SEBI Looks At AI Systems Of Las Vegas’ Casinos To Clamp Down On Insider Trading, Front Running

The Securities and Exchange Board of India (SEBI) is reportedly in talks with a US-based company to purchase artificial intelligence (AI) systems to clamp down on insider trading and front running.

The market regulator would deploy the same systems used at casinos in US’ Las Vegas, albeit with certain customisations, The Economic Times reported. 

The company reportedly briefed the market watchdog on the features of the platform a few weeks ago and agreed to customise the software if the deal goes ahead.

SEBI is considering the AI systems used by the casinos due to better risk management. “The casino AIs come with superior risk management systems compared to the traditional data analytics that regulators use, because the margin of error for these AIs is very thin. Failure to detect even one rogue gambler could cost a casino in seven figures,” a source was quoted as saying. 

The casino AIs come embedded with risk management systems that automatically analyse all bets placed during a session. These platforms detect suspicious trends during the bets and alerts the casino owners.

SEBI intends to deploy this system on a larger scale to crackdown on securities violations and offences such as insider trading and front running.

Casinos around the world use AI to analyse user behaviour and alert authorities about suspicious transactions. In many cases, such as casinos in Macau, owners use hidden camera and AI algorithms to track movements of players, their betting behaviour and curb inter-player collusion . 

Earlier, media reports suggested that SEBI is piloting using AI on its data to identify synchronised stock moves. The reports also said that the market watchdog is looking to approach the government to grant it powers of an enforcement agency under the IT Act.

According to a report, the global AI market size was pegged at around $87.04 Bn in 2021 and is expected to surge to $1,597.1 Bn by 2030, growing at a CAGR of 38.1% between 2022 and 2030.

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