Financial market watchdogs to use artificial intelligence to catch cheaters

wall street regulators machine learning cheaters new york stock exchange located on
flik47 / 123RF Stock Photo
Stock market cheats, A.I. will soon be looking for you. The sheer volume of transactions conducted in financial markets renders market surveillance by regulatory groups difficult, but machine learning and artificial intelligence tools will soon be employed to ferret out cheaters, according to Reuters.

The Financial Industry Regulatory Authority (FINRA) is developing A.I. that it will start testing in 2017 along with its existing surveillance and detection mechanisms. NASDAQ and the London Stock Exchange Group intend to start using artificial intelligence to spot trade irregularities and violation patterns this year.

Reuters reports that financial firms already use artificial intelligence for picking stocks and for monitoring their own firms’ compliance. Regulatory groups, on the other hand, are just beginning to work with A.I.

“We haven’t really let the machines loose, as it were, on the surveillance side,” said Nasdaq’s Bill Nosal, a  business development executive overseeing its artificial intelligence effort.

FINRA watches for potential rules violations by scanning for approximately 270 patterns among stock orders, modifications, cancellations, and trades covering about 50 billion market “events” each day. Just because an event pops an alarm or flag, however, doesn’t mean anything was wrong — many are false alarms. FINRA and other markets currently use algorithms to look for irregularities. If something is detected, staff members investigate further, but this can be an overwhelming task because of the huge number of incidents involved.

The immense volume of data and alerts calls for machine learning technologies. Machine learning would enable surveillance based on rules the software generates itself by evaluating previous trading patterns that led to charges being filed. Tom Gira, FINRA’s executive vice president for market regulation, told Reuters, “The biggest concern we have is that there is some manipulative scheme that we are not even aware of. It seems like these tools have the potential to give us a better window into the market for those types of scenarios.”

Various strategies that are or will be employed include scrubbing chat rooms looking for comments near times of big trades, detecting order and cancellation “layering,” and real-time comparison of activities across exchanges and markets.

Smart Home

With Personal Food Computers, nerd farmers are finding the best way to grow

MIT research scientist Caleb Harper wants to grow basil designed to prevent heart disease. It involves a personal food computer, climate manipulation, and open sourcing food. One day, your doctor could prescribe you a diet of food grown…
Emerging Tech

SpaceX’s Big Falcon Rocket goes bolder, changes its name to Starship

Elon Musk has revealed that he's changing the name of SpaceX's Big Falcon Rocket to the grander Starship. It's getting a redesign and may even be one day used to visit other star systems trillions of miles away.
Deals

This all-in-one shaving system lets you use over 40 blades from different brands

Trazor shaving system gives you the ability to shave using most of your favorite blades from various brands like Gillette and Schick. It even squirts out water, shaving gel, and aftershave making it an ideal solution for traveling.
Emerging Tech

The best drone photos from around the world

Most of today's drones come equipped with high-end cameras, which are quickly revolutionizing the world of aerial photography as we know it. Here are some of the best drone photos from around the world.
Emerging Tech

Internet of cows? Smart ear tag takes cattle tracking into the future

An Australian startup wants to bring cattle farming into the present day with smart ear tags capable of revealing where herds are grazing, and even if animals are sick or about to give birth.
Photography

DJI’s Ronin-S just got more capable with slew of new accessories

Need a longer battery life for the DJI Ronin-S, or perhaps a built-in screen, GPS, or universal mount? DJI has got you covered with a handful of new accessories for the company's one-hand gimbal.
Emerging Tech

Drones can safely fly a human kidney without damaging it, study shows

Drone deliveries are well on their way. Could they also be used for safely delivering transplant organs to hospitals without damage? A recent test flight attempted to find an answer.
Emerging Tech

Novameat’s 3D-printed ‘steak’ looks gross, but could it save the planet?

A Spanish startup called Novameat is developing a 3D-printed beefsteak, made using a paste composed of vegetable-based materials like rice, peas, and seaweed. Get ready for the future of food!
Smart Home

Most completely unnecessary ways to cook your turkey this Thanksgiving

Cooking the ol' Thanksgiving Day turkey in the oven can take hours. That said, why use a traditional oven when you can just as easily incinerate the bird with a jet engine? Here are the most insane ways to cook a turkey.
Emerging Tech

14 White elephant gift ideas that are guaranteed to spice up your holiday party

To help you make a splash at your holiday party this year, we've put together a quick list of the best White Elephant gift ideas the world has ever seen. Proceed with caution!
Emerging Tech

Dangle no more: Window-washing drone for towers could replace human cleaners

The maker of a window-washing drone for tall buildings claims it can do the job 20 times faster than humans and is much safer than using workers in cradles that dangle on the side of buildings.