Tokyo Stock Exchange aims to use AI to detect unfair trading

Maria Nikolova

JPX-R and TSE are testing AI solutions, developed by NEC and Hitachi, for market surveillance.

One more step has been made towards the use of Artificial Intelligence (AI) solutions in the trading industry, and, without any surprises – this is happening in Japan again.

Today, Japan Exchange Regulation (JPX-R) and Tokyo Stock Exchange, Inc. (TSE) announced they are working on applying AI to market surveillance operations by using technologies developed by NEC Corp (TYO:6701) and Hitachi, Ltd. (TYO:6501).

NEC’s RAPID machine learning and Hitachi’s Hitachi AI Technology/H (you may have heard of it as “H”) were used in preliminary investigations. The tests showed that AI solutions were highly accurate in identifying the possibility of unfair trading.

One advantage of such systems over conventional surveillance systems, which determine cases of unfair trading based on preset patterns, is that AI is able to learn on its own and determine the possibility of unfair trading. “H”, for instance, is known for its ability to learn from voluminous amounts of data and make judgments on its own, thus removing the need for people to set up hypotheses in advance and finding solutions that human beings had not even conceived.

Regarding their futures plans, JPX-R and TSE say they will apply AI technology in preliminary investigations, whereas surveillance personnel will focus on detailed investigations. The final decision in such investigations will still be made by surveillance personnel.

The exchanges will keep working toward the actual application of AI to market surveillance this year.

Japan is famous for its welcoming approach towards novel technologies, robotics and AI. This trend has already affected the Japanese financial services sector, where AI is replacing human beings in certain roles. In January this year, FinanceFeeds reported about Japan’s Fukoku Mutual Life Insurance plans to lay off 34 members of its staff, replacing them with IBM’s Watson Explorer Artificial Intelligence system.

Whereas there have been calls to protect human employees’ rights with regards to the advances of AI in the labour market, some consider that AI will actually improve the quality of human work and will take it to the next level rather than make human beings useless.

Read this next

Digital Assets

Boerse Stuttgart Digital secures BaFin authorization for crypto custody

“This is the first time that an established market participant has been licensed to hold cryptocurrencies in custody without any acquisitions. This completes the unique infrastructure we offer: of all the traditional service providers operating in the European crypto market, we are now the only one-stop-shop that’s fully regulated by BaFin in Germany for brokerage, trading, and custody of digital assets. For banks, brokers, asset managers, and family offices, this makes us the infrastructure partner of choice.”

Executive Moves

Capital.com hires Simone Manni as Head of Marketing, Europe

“I am proud to join Capital.com, a dynamic, fast-growing FinTech company harnessing technology to disrupt traditional access to financial markets. My focus over the next few years will be to grow Capital.com’s market share across western Europe and to gain a stronger foothold in countries like Italy and Germany which boasts a mature and sophisticated trading community.”

Retail FX

Axi extends partnership deal with Manchester City

FX broker Axi, previously known as AxiTrader, has renewed its flagship sponsorship deal with soccer giant Manchester City.

Digital Assets

Russia delays digital ruble pilot to May

Russia has postponed its central bank digital currency (CBDC) pilot indefinitely, which was originally scheduled for April 1, as it awaits specific legislation to be voted before the “crypto ruble” trial.

Executive Moves

Scope Markets promotes James Hughes to head of marketing

Belize-based FX and CFDs brokerage Scope Markets has promoted James Hughes, who until recently was its head of brand, to take on an expanded role as the company’s global head of marketing.

Retail FX

Fraudsters clone Financial Commission’s website, two ex-members under suspicion

The Financial Commission, an industry-specific dispute resolution service that caters to the financial services industry, today announced that it believes a clone website has been impersonating its membership roster.

Retail FX

CMC Markets warns of operational challenges in Q1

CMC Markets PLC (LSE:CMCX) said in a trading update for the fiscal year 2023 that February and March posed a more challenging environment with lower equity volumes and a higher proportion of lower margin institutional trading activity.

Interviews

Why Is Digital PR So Important for Financial Service Providers? Buzz Dealer’s CEO Uri Samet with the Answers

Digital PR is all about spreading your message faster, wider, and stronger in the online world, through proper SEO, link-building, and organic and paid social media work.

Inside View

Why And How Are Virtual Cards Disrupting The Finance Industry

Virtual cards have the potential to revolutionize the finance industry by providing faster and more secure payments, wider acceptance, and eco-friendliness.

<