Nasdaq, Inc. is teaming up with a tech startup to bolster the ability of its market surveillance technology to seek out possible misconduct and speed up investigations by analyzing traders’ chatter.
The New York-based stock exchange operator on Tuesday announced a strategic alliance with Digital Reasoning Systems Inc., a Nashville-based firm that develops technology to process and analyze communications, such as emails and chats.
The alliance will produce “next generation, holistic surveillance technology” that integrates trade surveillance alerts with natural language processing and machine intelligence-based technology,
“Digital Reasoning’s sophisticated natural language processing and machine intelligence-based technology is able to understand how people communicate by analyzing the context, content and relationships within human communications, while semantically revealing concealed insights — enabling firms to better understand the intent and meaning behind specific behaviors,” the exchange says in statement.
Combining thee capabilities of the two organizations in a single offering will help market surveillance analysts prioritize and speed up investigations, Nasdaq says. Additionally, the exchange operator suggests that the technology will be more effective in uncovering possible violations, and that the “partnership will drive a paradigm shift in behavior detection to identify heretofore concealed activities.”
“Our partnership with Digital Reasoning will not only enable us to strengthen our current surveillance solution but also allow us to utilize the best capabilities and data sourced from each product to deliver monitoring technology that will allow firms to take a truly holistic approach to surveillance across structured and unstructured data and strengthen their monitoring and detection capabilities,” says Valerie Bannert-Thurner, head of risk & surveillance solutions at Nasdaq.
Nasdaq also revealed that it participated in the latest round of financing for Digital Reasoning.
“The application of machine intelligence to identify inappropriate activity in digital communications greatly boosts positive predictive values over traditional methods, and it brings a radical new technological approach to the field of behavior analysis,” adds Marten den Haring, chief product officer of Digital Reasoning.
“By partnering with Nasdaq, we can raise the bar in signal detection across disparate systems and apply deep understanding of context to assess risk, without adding workload to the already burdened surveillance analyst,” he says.