Market Surveillance Enters a New Era Amid Expanding Regulatory Mandates

As global markets grow more interconnected, span a wider range of asset classes, and operate around the clock, the gap between modern market demands and the capability of outdated technology continues to widen. 

The Commodity Futures Trading Commission (CFTC) is taking a major step to modernize its oversight of fast-changing financial markets, replacing decades-old surveillance technology with Nasdaq’s Market Surveillance platform. 

The CFTC joins a growing community of clients that utilize Nasdaq’s market surveillance technology, which now includes more than 50 exchanges and 20 international regulators globally. 

“Market integrity and investor confidence are fundamental to sustaining robust financial systems, which has become more challenging for regulators globally as they are operating in an increasingly complex and interconnected ecosystem,” said Tal Cohen, President at Nasdaq. 

The announcement also comes alongside news that Bybit, the world’s second-largest cryptocurrency exchange by trading volume, has also agreed to adopt Nasdaq’s surveillance platform.

Nasdaq’s advanced technological solutions are used by regulators and marketplaces, from major global exchanges to crypto platforms, helping to safeguard markets, protect investors, and support economic growth.

Legacy Systems Meets a Modern Market

The CFTC partnership which was announced last week will provide the CFTC with automated alerts and cross-market analytics at a moment when its remit is expanding to cover digital assets, prediction markets and 24-hour trading environments — a critical lane, particularly following the passage of the CLARITY Act and recommendations from the President’s Working Group on Digital Assets.

The upgraded technological capabilities follow CFTC Acting Chairman Caroline D. Pham’s pledge to secure an enhanced market surveillance system as part of a broader effort to modernize the agency and replace its legacy surveillance system.

Tony Sio, Head of Regulatory Strategy and Innovation at Nasdaq, described the modern marketplace as characterized by ever greater speed and volume, global connectivity, and digital-first attributes which demanded updated tools to manage it. Markets aren’t slowing down, he said, “they’re moving faster, across more asset classes and regions, than legacy systems can keep up with.” 

The CFTC required a platform that could keep up with that evolution. The Nasdaq-enabled upgrade will provide the agency with automated alerts, integrated cross-asset monitoring, and the ability to spot complex patterns of manipulation that span multiple venues and products. That kind of surveillance is essential as regulators confront new complexity in crypto derivatives and event-based prediction markets. 

“The CFTC is front and center for some of the biggest financial market changes we’re going to see in the U.S. in the coming years,” Sio said. “Crypto, prediction markets, new types of contracts, 24-hour trading — they’re right in the middle of that.” 

“They’re going to take Nasdaq Market Surveillance to monitor all the market activity they receive — orders, trading, the works — and use it to detect abnormal activity and patterns of abuse.” 

According to Sio, Nasdaq’s experience, breadth, and scale played a decisive role. As the leading provider for both brokers and banks, Nasdaq market surveillance systems are used by more than 50 exchanges and 20 regulators. 

“Many service providers,” he continued, “often specialize in one asset class like crypto or energy. We do everything, and we do it at the scale of a government regulator.” 

Modernization with Balance

For Nasdaq, modernization is about more than deploying cutting-edge tech. It’s about ensuring innovation is applied responsibly in highly regulated, complex environments. 

“Markets are becoming faster and more complex, and we take a technology- and innovation-focused approach to that,” Sio said. “But it’s a balanced approach. We’re a regulated entity ourselves, so we know what’s possible and what’s required.” 

Artificial intelligence is a prime example. “We’re not just dropping in a large language model and letting it run,” he said. “We’re doing all the work to make sure it has audit trail capabilities, to make sure it’s not hallucinating – because this is built for a regulated environment.” 

A Growing and Complex Mandate for the CFTC 

The regulator’s technological modernization comes as the CFTC’s responsibilities are expanding significantly and at the same time, the challenges posed by bad actors are becoming more complex. Where manipulation once might have involved a single commodity, fraud today often spans physical assets, derivatives, and even tokenized versions of the same product. 

“That adds a huge amount of complexity in terms of how to piece different signals together to find those bad behaviors,” Sio said, explaining that Nasdaq’s market surveillance tools are purpose-built to navigate that complexity. 

Nasdaq Market Surveillance for Crypto: Bybit EU

Bybit, the world’s second-largest cryptocurrency exchange, has also agreed to adopt Nasdaq’s surveillance platform. Nasdaq will help ensure Bybit EU’s ongoing compliance with the EU’s Markets in Crypto-Assets Regulation, which compels digital asset exchanges to implement rigorous surveillance and reporting requirements. 

Mazurka Zeng, Bybit EU’s managing director and CEO, celebrated the partnership: “We welcome the opportunity to partner with Nasdaq, whose innovative technology

and unparalleled surveillance expertise, help safeguard the resilience and integrity of our marketplace.” 

For Sio, the dual announcements of CFTC and Bybit partnerships underscore the platform’s adaptability and readiness for crypto markets. Whereas equity surveillance tools look fairly similar, with regulations aligning across jurisdictions over the long history of equity markets, he explained that crypto is new and dynamic. Jurisdictions’ rules can vary widely, Sio said, so Nasdaq provides a best-practice baseline across markets, lowering compliance costs and closing gaps for criminals to exploit. 

Looking Ahead

With the CFTC and ByBit’s adoption, Nasdaq’s surveillance platform will now help them navigate an increasingly diverse and complex trading landscape. For Sio, that is what makes the news so exciting. 

“In the midst of massive market changes, Nasdaq's innovative technology’s ability to offer a comprehensive cross-market view, with real-time monitoring and sophisticated analytics empowers regulators and our client community with the tools they need to oversee an increasingly complex market ecosystem. Bringing those together is what makes this such an exciting challenge.” said Sio.

Learn more about Nasdaq’s Partnership with the CFTC  and ByBit.