CFTC Taps Nasdaq for Major Overhaul of Market Surveillance Technology
The Commodity Futures Trading Commission (CFTC) is deploying Nasdaq’s market surveillance platform to enhance its ability to detect fraud and manipulation across the derivatives markets it oversees. This will replace the agency’s outdated, ’90s-era legacy system with an industry-leading suite of tools used by exchanges and regulators around the world.
A “21st Century Regulator”
The initiative is a key part of a strategic push championed by CFTC Acting Chairman Caroline D. Pham to transform the agency into a “21st century regulator.” The CFTC’s regulatory responsibilities are expanding to include complex and fast-moving markets, from crypto assets to event-based prediction markets, making its decades-old surveillance system insufficient for the task.
“As our markets continue to evolve and integrate new technology, it’s critical that the CFTC stays ahead of the curve,” said Acting Chairman Pham.
New Tools to Combat Market Abuse
The new Nasdaq platform will provide the CFTC with a suite of advanced tools designed to make its surveillance more efficient and effective. For the first time, the agency will have access to automated alerts and cross-market analytics, allowing it to more easily identify unusual or disruptive trading activity.
“Nasdaq Market Surveillance will, for the first time, provide the CFTC with automated alerts and cross-market analytics that will benefit each of the CFTC’s operating divisions and better protect our markets from fraud, manipulation and abuse,” Pham stated. She added that the new system will allow the agency’s “lean and talented staff can take appropriate action more quickly.”
The platform’s flexible architecture is designed to provide a unified view of market activity, with the ability to conduct detailed transaction-level analysis and scale rapidly during periods of high volume and volatility.
A Partnership with an Industry Leader
For Nasdaq, the partnership highlights its position as a leading global provider of surveillance technology. Its platform is the most widely used in the world, serving over 50 exchanges and 20 international regulators.
“Today’s financial markets demand advanced surveillance technology that can adapt to rapid regulatory evolution and emerging asset classes,” said Tal Cohen, President at Nasdaq. “As both an owner and operator of heavily regulated markets, as well as a technology provider to financial services companies worldwide, Nasdaq occupies a unique position at the intersection of innovation and regulation.”
The enhanced capabilities are seen as critical for the CFTC to maintain the integrity of U.S. derivatives markets as they continue to grow in complexity and scope, particularly with the potential for an expanded role in overseeing digital asset markets.
Recommended