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How to use AI tech to detect unfair trading? Japan Exchanges Solution
01/03/2017
How to use AI tech to detect unfair trading? Japan Exchanges Solution

The Japanese Exchange Regulator (JPX-R) and the Tokyo Stock Exchange (TSE) are planning to apply AI tech to detect unfair trading. When and how will they use AI?

1 March, AtoZForex – Japan, who always comes up with innovative and cutting-edge technology, is keen to apply Artificial Intelligence (AI) for the financial market operations. In order to curb the unfair trading activities, Tokyo Stock Exchange, Inc. (TSE) and Japan Exchange Regulation (JPX-R) have planned to make usage of AI tech to detect unfair trading.

Considerably, TSE and JPX-R have been experimenting AI technologies developed by NEC Corporation and Hitachi Ltd. In order to conduct more sophisticated market surveillance.

How to use AI tech to detect unfair trading?

Nowadays, the surveillance systems identify a broad range of unfair trading orders based on certain criteria. Surveillance personnel then manually perform preliminary investigations based on the trading situation. Based on the preliminary investigations, the personnel decides the need for further detailed investigations.

Hitachi AI Technology/H and NEC’s RAPID machine learning were used for preliminary investigations to confirm the efficacy of AI technology. Interestingly, the results to determine the possibility of unfair trading were impressive. AI technology was found to be highly precise at pulling out the tainted orders. Unlike the preset pattern used in the current systems, AI is able to learn on its own and improve its success rate.

How will TSE and JPX-R proceed with AI?

TSE and JPX-R are looking forward to applying AI tech to detect unfair trading to preliminary investigations. They are in great hope that this will allow surveillance personnel to focus on detailed investigations. But the final decision will remain in the hands of surveillance personnel on conducting such investigations. Interestingly, this initiative is anticipated to facilitate even more thorough and detailed investigations. It can also contribute to the fairness and improvement of the market operation.

The two organizations are eager to implement the artificial intelligence (AI) technology for market surveillance in the financial year 2017.

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