Japan Exchange Regulation (“JPX-R”) and Tokyo Stock Exchange, Inc. (“TSE”) decided to apply artificial intelligence (AI) to market surveillance operations to detect such misconduct as market manipulation. Deployment of AI to market surveillance operations.
In surveillance operations of the TSE market for monitoring and preventing unfair trading, a broad range of orders that are likely to involve unfair trading are first identified by surveillance systems based on certain criteria. Surveillance personnel then conduct preliminary investigations to analyze the trading situation surrounding such orders. Based on these preliminary investigations, surveillance personnel determine the possibility of unfair trading before conducting detailed investigations and report to the Securities Exchange Surveillance Commission.
JPX-R and TSE will be deploying two AI technologies: NEC Corporations “NEC Advanced Analytics – RAPID machine learning” and Hitachi, Ltd.s “Hitachi AI Technology/H”. These technologies have been supplied with a store of knowledge previously used in operations by surveillance personnel to evaluate irregularities in trade activity for preliminary investigations.
The deployed AI technology enables surveillance personnel to finish preliminary investigations more quickly and focus on detailed investigations. While the final decision on conducting such investigations will continue to be made by surveillance personnel, this initiative facilitates even more in-depth and detailed investigations and is expected to improve their market monitoring functions, thereby protecting the fairness and credibility of the TSE market.
