Nasdaq is acquiring Sybenetix in its quest to sniff out and prevent suspicious trading activity.
Financial details were not disclosed. However, Nasdaq intends to pay for the purchase with cash on hand.
Sybenetix is a surveillance solutions provider which combines behavioral analytics and cognitive computing to "solve key surveillance challenges facing the asset management industry." The company uses behavioral algorithms to learn trader patterns and flag an alert when unusual patterns are detected, such as rapid trading in an area they usually avoid.
Backed by venture capitalists Summer Capital, Collinio Capital, and Yarrow Capital, the company's portfolio will be added to Nasdaq's risk solutions, including SMARTS and TradeGuard, to monitor for suspicious trading activity which may impact legitimate businesses.
Over 45 marketplaces, 17 regulators and 140 market participants currently use SMARTS to monitor trading.
The UK startup said in a statement on its website that "both sides became more and more excited about the possibilities of working together as one team," over the course of several months of negotiation, and "We did not decide to sell Sybenetix. We decided to sell Sybenetix to Nasdaq."
"We are convinced that we can grow faster by leveraging Nasdaq's resources in a way that we would be unable to do on our own or with any other partner," Sybenetix says. "Our customers will benefit from the global scale and operational experience of Nasdaq that would allow us to serve them on all continents immediately."
The purchase is the first made by new Nasdaq chief Adena Friedman. Speaking to the Financial Times, the Nasdaq president and CEO said that advanced technologies is a "key part of our strategy," and as more investors look towards "regtech" to automate the analysis of data and improve compliance operations, Sybenetix solutions can be offered to help Nasdaq clients cope.
"Nasdaq is investing in the technologies, talent and capabilities that solve the complex challenges our clients face," said Friedman. "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."
"This acquisition accelerates our offering to the buy-side and advances our ambitions to expand market integrity controls into all segments of the capital markets," Friedman added.