Financial markets have become increasingly complex due to globalization and the rise of modern businesses, making it more challenging to monitor and maintain fair practices.

Artificial intelligence (AI) is playing a crucial role in detecting and preventing market manipulation, which has also become more sophisticated with the use of advanced trading strategies.

AI systems analyze vast amounts of data to identify irregularities and potential manipulative behaviors that are difficult for humans to spot due to high-frequency trading and large data volumes.

These AI systems are trained on historical market data, allowing them to learn from past instances of manipulation and recognize subtle signals of foul play.

However, AI faces challenges in market surveillance, including the need for tailored models and the ability to adapt to ever-changing manipulative tactics. AI systems must continuously learn and adapt to new methods of market manipulation.

Inspiration is being drawn from the human immune system, which can identify and neutralize various threats.

Artificial Immune Systems (AIS) are used for market surveillance, employing mechanisms that mimic the immune system’s adaptability, like the Dendritic Cell Algorithm (DCA).

The DCA can identify manipulation patterns, performing anomaly detection without pre-defined knowledge of potential manipulations and reducing the input dataset’s dimensions.

While AI excels at data analysis, human expertise is essential for interpreting findings, providing context, and ensuring fairness. This balance between AI and human oversight is crucial.

The combination of AI’s analytical capabilities and human insight is vital for maintaining the integrity of financial markets, and this partnership is expected to strengthen over time.