Stock manipulators, beware the MAS AI arsenal
Singapore
MARKET manipulation syndicates have become more complex - but the same can be said for the Monetary Authority of Singapore's (MAS) enforcement team.
Surveillance officers are using machine-learning algorithms and other data-analysis tools to spot manipulative trading behaviour more quickly, The Business Times has learnt.
For instance, the MAS has worked with the Government Technology Agency (GovTech) to jointly develop a tool to detect syndicated market manipulation by identifying trading accounts that exhibit similar trading behaviours, using a community-detection algorithm.
The MAS also uses an analytics technique known as "strongly connected components", which can pick out circular trading across groups of accounts, so the watchdog is able to tell when traders are colluding to create the impression of market volume and interest in a counter.
Another project in the works is a "robo-expert" which the MAS is using machine learning and augmented intelligence technology to build. This "robo-expert" will be able to perform trade analysis and predict the likelihood of positive prosecution outcomes for new cases by learning from past case outcomes.
Detection is just the first step in the MAS' enforcement process.
On Monday, it published an enforcement monograph that explains how it selects matters for investigation, as well as the investigative powers and enforcement actions it can take against misconduct in the financial sector.
The monograph supersedes the one published in 2016, which covered enforcement only within the capital markets.
The MAS has run a centralised enforcement department since 2016, under which a specialised team of investigators, surveillance and forensic officers and lawyers are responsible for enforcement across the banking sector, insurance and capital markets.
In its monograph, the MAS explained how it prioritises cases for investigation, and which cases it chooses to take to the end.
Some of the criteria it considers when choosing the cases to elevate to a full investigation include the level of public interest, the number of victims involved, the amount lost/ gained, the sophistication of the scheme, reputational damage caused to the industry, as well as the prevalence of that form of misconduct.
The MAS regulates more than 1,500 financial institutions in Singapore and is responsible for the administration of 23 primary statutes.
Some of its investigative powers include the power to order the production of documents. The Securities and Futures Act also provides the MAS with the authority to apply for injunctions to prevent the dissipation of property to ensure sufficient funds to satisfy civil penalties.
