Nasdaq adds Gen AI to market surveillance: 33% faster

Rick Steves

The new AI feature can produce a consolidated table of the company’s regulatory filings, summaries, and links to company, sector, and peer company news, news sentiment analysis, and other mitigating or aggravating factors that may impact any given security.

Nasdaq growth record

Nasdaq has added an AI powered feature within its Market Surveillance technology solution to streamline the triage and examination process involved in investigating suspected market manipulation and insider dealing.

Generative AI will be leveraged to enhance the quality, speed, and efficiency of its U.S. equity market surveillance, thus empowering regulator and marketplace clients to more effectively monitor and detect potential market abuse.

According to Nasdaq, during proof-of-concept testing, surveillance analysts estimated a 33% reduction in investigation time, with improved overall outcomes.

Nasdaq leverages Amazon Bedrock for Gen AI feature

International regulators require financial institutions to demonstrate the ongoing effectiveness of their surveillance systems and controls. Firms are expected to have comprehensive coverage across their entire portfolio and operations, spanning a broad range of asset classes and jurisdictions, with scalable systems capable of managing increased levels of risk during periods of high volume and volatility.

When analysts receive automated alerts of suspicious activity, they must conduct an initial review and form an assessment of whether the activity warrants further investigation. That typically involves manually collating all necessary evidence, including relevant trading activity and corporate filings alongside a vast array of data from external sources, before deciding whether to continue the review.

Because the process is highly resource intensive, and even more so if the alert warrants further investigation, Nasdaq decided to address these challenges by leveraging Amazon Bedrock, an AWS service for building secure generative AI applications.

Analysts will now be able to utilize generative AI capabilities to distill, analyze, and interpret relevant information more quickly, enhancing their ability to form detailed initial assessments of alerts.

As an example, Nasdaq stated the new feature can produce a consolidated table of the company’s regulatory filings, summaries, and links to company, sector, and peer company news, news sentiment analysis, and other mitigating or aggravating factors that may impact any given security.

“Trust is critical to preserving long-term growth and prosperity”

Ed Probst, Senior Vice President and Head of Regulatory Technology at Nasdaq, said: “Maintaining trust in capital markets is critical to preserving long-term growth and prosperity. Market abuse is a substantial global challenge and one that demands increasingly sophisticated solutions to address it. 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.”

Tony Sio, Head of Regulatory Strategy and Innovation at Nasdaq, added: “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. This is a continuous cycle of investment and improvement in our capability, leveraging our unique position as both a world class market operator and best in class surveillance technology provider around the world.”

Scott Mullins, General Manager of Worldwide Financial Services at AWS, said: “Nasdaq is continuously innovating on behalf of the global capital markets by combining its industry-leading expertise with cloud and AI technology. We are honored to work with Nasdaq as it harnesses the power of generative AI to advance the stability and security of the global financial system.”

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