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Australia’s ASIC Taps First Derivatives Big Data Solution for Market Surveillance

The Australian Securities & Investments Commission (ASIC)’s selection of First Derivatives’ Delta Stream+ Market Surveillance solution is aimed at giving the regulator the same kinds of tools available to high frequency traders for monitoring market activity and identifying possible fraudulent behaviour.

The deployment of Delta Stream+ is seen as an early application of big data technologies to the challenge of market surveillance. The platform is based on First Derivatives technologies that are already used by practitioners for market data capture, alerts and analytics and high frequency and algorithmic trading.

According to Gerry Buggy of First Derivatives, “We are seeing the ability to support massively scalable tick-by-tick data capture – together with synchronised time-stamping and integration of both structured and unstructured data – as essential ingredients of any big data project in capital markets. This data may reside in a broad array of repositories, such as Hadoop, and our ‘on-ramp’ capabilities allow us to capture this data, whatever its source. Delta Stream+ can then run queries against this data. This allows clients to use our ‘off-ramp’ architecture to generate unprecedentedly sophisticated analytics such as those used to identify fraudulent trading activity.”

The new surveillance system – which is expected to go live in mid-2013 – will allow ASIC to cope with anticipated future increases in message traffic, the emergence of new trading technologies, increased competition between trading venues and the ongoing globalisation of capital markets.

The surveillance system will promote the integrity of our financial markets through the prevention, detection and deterrence of market misconduct, and provide a greater capability to monitor all types of trading across markets as well as across different products.

The new system enables ASIC to interrogate very large data sets and monitor market activity, consistent with the increased use of technology in day-to-day trading. The system will have multiple layers of security built into it, ensuring that ASIC maintains control over data at all times, and will allow for a robust framework that will deliver significant benefits to ASIC’s work, including:

– Functionality that is appropriate for the Australian market, and flexible for a changing trading environment; and

– Advanced analytics that will allow for the analysis of complex data sets and the ability to connect patterns and relationships.

Selection of First Derivatives followed a competitive tender process. ASIC says a thorough evaluation process has also ensured that the new system will represent value for money for ASIC and the market participants and operators that fund ASIC’s market supervision through cost recovery. “The total cost of the system is well under the maximum that was allowed for, which is a significant saving for the industry,” it said in a statement.

ASIC will continue its surveillance relationship with Smarts, a relationship that assisted ASIC to assume market supervision responsibilities from ASX in 2010.

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