China to buy market surveillance technology from Nasdaq

Updated: 2015-09-03 05:31

By PAUL WELITZKIN in New York(China Daily USA)

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A securities exchange and financial firms in China have agreed to purchase market-surveillance technology from the operator of one of the best-known exchanges in the United States to keep pace with sophisticated trading technology.

Nasdaq OMX Group confirmed Tuesday that it has sold surveillance systems that will be used by an unidentified stock exchange and domestic Chinese brokerages in the mainland.

“Our market surveillance system is called SMARTS, which regulators, exchanges, brokers and buy sides use to identify market manipulation and misconduct,” Michael Karbouris, head of business development for Asia Pacific at Nasdaq, said in an e-mail. “Our advisory business is also very active in China, which provides professional services and consulting to exchanges and other market participants.

“In China, this is particularly focused around dealing with market structure changes in an environment of high growth and internationalization of financial markets,” he said. “In addition to operating the Nasdaq exchange, a unit of Nasdaq OMX provides technology to help exchanges and regulatory authorities to keep pace with trading advancement. For exchanges, the ability to maintain a fair, transparent and safe market is critical to attracting liquidity.”

Karbouris said Nasdaq has been active in China for more than 10 years. “There have been specific discussions around SMARTS for over two years, with the most recent major deals being carried out over the last year. While the trend started before the major market turmoil, recent events in China have accelerated interest for both exchanges and brokers,” he said.

China has been opening its stock markets to more foreign investors. Last year, the Shanghai-Hong Kong Stock Connect was unveiled, enabling off-shore investors to directly trade Shanghai-listed companies without going through quota systems. It also offered investors from Chinese mainland direct access to companies listed in Hong Kong.

Rob Lang, vice-president for business and product development at Nasdaq, told The Wall Street Journal that the recent slump in Chinese equities has forced regulators and trading companies to more closely examine their processes.

Karbouris said Nasdaq is working on additional sales in China. “Nasdaq plans a domestic China infrastructure presence in early 2016 to support the growth in take-up of our risk and compliance products by the Chinese market, particularly the domestic Chinese brokers,” he said.

paulwelitzkin@chinadailyusa.com

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