The Australian Securities and Investments Commission (Asic) chairman Greg Medcraft says the body’s new artificial intelligence software will target rooting out fake news on social media to prevent it from manipulating the share market.
Medcraft says Asic’s push to use artificial intelligence to detect rogue market behavior will include a focus on people creating fake news to circulate on social media, aimed at driving up stock prices.
‘Asic is rapidly moving into the use of advanced technology methods to detect aberrant behavior, including breaches of the law, at an earlier stage,’ Medcraft tells the Australian Financial Review, in reference to the use of fake news as a market manipulation tool. ‘This is in addition to detecting such behavior after the fact and seeking to take punitive or compensatory action.’
Medcraft says the threat raised by digital market manipulation is real and the new suite of technologies in use and under development will help build a more ‘pre-emptive’ system. Under Asic’s plans, data analytics will be used to enhance the ability to predict market movements and therefore detect market manipulation and other criminality in real time.
‘Asic will be able to move quickly, to the point of proactively intervening as the market events occur,’ Medcraft says. ‘The sophisticated use of data-matching and better analysis of trading patterns means Asic can identify the likely leak of confidential information, and pair it to the suspect trades, and also follow the trail of any market manipulation back to the perpetrator and beneficiary.’
But Australasian Investor Relations Association chief executive Ian Matheson warns that it will be difficult to track down and police offenders offshore.
‘Just after the global financial crisis there was a bumper number of false rumors relating to the share market and listed companies put into the market, particularly by offshore hedge funds,’ Matheson says.
‘A number of these were reported to Asic, which set up a rumor hotline. I’m not sure if it’s been used a lot since that time but it is certainly a concern to listed companies that false information can be fed into the mainstream media through the ether – through social media.’
Matheson warns there may be no way to properly protect against false company news, and says companies would come under increased pressure to quickly set the record straight about rumors.
