Nasdaq OMX Group said today it has installed technology developed by the vendor Corvil that monitors the performance of its trading and other systems. The move is intended to help Nasdaq contend with a more unforgiving regulatory climate as well as better service its members.
“This will allow us to make sure we are in compliance with the general regulatory functions that are becoming more and more prevalent,” Nasdaq senior vice president Brad Vopni, told Traders Magazine, “and more critical for the safety and protection of the markets.”
The Corvil technology will allow Nasdaq to simultaneously analyze activity at the network, application and trading layers, according to Nasdaq, as well as track the full life cycle of a trade. Nasdaq is Corvil’s first customer for the new technology.
Called CorvilNet, the operational performance monitoring system will track all messages coming from and going to Nasdaq’s members using its U.S. trading platforms. The functionality is an outgrowth of Corvil’s latency measuring technology used by Nasdaq since 2011.
The latency measuring technology tracked every message, but the enhancements “incorporate the information contained in the messages from Nasdaq’s members,” Vopni noted. “It allows us to look at customer behavior and trends in customer behavior,” the exec said.
According to Vopni, the technology will enable Nasdaq to react to problems much faster as the Corvil system will alert Nasdaq’s operations staff in real time. That has been the experience with Corvil’s latency measuring technology, Vopni added, where the alerts cut staff response times from hours to seconds.
Driving Nasdaq’s decision to monitor its systems more closely is pressure by the Securities and Exchange Commission on exchanges to better adhere to their regulatory obligations. In the past year, the SEC has fined both Nasdaq and the New York Stock Exchange, following systems-related problems, for breaches of the rules governing self-regulatory organizations.
Last September, the SEC fined the NYSE $5 million for delivering market data faster to certain paying customers than the general marketplace. And, just last week, the SEC fined Nasdaq for failing to live up to its obligations during the Facebook initial public offering of May 2012.