GMB - For everyone, Nasdaq is the most famous stock market in the world. How does it currently provide surveillance and monitoring in sports betting?
Carlos A. Patiño - As well as being the world’s largest stock exchange by volume traded, Nasdaq owns and operators 20+ other leading exchanges worldwide. We also supply core technology to a further 100+ exchanges around the world and, increasingly, clients in new sectors. We have 4 operator clients in the betting space and a strong knowledge base to grow from. Our surveillance products have huge dominance in capital markets.
We have 20 years of experience in using pattern recognition of transaction level data to alert for undesirable and illegal activity across all manner of financial assets and more esoteric sectors like crypto and energy trading. There are some clear differences with regards the structure of a sports betting market but, ultimately, it’s about humans obeying or disobeying sets of rules that regulators want to enforce.
GMB - What is the differential of your systems against the competition that already exists in the market? Do you think you have the most advanced technology?
Andrew Phillips - Anyone trying to sure up sport against corruption is a potential partner. We don’t regard the existing market monitoring products as direct competition. We know all of them and it wouldn’t make sense for us to replicate what is already in the market. The existing alerts due to suspicious price movements could be a valuable additional input, either for us or our mutual customers. The technology we use to monitor securities and new asset classes is different because we have different data available. When you have transaction level data you can ask more sophisticated questions but you need more advanced technology to facilitate that.
GMB - Why did you ask for a meeting with the Ministry of Economy of Brazil and how was that meeting?
Carlos A. Patiño - We were interested in sharing with the Minister of Economy our experiences in similar projects around the world. We found the meeting to be extremely informative and productive for both parties. We believe that we can provide tools for the supervision of sports betting.
GMB - What could Nasdaq contribute to the future Brazilian market?
Andrew Phillips - Our aim is always to improve the efficiency and sustainability of our markets or those in which we participate. That means stripping out undesirable behaviors. Like many other industries, sports betting and gaming has its share of challenges. We believe that with sufficiently granular data and application of the right technologies, huge improvements can be made. Responsible gaming implementation, AML/fraud prevention, sports integrity are areas where we’d like to help and the same solutions can be used to ensure efficiency of the market, for instance, in optimizing tax revenue. We see our technology playing a part in delivering a market which works in the interest of all stakeholders and against those who are trying to manipulate or otherwise extract value through dishonest means.
GMB - Are the dimensions of Brazil and its huge amount of state tournaments an issue to consider when fighting against fraud and corruption in the sports betting market? Are there other factors that you see in the country against which you have to fight to keep the business clean?
Carlos A. Patiño - The more content to monitor, the more it makes sense to automate as much work as possible. In our core space - financial exchange surveillance – we can analyse over 30 billion events in a typical trading day and use all of those events to reconstruct behavior at any point in time. This creates a lot of pressure to be accurate. If a competing product were to create a tiny increase in the rate of false positive alerts, it would render the tool practically unusable. We also started using machine learning to prioritize alerts to even further streamline the back-office activities for our regulator customers. We haven’t got into the details of the Brazilian markets idiosyncrasies as yet. The diversity of markets in which we operate, in terms of geography, asset classes, regulatory environment and so on, puts us in great position to absorb new learnings and requirements if and when we are asked to do so.
GMB - Does Nasdaq already work with this service in some jurisdictions? Is it already implemented and functioning?
Andrew Phillips - We work with betting operators but not currently any gaming regulators. We work with many financial regulators and also act as our own regulator across many of our exchanges. Nasdaq Surveillance is well established to monitor for every variety of security exchange and many more comparative new sectors, like energy, crypto, etc. In terms of this region we work in Chile, Argentina, Colombia, Panama.
GMB - In addition to the Brazilian market, is Nasdaq interested in the rest of the Latin American countries?
Carlos A. Patiño - Of course. Anywhere there is a market regulator, there is obviously market activity to regulate. Most of the issues we are aiming to address are universal and also best addressed at the macro level. The nearer we can get to critical mass on a global scale, the more efficiently we can address many of the issues which hold the gaming industry back.
Source: Exclusive Games Magazine Brasil
