Ajay Tyagi, Chairman of Indian Securities Market, explores blockchain usage in the securities markets. The applications of blockchain, artificial intelligence (AI) and machine learning have the potential to bring a paradigm shift in the securities market landscape.
24 January, 2020 | AtoZ Markets – Tyagi said at the National Institute of Securities Markets (NISM) research conference that social media platforms are increasingly being used for market manipulation. Regulators around the world are recognizing that more surveillance input can gain from monitoring social media platforms.
Indian Securities Market Explores Blockchain to Fight Market Manipulation
According to Tyagi, surveillance capabilities can be significantly enhanced by the use of new technologies. Tools like AI and blockchain have the potential to bring a paradigm shift in the securities markets. The blockchain could be used in clearing, settling and keeping records.
He takes examples from some international blockchain projects and asks for research in these areas. He also said:
“Some foreign exchanges are developing blockchain solutions for the settlement. Active research is needed on these technologies to explore their best possible use in securities markets. Some domestic exchanges are also developing blockchain-based solutions for KYC record-keeping purposes.”
Risk Assessment and Management to Protect the Interest of Stakeholders
The securities market is the emergence of new risks and recurring stress periods. Tyagi also reiterated the importance of risk management by citing the example of the Depository Trust and Clearing Corporation (DTCC). The corporation successfully closed the exposure of more than $ 500 billion of Lehman Brothers to market participants without impacting the clearinghouse balance sheet or its clearing fund. He added:
“However, regulators also need to strike a balance between conservative risk management and market development. The high level of security usually comes at the expense of market liquidity”.
Tyagi also stressed the use of the latest technologies to rationalize the securities market. Technology plays an important role in the transformation of the capital markets. He also said:
Capturing malpractices on the market using standard tools is becoming increasingly difficult. However, Security and Exchange Board of India (SEBI) has already planned the Data Lake project to increase analytical capacity with advanced analytical tools. The tools are AI/ML, deep learning, big data analytics, pattern recognition, processing of structured and unstructured data, text mining and natural language processing, etc.
The Indian government is positive about the use of the blockchain in several cases. Moreover, the Reserve Bank of India (RBI) on 6 December said that it is planning to develop India’s own digital currency.
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