Digital Business Solutions

Nasdaq purchases firm that uses AI to catch rogue traders

The Nasdaq Stock Exchange in the US confirmed it has purchased a London-based regulatory technology firm called Sybenetix which uses artificial intelligence to catch rogue traders. Nasdaq said it will pay an undisclosed amount for the firm and said it intends to fund the purchase with cash.

Nasdaq president and CEO, Adena Friedman, said in a release, “Nasdaq is investing in the technologies, talent and capabilities that solve the complex challenges our clients face.”

Friedman added, “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.”

Specific behavioral patterns by an organization are learned by Sybenetix through algorithms, and the information can then be processed to detect any unusual trading behavior. Nasdaq does have its own risk and surveillance solutions, but the addition of Sybenetix artificial intelligence software will add to it making overall operations more secure.

Regulatory companies are becoming more and more popular as there are increasingly complex regulations being put on financial institutions, CNBC reports. CB Insights says regulatory companies raised $732 million globally in 2016 with 102 companies getting funding, highlighting the largest number of deals.

In a joint statement, Sybenetix CEO Taras Chaban and chief behavioral scientist Wendy Jephson, said, “Being part of Nasdaq will provide enormous growth opportunities for Sybenetix’s surveillance technologies and will also accelerate new product development for the buy-side industry.”

The statement added, “Our clients will benefit from the added confidence of working with a world-leading company that understands the business and requirements of Sybenetix’s buy-side customers.”