Chapter 11 Can Artificial Intelligence Be Used to Target Market Manipulation?
Shaen Corbet, Charles James Larkin · 2024
This chapter discusses the use of artificial intelligence (AI) in combating market manipulation within financial markets. It begins by defining market manipulation and its impact on market integrity and investor confidence. The chapter then explores the integration of AI in market surveillance systems, highlighting AI’s ability to analyse vast datasets and identify complex patterns indicative of manipulative activities. It delves into the multifaceted role of AI, including real-time monitoring of trade data, analysing communication patterns, and predicting potential manipulation scenarios. It further addresses the challenges in adopting AI, such as data privacy, ethical use, and transparency in decision-making. It also examines the effectiveness of AI in identifying fraud and reducing false positives, emphasising AI’s adaptability and continuous learning capabilities. The chapter concludes by exploring the implications of AI’s integration in market surveillance, stressing the need for regulatory responses, ethical considerations, and future developments in AI technology for financial markets. This includes the advancement of predictive analytics, global collaboration initiatives, and continuous learning capabilities of AI systems, all aimed at enhancing market integrity and investor protection.