Nasdaq To Boost Market Surveillance With Sybenetix Buyout

Nasdaq, Inc. (NASDAQ:NDAQ) has recently completed the buyout of London-based startup Sybenetix, an industry-leading surveillance provider that brings together behavioral analytics and cognitive computing offering financial markets expertise. The acquisition will not only help Nasdaq expand market technology business but also enable the securities exchange to improve its market surveillance techniques.

Details of the Transaction

Nasdaq inked the deal to acquire Sybenetix on Jul 25, 2017. However, the securities exchange has not disclosed the purchase price of the transaction but aims to fund the same with cash in hand. Notably, the buyout marks the first transaction since the appointment of Adena Friedman, Chief Executive Officer of Nasdaq.

Benefits of the Acquisition

The takeover will allow Nasdaq to extend its current market surveillance technology to ultimately help the securities exchange further strengthen and expand position in the surveillance space, thereby enabling the company to become a leading provider to the buy-side industry. Hence, the transaction will permit the company to invest more into advanced technologies like cognitive computing, which is a very important part of the company’s strategy. Thus, the securities exchange will be able to further improve its service portfolio to boost overall results and result in long-term growth.

With this transaction, Nasdaq will be able to fulfill its primary objective of making an entry into the buy-side market with a compliance solution. Also, the buyout will help enhance the company’s risk management solutions, as Sybenetix will assist compliance officers at asset management firms to help detect market abuse by analyzing the traders’ behavior. This will be made possible by using an advanced technology, referred to as artificial intelligence.

Additionally, the buyout will aid Nasdaq in creating solutions to provide data analysis that will venture beyond trading records to better identify conduct risk.

Amid a volatile market environment, increasing competition and regulatory changes, Nasdaq has diversified its operations beyond traditional exchange businesses. This move mainly came due to lower profitability of equity trading over the past decade. Also, expansion of market technology will significantly contribute to the company’s overall growth. Thus, the acquisition is anticipated to boost company’s prosperity in the near future.

On the other hand, Sybenetix will benefit from using Nasdaq’s platform to draw massive growth opportunities for its surveillance technologies. In turn, the company will expedite new product development for the buy-side industry.

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Interestingly, Nasdaq has been boosting its inorganic growth by making prudent acquisitions. To that end, on Sep 5, 2017, the company agreed to acquire eVestment for $705 million. The transaction is expected to culminate in the fourth quarter of 2017. The acquisition will help Nasdaq boost its global information services business.

Zacks Rank and Share Price Movement

Currently Nasdaq carries a Zacks Rank #3 (Hold). Shares of Nasdaq have gained 5.0% quarter to date, outperforming the Zacks Investment Research

Written By: Zacks Investment Research