The Securities and Exchange Board of India is acquiring capabilities to keep a tab on social media posts to track market manipulations, its chief Ajay Tyagi said on Thursday.
The regulator plans to create a ‘data lake’ project to augment analytical capability that would involve the use of artificial intelligence, deep learning, big data analytics, pattern recognition, and structured and natural language processing tools to spot manipulations.
“Social media platforms are increasingly being used by manipulators for market manipulation. Regulators worldwide are increasingly acknowledging that there is much more surveillance input that can be gained from such social media platforms,” Tyagi said at a research conference organised by Sebi and National Institute of Securities Markets (NISM). “We want to acquire technology and unstructure data analysis because structured data analysis is not helping much, manipulators use all sort of things. So, analysis of what is coming in social media, which largely is unstructured data, and language processing, that is a must to see in addition to pricing volume changes. We intend to acquire that technology.”
A tender has been floated for acquiring the technology.
In recent times, Sebi has been doing social media screening related to corporate announcements and price volume issues in insider-trading cases.
“We are anyway doing data analysis and seeing unstructured data in our surveillance department and trying to correlate with pricing volume data to come to better analysis,” Tyagi said.
Last year, in a case of frontrunning of several funds of the Fidelity Group, the regulator checked the profile of a trader at a matrimonial site in order to establish his link with the family members.
In another insider-trading case related to Deep Industries, Sebi checked the Facebook profiles of suspected persons to ascertain whether they were connected to each other. The regulator found that the entities involved were friends on the social networking platform and had ‘liked’ each other’s pictures posted on the site.
Sebi has also issued show-cause notices to several entities in a case involving leak of material financial information of listed entities on WhatsApp groups a couple of days prior to the stock exchange disclosure.
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