The U.S. Commodity Futures Trading Commission (CFTC) will adopt Nasdaq’s surveillance system to enhance oversight of digital asset and derivatives trading.
The agency announced this update on August 27, emphasizing that it replaces outdated monitoring tools from the 1990s with technology suited for modern, around-the-clock markets.
Reasons for CFTC’s Upgrade
The regulator oversees a range of markets, including commodities, currencies, crypto, and event contracts.
However, the recent expansion of these markets and changes, such as round-the-clock trading, have heightened the potential for abuse and manipulation.
As a response, the CFTC stated that the evolving landscape necessitates tools capable of managing increased volumes and more intricate trading behaviors.
Consequently, it is implementing the Nasdaq system to offer a unified view across asset classes and generate automated alerts for suspicious activities. This will enable the agency to analyze transaction-level details, monitor order book activity in real-time, and scale effectively during periods of market volatility.
The Nasdaq’s technology is already utilized by over 50 exchanges and 20 regulators around the globe, establishing it as one of the leading tools in market surveillance.
Through this adoption, the CFTC aims to identify misconduct more effectively and respond to potential threats to market integrity more swiftly.
Acting Chairman Caroline D. Pham described the Nasdaq system as a means to provide staff with “cross-market analytics and automated alerts” that will enhance investigations and facilitate more strategic resource allocation.
She commented:
“[This is] the latest instance of our efforts in recent months to drive the transformation and optimization needed to position the CFTC as a modern regulator. The CFTC leads in derivatives regulation, and Nasdaq’s Market Surveillance platform will be pivotal to our success.”
Additionally, this transition aligns with the agency’s ongoing “crypto sprint,” aimed at implementing recommendations from a White House report on digital assets.
These initiatives reflect the regulator’s endeavor to balance innovation with investor protection by investing in data-driven monitoring for the emerging sector.
