AI and bots could threaten future of trading
AI and bots pose a real threat when it comes to market manipulation, according to research released by UK-based regulatory technology firm eflow.
The new research is based on a survey of 250 senior compliance professionals in the financial services sector. It reveals that 75% of companies polled are worried about bots manipulating markets and being able to cover up their actions. Some 21% of respondents said they are “extremely worried” and believe AI poses “a real threat” to the future of trading.
Ninety-four percent of those surveyed said financial professionals using AI bots to manipulate the market is a challenge, with 36% saying it is a significant problem.
Ben Parker, CEO and founder of eflow, commented: “We saw how a bot used made-up insider information to make an ‘illegal’ purchase of stocks without disclosing this information, at the recent AI Safety Summit. These are real threats, not just hype, fuelled by the recognition that the regulatory surveillance methods of old are insufficient in the face of evolving market dynamics.”
He continued: “The good news is that AI will also deliver efficiencies and advanced capabilities for both firms and regulators, with firms turning to AI and RegTech to better monitor and combat market abuse. However, firms need a clear understanding of how these algorithms operate, as well as how more sophisticated technology will need to be deployed to protect them,” Parker added.
