Central Bank Supervision: Leveraging Technology in the Evolving Data Landscape
Nasdaq recently launched the Nasdaq Market Surveillance and Supervision for Central Banks, a real-time technology solution built to safeguard the integrity of markets.
We sat down with Tony Sio, Head of Marketplace Regulatory Technology, Market Technology at Nasdaq, to learn more about the challenges that central banks face and how technology can bolster data management practices while safeguarding marketplaces.
1. Nasdaq recently announced the launch of Nasdaq Market Surveillance and Supervision for Central Banks. Can you start by describing the technology solution and explain how this is relevant for central banks?
Nasdaq has long been a provider of mission-critical technology to financial institutions globally. Not only do we power Nasdaq’s 28 marketplaces worldwide, but we also provide technology to 300 marketplace infrastructure organizations and financial institutions such as regulators, banks and brokers that use Nasdaq’s technology to run and supervise their marketplaces. We see this specific technology for central banks as a natural extension of our efforts in providing technology solutions that safeguard the financial ecosystem.
I would like to highlight two key aspects in how this market surveillance and supervision technology can be relevant for central banks. Firstly, we have sophisticated capabilities around systematic and secure collection, cleansing and management of sensitive financial information. Secondly, Nasdaq’s surveillance and monitoring technology includes an advanced toolset and methodology of monitoring and detecting anomalous financial behavior.
To summarize, the data capture perspective is incredibly important for central banks as they rely on data to make effective decisions. They need to be able to systematically collect and monitor financial data. A solution that can provide a structured and systematic approach to this resource-intensive process can potentially create efficiencies and enable a more proactive approach to supervisory and market oversight processes.
2. Why central banks now?
As I mentioned, Nasdaq has long experience in developing and providing robust technology that strengthens surveillance processes for marketplaces worldwide. So I see this implementation of our technology expertise and capabilities as a natural next step. Central banks play an important role in overseeing debt and currency markets, so they need to ensure their infrastructure is efficient and robust. We are seeing greater implementation of electronic platforms and networks for this type of activity across the world. Meanwhile, the data landscape is changing, driving a more proactive approach to monitoring, which requires robust technology solutions and a structured approach to data collection. A solution like this can help improve data management and analysis, enhance supervisory and market oversight capabilities, and reduce operational costs.
3. What are some of the challenges central banks are facing that the solution can support?
Data management has been a topic of discussion for central banks for a while now. As economies evolve to become more data-driven, central banks have to consider how to best collect and manage data. Managing real-time data that supports decision-making in an efficient way is a challenge many central banks are facing.
At Nasdaq, we have the knowledge of the marketplace, along with technology tools that can automate both the detection of anomalous behaviors as well as the reporting. The solution can normalize transactional, reference and alerting data, as well as combine it with unstructured data such as news or social media. The ambition with these technologies is to automate many of the manual processes of analyzing data while avoiding labor-intensive activities so central banks can detect patterns or potential problems at an earlier stage.
4. What feedback are you expecting? Any specific regions in the world that you are in contact with?
Central banks play very different roles in each jurisdiction. Meanwhile, there is a difference in how far central banks in different countries and regions have come in their technology journey. The level of digitalization in the underlying infrastructure in each country also influences the need for these types of technology solutions. Currently, we see that our technology and expertise can probably be most beneficial in countries with active forex and government securities markets, where the local governments play important roles in ensuring efficient operations and market integrity.
5. Looking ahead, what are you most looking forward to in the year to come?
With the COVID-19 pandemic, we have all been forced to rely on virtual channels to keep in touch with our colleagues and customers worldwide. Most of us have adapted well to remote working, and while the switch from in-person to virtual was quite seamless for the team and me, I do look forward to in-person face-to-face meetings with many of the central bankers and regulators we’ve been in discussions with.
Other Topics
Technology Market Surveillance Data and Analytics
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