SEBI To Use AI, ML, Big Data Analytics To Keep A Watch On Market Manipulations

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  • The plan will involve creating a “data lake” project to augment analytical capabilities said Ajay Tyagi, SEBI chairman
  • He added that the application of AI and ML tools has the potential to bring a paradigm shift in the securities market landscape
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The Securities and Exchange Board of India ( SEBI) chairman Ajay Tyagi said that SEBI is acquiring capabilities to monitor and analyse social media posts. This will be done to keep a watch on possible market manipulations. The capabilities will involve the use of artificial intelligence, machine learning, big data analytics, and natural language processing tools to spot market manipulation.

The plan will involve creating a “data lake” project to augment analytical capabilities said Ajay Tyagi. SEBI has been keeping a tab on social media. There have been cases where social media posts have helped to act against manipulative activities. Tyagi added that catching malpractices in the market using the standard tools that analyse only structured data of price and volume is getting difficult day by day.

Tender floated

He pointed out that SEBI wants to acquire technology and unstructured data analysis. This needs to be done as the structured data analysis is not helping much as manipulators are using different things to manipulate the market. A tender has also been floated for acquiring the technology.

Tyagi also said that even in the absence of a focused tool, SEBI already has the capabilities where it screens social media posts after corporate announcements and the changes in price and volumes of a scrip. He added that application of AI and ML tools has the potential to bring a paradigm shift in the securities market landscape. Blockchain can also be used in clearing and settlement activities.

AI/ML tools

He further said that AI/ML tools are being increasingly used in fund management, trading, supervision and surveillance functions in the capital markets. There is a need for technologists to invest time in research in the tools to apply in the capital markets.

Tyagi added that systemic risks are becoming important objectives for financial regulators. It requires identification and monitoring of important financial institutions, leverage, inter-connectedness, risk concentrations and market sentiment.

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