Singapore Exchange (SGX) has confirmed plans to implement artificial intelligence technology within surveillance and regulation for real-time monitoring of markets.
The exchange group said that the technology will help better isolate potentially manipulative activity, as the surveillance system learns from historical trading patterns to filter out noise, and focus more sharply on unusual trading signals for greater regulatory attention.
“SGX RegCo’s [SGX Regulation] focus on targeted regulation extends beyond the way we deploy our established regulatory tools to the development of technology to enhance our surveillance activities,” said Tan Boon Gin, CEO of SGX RegCo. “The successful use of AI to generate higher quality alerts affirms that investing in new technology can result in increased efficiencies and better outcomes for investors and the market.”
SGX added that AI technology will also allow the exchange to segregate circumstances where stock prices of certain counters are artificially maintained, despite other securities and the wider market moving significantly. The exchange will be able to eliminate false negatives in its surveillance reports to reduce market noise for more accurate trading queries and alerts.
Exchange groups globally are making moves to deploy new technologies for surveillance of markets. Late last year, US exchange Nasdaq confirmed it had implemented AI to its surveillance system in a bid to gain a broader view of its US market activity.
“AI and machine learning have broad application across our company – from predicting market trends with Nasdaq’s proprietary data or creating more sophisticated market surveillance capabilities,” said Michael O’Rourke, head of machine intelligence at Nasdaq, at the time.
At the same time, investment banks are exploring how AI can positively impact processes across trading divisions. Goldman Sachs participated in a $72.5 million funding round last year in AI and machine learning specialist, H2O.ai, with the aim of deploying the technologies to its equities trading business.