A New Surveillance System at the Securities and Futures Commission (SFC) and the Stock Exchange of Hong Kong

The Securities and Futures Commission (SFC) and the Stock Exchange of Hong Kong Limited have acquired a new automated surveillance and trading analysis system called SMARTS. The SFC and the Exchange acquired the system from Computershare, an Australian software vendor. After extensive testing during the past five months, the system is now fully operational. SMARTS is the acronym for Securities Markets Automated Research Training and Surveillance. It is an integrated data management system designed to provide assistance to both organisations in their daily surveillance and regulation work. It consists of a series of integrated software modules developed by Computershare in association with researchers from the Securities Industry Research Centre of Asia-Pacific, and is based on ten years of research and consulting work with various stock exchanges. Using real time trading information, SMARTS can be programmed to provide alerts about unusual daily and intra-day movements in the price and/or volume of any listed security using a variety of parameters. Alerts will be brought to the attention of regulators in a matter of seconds for consideration and follow up action, if required. SMARTS also provides a wide variety of analytical and visual functions. Graphic displays of trading activities over extended periods can be retrieved from the system within a few seconds. Regulators can also reconstruct historical trading activity as it occurred including the interaction of orders and trades of different stocks between brokers. These functions will increase the ability of the regulators to identify and study unusual market behaviour. Both the SFC and the Exchange are committed to maintaining a fair and efficient securities market. To achieve this objective, they are continually improving their surveillance and analytical capabilities using the latest information technology. The acquisition of SMARTS is a clear demonstration of this commitment. For further information, please contact Susanne Ho of the SFC at 2840 9470 or Henry Law of the Exchange at 2840 3862.