Nasdaq has integrated a new AI-powered feature within its Market Surveillance technology, aimed at significantly enhancing the quality, speed, and efficiency of market abuse investigations. The solution utilises generative AI (GenAI) to streamline the investigative procedures around suspected market manipulation and insider trading, enabling more effective monitoring and detection of potential market abuse.
With proof-of-concept testing showing a 33% reduction in investigation time, Nasdaq now plans to implement the functionality across its U.S. equity market surveillance.
“Market abuse is a substantial global challenge and one that demands increasingly sophisticated solutions to address it,” commented Ed Probst, Senior Vice President and Head of Regulatory Technology at Nasdaq. “As a major regulatory technology provider to the world’s financial system, with a deep culture of innovation, Nasdaq is uniquely placed to leverage the power of technology to further enhance the tools and capabilities necessary to uphold the integrity of marketplaces globally.”
Regulators worldwide mandate financial institutions to demonstrate the continuous effectiveness of their surveillance systems and controls. Firms are expected to maintain comprehensive coverage across all asset classes and jurisdictions with scalable systems that handle periods of high volume and volatility effectively.
Typically, when conducting initial reviews of automated alerts, analysts need to manually gather extensive evidence before deciding whether further investigation is warranted. This process is resource-intensive, especially for alerts requiring deeper investigation. Nasdaq’s enhanced functionality, built on Amazon Bedrock, an AWS service for secure GenAI applications, enables analysts to swiftly perform detailed initial assessments of alerts by distilling, analysing, and interpreting relevant information.
“By drawing on the latest innovation in cloud technology and artificial intelligence, we can better respond to new threats and offer the global financial system advanced tools to more effectively tackle market abuse,” said Tony Sio, Head of Regulatory Strategy and Innovation at Nasdaq.
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