Nasdaq has become the latest major global financial player to step up its use of Artificial Intelligence (AI), leveraging the technology for market abuse investigations.
The stock exchange will utilise Amazon Bedrock, a generative AI applications solution developed by Amazon Web Services (AWS). Nasdaq, along with its regulator and marketplace clients, will use the solution to quickly analyse and interpret information.
Amazon Bedrock will play a role identifying suspected market manipulation and insider dealing to better enhance monitoring and detection of market abuse. Testing has seen a 33% reduction in investigation time and improved overall outcomes.
Tony Sio, Head of Regulatory Strategy and Innovation at Nasdaq, said: “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.”
Nasdaq is an international marketplace, operating the Nasdaq Stock Exchange in New York and the Nasdaq Nordic exchange in Stockholm, Sweden. The rollout of Amazon Bedrock will focus on its US equity operations, at least initially.
The move forms part of Nasdaq’s compliance with international financial market regulations. Regulatory authorities require financial institutions to demonstrate the effectiveness of solutions and controls.
This includes coverage of asset portfolios to ensure protection of market integrity and bulwarks against manipulation. Nasdaq hopes to reduce the resource intensiveness of its current approach, which relies heavily on manual monitoring, by utilising AWS’ AI services.
“Maintaining trust in capital markets is critical to preserving long-term growth and prosperity,” said Ed Probst, Senior Vice President and Head of Regulatory Technology at Nasdaq. “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.”
Ai, particularly GenAI, is becoming increasingly widely utilised across various sectors, not least financial services and fintech. Much of its use in finance and banking has focused on fraud prevention, so it is unsurprising financial marketplaces like Nasdaq are now looking at its use in the similar field of market integrity.
This upsurge in AI usage has in turn driven an increase in funding for AI developers in fintech investment circles. This is a trend observed by the likes of Stripe President John Collison, whilst studies have also shown AI studios are taking over from payments firms as a leading target for investors.
Scott Mullins, General Manager of Worldwide Financial Services at AWS, added: “Nasdaq is continuously innovating on behalf of the global capital markets by combining its industry-leading expertise with cloud and AI technology.
“We are honoured to work with Nasdaq as it harnesses the power of generative AI to advance the stability and security of the global financial system.”
