Nasdaq fintech purchase adds AI for market surveillance
Founded in 2011, Sybenetix uses behavioral analytics and cognitive computing “to solve key surveillance challenges facing the asset management industry.” Its software is designed to learn the behavior of individuals or groups within an organization and flag suspicious activity to compliance officials, although it can also be used to enhance performance.
“Nasdaq is investing in the technologies, talent and capabilities that solve the complex challenges our clients face,” says Adena Friedman, president and CEO of Nasdaq. “We believe behavioral science, cognitive computing and machine intelligence are essential to a successful, holistic surveillance offering and critical to efficient and effective organizational compliance with an increasingly intricate global regulatory environment.”
In addition to running its stock exchanges, Nasdaq sells market technology to trading firms, exchanges, and clearing houses around the world. The Sybenetix acquisition will, it says, enable it to expand its current market surveillance technology offering to service buy-side firms – i.e., investing institutions such as mutual funds, pension funds and insurance companies that tend to buy large amounts of securities for money-management purposes.
One of Nasdaq’s current such surveillance products, called Smarts, helps brokers, exchanges, and regulators identify potentially abusive trading across a range of markets. According to the company, more than 45 marketplaces, 17 regulators, and 140 market participants use its surveillance tools. Adding the Sybenetix technology, says the company, will help it develop solutions that analyze data beyond trading records to better spot conduct risk.
“Our primary goal with this [acquisition] is our entry into the buy-side market with a compliance solution,” says Valerie Bannert-Thurner, senior vice president and head of risk and surveillance solutions at Nasdaq. “We talk to firms globally who are looking at how they can beef up their surveillance and improve their compliance.”
Nasdaq did not disclose the amount it is paying for Sybenetix. It did say that it intends to fund the purchase price with cash on hand.
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