The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Nasdaq Adds AI and Transfer Learning to Enhance Market Surveillance

Share article

Nasdaq has enhanced market surveillance of its US stock exchange following the introduction of artificial intelligence (AI) and transfer learning to improve detection of malicious activity. Transfer learning is a machine learning method where a model developed for a task is reused as the starting point for a model on a second task. The company plans to push use of the technology to other exchanges and regulators through its Market Technology business, and will implement it in other Nasdaq markets. In time, it will also extend the range of scenarios the system detects.

The technology supports automated detection, investigation and analysis of potentially abusive or disorderly trading, and is the result of collaboration between Nasdaq’s Market Technology business, Machine Intelligence Lab and US market surveillance unit. It provides deep learning, allowing computers to understand extremely complex patterns and hidden relationships in massive amounts of data, and learn invariant representations; and transfer learning to create new models from old models and achieve rapid implementation, scalable model development, and detection of new forms of financial crime in new markets. Human-in-the-loop learning allows analysts to share their expertise with the machine, while human assisted model improvement leads to more signal and less noise in flagged examples.

Tony Sio, vice president and head of marketplace regulatory technology at Nasdaq, says that by training models based on their experience in monitoring data directly from the trading engine of the Nasdaq stock exchange, and using transfer learning, the company has built a framework that can provide learning to other marketplaces.

Martina Rejsjo, vice president and head of market surveillance, North America equities at Nasdaq, comments: “By incorporating AI into our monitoring systems, we are sharpening our detection capabilities and broadening our view of market activity to safeguard the integrity of our country’s markets.”

Leave a comment

Your email address will not be published. Required fields are marked *

*

Related content

WEBINAR

Recorded Webinar: High noon for surveillance: resolving tension between the costs of false positives, challenges of calibration, and compliance

When it comes to trade surveillance, regulators want firms to do their own alert calibration, examine all alerts, and keep auditable records. Firms need to balance the real cost of false positives with the technical challenge and risk of self-calibrating and auto-calibrating, while compliance, IT and vendors have to grapple with the need for defensible...

BLOG

Goldman Sachs Throws Weight Behind Open Source with Contribution of PURE and Alloy to FINOS

Goldman Sachs has thrown its weight behind the Fintech Open Source Foundation (FINOS) with a major open source contribution of a logical modelling language, internally named PURE, and a platform and visual modelling tool that generates PURE-based models, known within Goldman as Alloy. The contribution is designed to encourage banks to further adopt open source,...

EVENT

RegTech Summit Virtual

We’re thrilled to introduce you to our new RegTech Summit Virtual event. Yes that’s right, all the fantastic content shared by A-Team’s unique community of practitioner experts that you’ve come to know and love from our RegTech Summit live events in London is now going to be made available to you online, so you can watch or listen at your leisure – whether that’s in your office, on your commute, or from the comfort of your own home.

GUIDE

Fatca – Getting to Grips with the Challenge Ahead

The industry breathed a sigh of relief when the deadline for reporting under the US Foreign Account Tax Compliance Act (Fatca) was pushed back to July 1, 2014. But what’s starting to look like perhaps the most significant regulation of the next 12 months may start to impact our marketplace sooner than we think, especially...