital markets. As the creator of the world's first
electronic stock market, its technology powers more than 70
marketplaces in 50 countries, and 1 in 10 of the world's securities
transactions. Nasdaq is home to more than 3,600 listed companies
with a market value of approximately $9.6 trillion and more than
10,000 corporate clients. To learn more, visit: nasdaq.com/ambition
or business.nasdaq.com.
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