Nasdaq to Step Up Its Surveillance

Nasdaq OMX Group plans to take on surveillance and other regulatory duties for its flagship marketplace that are currently performed by the Financial Industry Regulatory Authority.

According to a filing with the Securities and Exchange Commission, Nasdaq will monitor its namesake stock exchange for manipulation and compliance by members in certain areas. Much of the surveillance work has been performed by FINRA since Nasdaq became an exchange in 2006.

Besides scanning for signs of manipulation, Nasdaq will also keep tabs on market makers involved in an underwriting. The surveillance will involve ensuring dealers are adhering to certain quoting and trading restrictions.

Nasdaq will use its SMARTS program to conduct the surveillance, according to the filing.

The move to step up surveillance comes in the wake of criticism by broker-dealers that exchange operators such as Nasdaq unfairly benefit from their status as regulatory organizations despite having outsourced much of the regulation to FINRA.