White collar criminals increasingly use sophisticated methods to commit crimes and regulators have in the past struggled to keep up with the technological advances but this may be set to change.
The financial industry has for years, quite legitimately, used systems that feed market data from news sources and social network sites into their automated trading systems but so far the regulators have not had access to such sophisticated systems.
In recent months, many regulators have taken proactive steps to identify market manipulation and abuse committed through news reporting and internet comment. The Financial Times recently reported that regulators from Hong Kong and Singapore are looking at ways of analysing online data such as news and blog comments to identify insider trading and market manipulation.
Whilst the FCA, for example, has used systems like Nasdaq OMX’s Smart systems for years, this is the first time that regulators across borders are proposing to use sentiment analysis to prevent financial crime.
Whether the limited use of such methods in the past is due to a lack of funding or innovation is hard to determine but one thing is certain: regulators globally are sharpening their teeth and with that, reviewing and improving the methods used to police the financial markets.
By Business Crime Solicitor Stine Dulong.
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