AI tools enable bourses to catch unusual order-to-trade ratio, says BSE MD
This story was originally published at 18:59 IST on 10 January 2025
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--BSE MD: AI not new, in existence for a long time
--CONTEXT: Comments by BSE MD, CEO Ramamurthy at stock mkt symposium
--BSE MD: AI already used in trading surveillance by stock exchanges
--BSE MD: AI can spot problems in disclosures in offer documents of issuers
--BSE MD: AI can spot inconsistencies in cos' corporate governance documents
--BSE MD:Order-to-trade ratio reveals if orders pumped to create false view
--BSE MD: AI tools enable bourses to catch unusual order-to-trade ratio
--BSE MD: Fear, greed cloud AI deepfake victims' view of fincl mkt ecosystem
--SEBI Varshney: Deepfake videos using AI tools pose real risk to mkt
--CONTEXT: Comments by SEBI whole-time member Varshney at mkt symposium
NEW DELHI – Artificial intelligence-enabled tools have helped stock exchanges to catch orders that get pumped in by traders to make the order book look good, only to withdraw the orders when other investors start to trade in that stock or instrument, BSE Ltd. Managing Director and Chief Executive Officer Sundararaman Ramamurthy said Friday.
Speaking at a securities symposium organised by the Securities and Exchange Board of India and the National Institute of Securities Markets, Ramamurthy said such trading operations that create a false impression among investors are captured by the rules and stipulations exchanges have in place, such as order-to-trade ratio.
The order-to-trade ratio, typically, helps when someone pumps in, say, 100 orders, to find out how many of these orders got converted into trades, the BSE managing director said. There is also a rule that catches traders trying to persistently create noise by entering orders that are out of normal range, he said. The reaction of exchanges to such manipulative trading operations is stringent, and includes cutting off the broker's trading access across all exchanges where the broker has a membership, according to Ramamurthy.
The BSE chief said the AI phenomenon is not new and has been in existence for a long time. AI tools have been used for market and trading surveillance by stock exchanges and regulators, he said. The use of such tools can be expanded to spot problems in disclosures in offer documents of issuers in the primary market, or to spot inconsistencies in companies' corporate governance documents.
SEBI's Whole-Time Member Kamlesh Varshney, who was addressing the same symposium, cited instances of fake videos circulating on social media showing stock exchange chiefs giving investment advice, and said that deepfake videos created using AI tools pose a real and grave risk to market participants. Ramamurthy agreed and said fear and greed cloud the judgement of investors and other participants in the market ecosystem and leads them to fall prey to such deepfake videos and other material. End
Reported by Rajesh Gajra
Edited by Rajeev Pai
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