Mexico's BMV to Use Nasdaq Smarts for Market Surveillance

BMV will migrate its current real-time proprietary surveillance system to Smarts, which will be completely up and running by Q3, according Steve Phillips, Nasdaq regional manager of Latin America and the Caribbean.

Pedro Díez, market surveillance director of BMV, added in a statement, "The Smarts solution fortifies the capacities of reviewing operations that are traded in our market, enhancing Bolsa's abilities for detecting patterns of behavior internationally recognized as contrary to good market practices. With the adoption of this technology and according to its strategic lines, Bolsa remains at the forefront in terms of the services offered to the general public, fortifying transparency, ethics and safety with the support of a world-class system."

Catch-22
Phillips tells Sell-Side Technology that many growing exchanges are in a catch-22 when it comes to increasing volume. On one hand, bringing in high-frequency and algorithmic traders will increase trading. However, with it comes the potential for predatory practices.

By using Smarts, which has been installed in over 40 exchanges and regulatory bodies around the world, Phillips says BMV will be able to handle that increase in orders while still efficiently monitoring the market and making sure its remaining compliant.

"You need to have technology that will pay attention to the orders themselves. To verify that those orders are by market rules and then analyzing those orders across the board on a reassigned basis against alerts that cover different potential types of market abuse," Phillips says.

Deep Ties
While Nasdaq and BMV have always had a good relationship ─ Phillips says he's been visiting BMV for roughly a decade ─ this will mark the first time BMV has used Nasdaq technology. The Mexican Exchange built its own trading and central securities depository (CSD) platforms, which Phillips calls a high-tier group in terms of technology.

The two sides first talked about integrating Smarts into BMV about two years ago, according to Phillips. BMV eventually set up a request for proposal (RFP) and selected Nasdaq. Once the budget was allocated things started moving pretty quickly.

"They recognize that because of the globalization phenomenon they needed to have a better perspective and scope of different types of potentially marketed views to be analyzed and filtered through their trades," Phillips says. Waters recently highlighted that phenomenon in a feature examining Mexico as well.

As for future partnerships, Phillips says he hopes Nasdaq can continue implementing technology into BMV. Like many of these types of relationships, it's more than just buying and selling technology. Phillips says there is a pretty open dialogue between the two sides, with the conversations spanning non-technology topics exchanges face as well.

"It's quite a compliment for us to get a phone call that's not necessarily something that we're going to sell them," Phillips says. "We have that kind of trusted relationship that they'll call us and ask us just about anything."