AI Case Study

Nasdaq invests in AI surveillance software company Digital Reasoning to automate detection of trader misconduct

Nasdaq has invested in Digital Reasoning, an AI software vendor which surveys mass employee communications data to automatically detect potential employee wrongdoing, such as insider trading and other market violations.

Industry

Financial Services

Investment Banking And Investment Services

Project Overview

Nasdaq "will invest an undisclosed sum in Digital Reasoning and link the latter’s algorithms with Nasdaq’s own surveillance technology, which monitors trade data... Combining the two products is designed to assess the context, content and relationships behind trading and spot signals that could indicate insider trading, market manipulation or even expenses rules violations. We can raise the bar in signal detection across disparate systems and apply deep understanding of context to assess risk, without adding workload to the already burdened surveillance analyst".

"Digital Reasoning’s algorithm can search for clients who are asking lots of questions to flag them up as ripe for doing a deal, or spot instances of a trader whose clients repeatedly show interest but often do not complete the deal. It can even scan for complaints to help a company avoid losing customers by prompting it to offer an apology."

Reported Results

Planned; results not yet available

Technology

Function

Legal And Compliance

Compliance

Background

After a series of trading scandals, financial institutions are investing in improving surveillance systems to detect employee wrongdoing. This has been done previously by analysing instant messaging between traders and hiring people to monitor telephone conversations.

Benefits

Data

Employee "unstructured data such as voicemail, email, chats and social media"