Nasdaq Inc. has beefed up its market surveillance of The Nasdaq Stock Market with artificial intelligence (AI) technology designed to improve the detection of malicious trading activity, such as market manipulation and illegal insider trading, the exchange operator announced Thursday.
Among other things, the new technology aims to enable market regulators to uncover “extremely complex patterns and hidden relationships in massive amounts of data” and detect new forms of financial crime in new markets. It also employs human analysts to improve the model.
“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,” said Martina Rejsjo, Nasdaq vice president and head of market surveillance, North America equities, in a statement.
Nasdaq says it plans to expand the technology to other exchanges and regulators around the world through its market technology business.
“Through transfer learning, we have now built a framework to provide those learnings to other marketplaces around the world. We believe this is a major step in the evolution of how we use artificial intelligence technology to maintain the integrity of capital markets,” said Tony Sio, Nasdaq vice president and head of marketplace regulatory technology .
Earlier this year, the Investment Industry Regulatory Organization of Canada implemented a new market surveillance system from Nasdaq to oversee the Canadian markets.