Hong Kong Exchanges and Clearing has deployed the latest market surveillance technology from Nasdaq to safeguard the integrity of its equity market. The surveillance solution, called SMARTS, uses machine learning to analyze unusual trading activities and measure the performance of the exchange's surveillance analysts. The aim is to predict which actions analysts are likely to take based upon their handling of historical activity as well as discovering new relationships within the data.
"HKEX has been instrumental in contributing to this collaboration and embracing emerging technology to protect market participants," said Valerie Bannert-Thurner, senior vice president and head of risk & surveillance solutions, Nasdaq. "The evolution of SMARTS is heavily driven through client collaboration and our mutual interest in improving and maintaining market integrity, and we look forward to supporting their continual innovative approach to market surveillance."
The machine learning capabilities initially will be used to prioritize the surveillance workflow and predict the likelihood that an event will lead to an action by an analyst. This will enable surveillance officers to identify outliers where the actual handling of alerts has differed from the prediction of the algorithm. SMARTS also has supplied a way to visualize trade relationships so that HKEX can immediately review how participants coordinate trades through multiple accounts.
"As a market operator, we have always strived to be at the forefront of embracing and applying emerging technologies that will strengthen the integrity of our markets," said Garbo Cheung, managing director and head of market surveillance and monitoring, HKEX. "We look forward to continuing our collaboration with the SMARTS team in further building our machine learning capabilities in our market surveillance endeavors."