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Technologies Driving the Evolution of Global Capital Markets


(The Southern African Times) – Amid the prolonged pandemic, global capital markets rapidly accelerated their digitalization journey, leveraging the software-as-a-service model, as well as emerging technologies, including the cloud, machine learning and artificial intelligence, according to Faycal Belyazid, Managing Director Middle East & Africa for Nasdaq Market Technology.

At the African Securities Exchange Association (ASEA) annual meeting, hosted by Casablanca Stock Exchange, Belyazid and with an esteemed panel of experts explored the technologies driving the evolution of the capital markets. While most people around the world know Nasdaq as the stock exchange group that operates exchanges in the U.S. and across the Nordic and the Baltic regions, Nasdaq is also a major technology provider to other exchanges and financial institutions worldwide. Nasdaq’s technology powers more than 2,300 companies in 50 countries that span the world’s financial industry, including capital markets infrastructure operators, market participants, banks and regulators.

Leveraging the Cloud

During the pandemic, global exchanges have seen serious surges in trading volume and activity, particularly amid an enormous influx of retail investors—which shows no signs of slowing down, Belyazid noted. To be prepared to scale for such volumes, the cloud is critical for markets to move quickly and efficiently and not focus on infrastructure per se.

“Cloud, in our opinion, is a great enabler,” said Belyazid. “It helps market operators to flexibly scale as volumes fluctuate and market participation increases.”

Importantly, a recent survey revealed that market infrastructure CIOs plan to increase their investment in modern technology and nearly two-thirds (65%) see cloud technology as a fundamental and expanding part of their software development. According to a Celent study that Nasdaq commissioned, researchers estimate a 27% increase in cloud-ready applications between 2021 and 2025.

With the heightened attention and allocation toward cloud-based applications, there are three key technology areas that help Nasdaq ensure the speed, transparency, and integrity of a market. Those three are low latency trading, data processing and market surveillance. At the core of these system requirements are cloud infrastructure capacity and machine learning.

“We are at a crossroad between more traditional marketplaces accelerating their digital transformation efforts and actual new generation markets in the cloud, challenging the way traditional players seek investor dollars,” said Belyazid, adding that market infrastructures need the ability to have flexible, scalable infrastructure leveraging modern APIs in order to compete and thrive in the future.

Notably, Nasdaq recently unveiled its accelerated path toward the cloud, with plans to begin migrating Nasdaq’s North American markets to the AWS cloud, starting in 2022 with one of Nasdaq’s U.S. options markets. 

Incorporating a SaaS model

As the financial ecosystem is becoming increasingly digitized, Nasdaq is also focusing on a software-as-a-service (SaaS) model that “helps develop and build technology solutions for both traditional capital markets and new types of marketplaces using cloud-based plug and play components,” said Belyazid.

This approach can reduce time to market as it reduces major technology infrastructure hurdles. Most importantly, it lowers the threshold to set up an efficient, reliable and scalable marketplace for digital assets. 

Enhancing RegTech

In addition to the cloud and SaaS models, Belyazid noted that Nasdaq is also looking at regulatory technology (RegTech) and how emerging technologies, such as machine learning and artificial intelligence, can improve efficiency. With these technologies, “we can help our governance organizations become much more efficient in terms of overcoming false positives much faster, helping with triage and narrowing down the interpretation of those different alerts and reports,” said Belyazid.

With intelligent RegTech and surveillance technology, global exchanges can safeguard market participants and maintain the integrity of marketplaces. Given an increasing focus from regulators on improving the integrity and transparency of the investigations process, making a structural shift to more intelligent technologies and real-time adaptive analytics based enables exchanges to detect and investigate financial crime.

Through Nasdaq’s acquisition of Verafin, we have expanded our anti-financial crime solutions, providing financial institutions with a complete solution to detect, investigate and report financial crime. As both a market operator and technology provider, we have a commitment to the capital market ecosystem to keep markets healthy and safe to fight financial crime.

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