August 8, 2017 2:57 am JST

SBI, Rakuten enlist AI to catch market manipulators

Japanese brokerages will test system developed by NEC

TOKYO -- Japan's SBI Securities and Rakuten Securities will each test artificial intelligence software designed by NEC to detect market manipulation, as technological advances make trading schemes more complex. 

The online brokerages aim to have working monitoring and detection systems ready within the current fiscal year.

Learning from past cases of illegal trading, the software flags suspicious activity as it screens such data as orders, stock price movements and trading values. It looks for market manipulators using techniques such as spoofing, which involves placing large orders that are canceled before they are executed.

Brokerages have relied on human monitors to spot market manipulation. SBI Securities, a subsidiary of SBI Holdings, says it inspects 100,000 trading orders out of the 2 million placed daily.

An AI system, if implemented, would handle both monitoring and inspection, freeing up human investigators to work on complex cases. The brokerages also hope AI will help them better deal with evolving forms of manipulation that have emerged with the rise of high-frequency trading. 

SBI Securities and Rakuten Securities, a unit of e-commerce group Rakuten, will be the first brokerages to employ AI for such uses. Japan Exchange Group, operator of the Tokyo Stock Exchange, is also teaming up with such companies as information technology groups NEC and Hitachi to introduce an AI system able to detect manipulation.

(Nikkei)

NEC Corp.

Japan

Market(Ticker): TKS(6701)
Sector:
Industry:
Electronic Technology
Electronic Equipment/Instruments
Market cap(USD): 7,025.23M
Shares: 260.47M

SBI Holdings, Inc.

Japan

Market(Ticker): TKS(8473)
Sector:
Industry:
Finance
Financial Conglomerates
Market cap(USD): 4,360.40M
Shares: 224.56M

Rakuten, Inc.

Japan

Market(Ticker): TKS(4755)
Sector:
Industry:
Consumer Services
Other Consumer Services
Market cap(USD): 14,318.35M
Shares: 1,434.42M

Japan Exchange Group, Inc.

Japan

Market(Ticker): TKS(8697)
Sector:
Industry:
Finance
Investment Banks/Brokers
Market cap(USD): 9,727.45M
Shares: 549.06M

Hitachi Ltd.

Japan

Market(Ticker): TKS(6501)
Sector:
Industry:
Producer Manufacturing
Industrial Conglomerates
Market cap(USD): 36,335.64M
Shares: 4,833.46M

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

Resubscribe now to continue reading.
BEST OFFER:
Only US$ 9.99 per month for a full-year subscription

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.