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Keeping pace with dynamic markets: FINRA’s journey with AI-based surveillance techniques and tools
Journal of Securities Operations & Custody,
14
(1),
54-63
(2021)
Abstract
Trading markets are dynamic. The composition of trading centres and market behaviour are constantly evolving. The number of market events is also constantly increasing, often in response to significant events like the COVID-19 pandemic. The dynamic nature of trading markets poses significant challenges for regulators that are responsible for exercising oversight of market activities. This paper discusses the Financial Industry Regulatory Authority’s research and development projects dedicated to experimenting with the development and improvement of artificial intelligence, machine learning and deep learning market surveillance techniques or tools. Such experimentation is critical for regulators to continue to keep pace with dynamic markets. The development and improvement of such techniques and tools holds the potential for continued effective oversight of market activities.
Keywords: Market surveillance; artificial intelligence; machine learning; deep learning
The full article is available to subscribers to the journal.
Author's Biography
Susan Tibbs is the Senior Vice President of the Market Manipulation Group (MMG) in the Quality of Markets Section of the Financial Industry Regulatory Authority’s (FINRA) Department of Market Regulation. She has developed a specialty in complex products, new exchanges and cross-market surveillance and investigations. She oversees FINRA’s Cross Market Manipulation Surveillance Patterns and directs investigations for equity products both traded on and off exchange. Over the years, she has been instrumental in the planning and implementation of surveillance patterns for various FINRA customers. Currently, she is part of the leadership team managing the implementation of deep learning in production surveillance patterns for the Department of Market Regulation. Ms Tibbs earned a BA in International Affairs from the George Washington University and a JD from Western Michigan University Thomas M. Cooley Law School.
Raghu Raman is a Vice President in FINRA’s Department of Technology. Since 2018, he has served as the coach for the team that innovates and deploys surveillance pattern systems that assist in achieving FINRA’s mission of market regulation. Prior to this, he was with the Development Services group within the Department of Technology, overseeing Quality Assurance and advancements in the areas of Continuous Integration and Continuous Delivery of software. He was involved heavily in the migration of FINRA’s big data systems to the AWS cloud. Mr Raman earned a BS from Bangalore University and a Master of Science in Engineering from the University of Toledo.
Chi-Keung Chow is a Principal Developer in FINRA’s Department of Technology. He worked for almost a decade as a theoretical nuclear physicist, before transitioning into the nascent field of data science (social network analysis and predictive modelling). Currently, he directs the data science program in Market Regulation Technology. He also serves on the coaching team of the FINRA Research and Development (R&D) Analytic program. Mr Chow earned a BS in Physics from the Chinese University of Hong Kong and a PhD in Theoretical and Mathematical Physics from the California Institute of Technology.
Robert A. Gomez is a Principal Advisor to the Senior Vice President of MMG in the Quality of Markets Section of FINRA’s Department of Market Regulation. He provides legal, policy and strategic advice on all facets of MMG’s program and the Department of Market Regulation at large, including on issues related to surveillance and investigations. Before joining MMG, he served as a Principal Counsel in FINRA’s Department of Enforcement. He previously practiced law at several law firms in New York and Washington, D.C. Mr Gomez earned a BA in Political Science from the University of California, Los Angeles and a JD from Yale Law School.
