Nasdaq is to integrate a generative AI (Gen AI) feature into its market surveillance solution that enhances the triage and examination process involved in investigating suspected market manipulation and insider dealing. Nasdaq is planning to leverage the generative AI enabled functionality for its US equity market surveillance. The firm’s head of regulatory strategy and innovation, Tony Sio, spoke to Global Trading about how there will always be a need for a human being in this highly regulated industry, and the future regulatory applications of Gen AI technology.
Speaking to Global Trading, Tony Sio, said that, despite advances in AI, there will always be a need for the human touch.
“As a highly regulated part of the industry, there will always be a human aspect to surveillance to ensure robust systems and controls are in place, and to provide an additional layer of protection for marketplaces. This capability complements the work of investigators with better tools and analytics to conduct more rigorous assessment of potential abuse. It’s a symbiotic relationship, where by giving the analysts better AI tools they are able to use new techniques or incorporate new datasets that they wouldn’t have had time previously, which we can then use AI tools to make even more efficient.”
On the future application of the technology, Sio said: “The nature of market abuse threats is changing all the time, with AI itself bringing new challenges to the industry in terms of trading activity and its potential to disseminate false information. It’s therefore essential marketplaces continue to invest in R&D to ensure they keep pace with external threats and maintain the integrity of their market.
“We believe that GenAI is immediately useful in two parts of the surveillance/compliance process. Firstly by incorporating unstructured data into the surveillance signals, for example news events or social media. And secondly we see it being useful across the investigation process from collating evidence to initiate an investigation, to documenting a case that goes out,” Sio added
The firm claims that during proof-of-concept testing, surveillance analysts estimated a 33% reduction in investigation time, with improved overall outcomes.
Leveraging Amazon Bedrock, an AWS service for building secure generative AI applications, Nasdaq said the enhanced functionality will empower analysts with generative AI capabilities to distil, analyse, and interpret relevant information more quickly, enhancing their ability to form detailed initial assessments of alerts. For example, the technology can produce a consolidated table of the company’s regulatory filings, summaries and links to company, sector, and peer company news, news sentiment analysis, and other mitigating or aggravating factors that may impact any given security.
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