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Your email address will not be published.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

Upcoming Webinar: Financial Services Infrastructure in the Post-Covid Environment

Date: 16 June 2020 Time: 10:00am ET / 3:00pm London / 4:00pm CET The Covid-19 pandemic has shaken financial institutions’ working practices to the core. Trading volumes have exploded, with some venues recording more than 10X the usual volume of transactions. Volatility has raged, with the benchmark VIX index testing new highs. And nor are...

BLOG

SteelEye Outlines International Expansion and Product Development Plans Following Series A funding of $10 Million

SteelEye will extend its presence in Europe, evolve its regulatory compliance and data analytics products, and expand its team after raising $10 million of Series A funding in a round led by Eight Roads, the proprietary investment firm backed by Fidelity, and including its existing investor Illuminate Financial. Looking two years out, the company is...

EVENT

FRTB Briefing Virtual

The FRTB Briefing Virtual will examine key focus areas and priorities for banks in 2020 and offer guidance, advice and expertise for tackling the challenges and pain points around implementing the FRTB regulation.

GUIDE

GDPR Handbook

The May 25, 2018 compliance deadline of General Data Protection Regulation (GDPR) is approaching fast, requiring financial institutions to understand what personal data they hold, why they process it, and whether it is shared with other organisations. In line with individuals’ rights under the regulation, they must also provide access to individuals’ personal data and...