SMARTS Signs Contract with SWX to Provide State of the Art Market Surveillance System

8 November 2004

The Australian company SMARTS Pty Ltd, the world’s leading provider of real-time market surveillance solutions, has today signed an agreement with the SWX Group under which the SMARTS software will be used to provide a new realtime surveillance system for SWX and virt-x, in respect of their equity, bond, ETF and warrant markets. SWX and virt-x have chosen to adopt SMARTS because it is a proven real-time surveillance system with a demonstrated capacity to handle any type of financial instruments, as well as the enormous transaction volumes associated with derivatives trading, particularly warrants.

Following a rigorous and systematic evaluation process, SWX identified SMARTS as the best available product to ensure the integrity of its marketplace.

Jürg Spillmann, Head of SWX Group Executive Committee, said:
“ We are delighted to be working with SMARTS as they best position us to meet our regulatory objectives”

Commenting on the engagement of SMARTS, Mr Thomas Jones, Director of SMARTS Europe, said:

“We welcome the decision of SWX and its commitment to the SMARTS product. By choosing SMARTS, SWX and virt-x become part of an informal global network of 18 exchanges and regulators who now use the SMARTS system. For an exchange in a cross-market cross-border world SMARTS offers a standard which will facilitate information sharing at a technological level.”

The SWX and virt-x decision further enhances SMARTS’ position as the leading product for real-time security market surveillance. In Europe, other SMARTS users are the Helsinki Stock Exchange, the Oslo Børs, Stockholmsbörsen, Copenhagen Stock Exchange, and the Iceland Stock Exchange all part of the NOREX alliance. Elsewhere, SMARTS users include exchanges in Hong Kong, Singapore, Australia, New Zealand, Indonesia and Russia; Regulators include the Monetary Authority of Singapore, the Securities and Futures Commission of Hong Kong, the Nigeria Securities Commission and the Russian Central Bank.

Using superior data management, visualisation and mining capabilities, SMARTS permits a user to build an understanding of "normal" market behaviour as part of the process of identifying "abnormal" possibly illegal behaviour. Because identification and analysis of suspicious trading occurs in real-time, SMARTS facilitates a more rapid response from surveillance departments to problem situations. With a capacity to handle 20,000 transactions (7500 trades) a second, SMARTS has the capability to process a typical NASDAQ plus NYSE trading day in less than half an hour. What is more, the upcoming re-engineered SMARTS (version 6) will double these figures.

On the basis of its acceptance in the marketplace, SMARTS has become a quasi industry standard. An important reason for its success is its commitment to Research and Development as demonstrated by its affiliation with the world's largest research centre dealing exclusively with securities fraud. The Capital Markets Cooperative Research Centre (www.cmcrc.com) comprises approximately 100 PhD students and staff. Spanning equities, derivative and OTC markets, this group provides the latest ideas and techniques (e.g. neural networks, genetic algorithms, and catastrophe theory) for identifying normal/abnormal trading behaviour, a key component in data analysis. This commitment to R&D guarantees that SMARTS will remain at the cutting edge over the next decade.

Commenting on the partnership Professor Michael Aitken, CEO of the CMCRC and director of SMARTS said:

"The partnership between the SMARTS and the CMCRC has had demonstrable benefits to both organisations. Students and staff get to work closely with the world's leading exchanges, bringing a whole new meaning to “town and gown” not to mention developing a entirely new literature in the area of market integrity. SMARTS for their part, get to see the latest ideas and techniques in data management, visualisation and mining as well as gaining early access to an impressive array of human capital from Australia's leading universities".

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