Computershare and the Norwegian stock exchange, Oslo Brs today announced a new business partnership that they grandiloquently claim will “globally change the landscape of central markets regulation and surveillance.”
obSurveX – the name of the new joint venture – is based on the existing Oslo/Computershare partnership. The new venture will simply make SMARTS, the Computershare technology designed to identify and capture market abuse, more widely available in termsof markets and instruments. Oslo has now had three years` experience with the SMARTS surveillance software.
“Hot on the heels of our deals with Deutsche Borse and the Hong Kong exchange, obSurveX is a further example of Computershare working with an expert partner to produce turnkey solutions for securities markets,” says Iain Saville, European Chief Executive of Computershare. “We are delighted to be able to bring together technology and expertise from around the world in partnership to make the markets work better”.
A key principle of obSurveX is to share resources and knowledge between exchanges, say the partners: current and new SMARTS users will join the obSurveX Committee and use the obSurveX Alert Factory service. The obSurveX Alert Factory will co-ordinate advice and requests from obSurveX member exchanges to create new algorithms and alerts for all markets.
The goal of the factory is to optimise SMARTS’ search for market abuse by keeping all user alert rules up to date. The Alert Factory will be backed by Oslo Brs and Computershare and will include a research and development centre, plus a centre of excellence that will write alerts following requests and advice from obSurveX members.
“The Alert Factory recognises a fundamental need for continual development of new detection processes; a little bit like the regular virus up-dates we get on our PCs at home,” says Thomas Jones, Computershare’s SMARTS Director or Europe. “Just as viruses change, so does the type of trading activity that SMARTS is trying to catch.
No system other than SMARTS has such a pro-active approach to the task of surveillance. No approach other than the Alert Factory can ensure that SMARTS continually meets our customers’ evolving needs.”
obSurveX members will work together in committee to improve the quality of surveillance performed with SMARTS.
The committee will build and grow standard solutions for investigation and evidence gathering using SMARTS.
The committee, together with the Alert Factory, will also build a database of legal arguments and case law across various jurisdictions, developing best practice in regulatory law, and offering help and guidance back to the courts, governments and law enforcement agencies, to ensure effective prosecution.
“The world of regulation and surveillance necessitates a level of secrecy, and from time to time it is appropriate for the market not to know where obSurveX is working, or where the SMARTS software is looking at company and broker behaviour”, comments Sverre Lilleng, Chairman of the obSurveX Committee. “However, the significance of this new business partnership is not just in regulation and surveillance, but in providing orderly markets with greater transparency, leading to greater liquidity. A well-regulated market is a good market, and therefore trusted.”
Sverre Lilleng, head of Market Surveillance at Oslo Brs, is a leading regulator in Northern Europe and in his past life was a crown prosecutor. Sverre and his team have taken the powerful SMARTS technology much closer to the needs of law enforcers.
“Case-law aggregation will make it easier for regulators and exchanges to identify market manipulation and insider trading, and establish a clear basis in law for prosecution” he continues.
One of the immediate benefits of the obSurveX Alert Factory is that all existing and new SMARTS customers will be entitled to the new alert algorithms, and as the world’s regulators and markets use the same techniques and technology, it will allow them to share their findings. In many ways, the obSurveX Alert Factory is conceived as a shared regulatory and surveillance research and development facility.
Sverre Lilleng says “Over the last year, the Norex exchanges have built up a very positive surveillance co-operation.
This obSurveX agreement gives us and other SMARTS users throughout Europe and the rest of the world the opportunity to share case experience, alerts algorithms and operations experience.”
Thomas Jones says “Our partnership with Oslo builds a centre of excellence, which will ensure that the ongoing SMARTS development keeps abreast of developments in the market.”