Italy’s Consob Uses AI to Monitor Markets and Detect Insider Trading
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Italian Market Watchdog Explores AI for Regulatory Enhancement
Italian market regulator, Consob, is currently evaluating the application of artificial intelligence (AI) to streamline the initial approval process of listing prospectuses and enhance the detection of insider trading incidents. According to a statement released on Tuesday, these AI algorithms are designed to assist in preliminary examinations aimed at spotting potential instances of insider trading, which would then be subject to more detailed investigative efforts.
Highlighting the efficiency of AI, Consob noted that while the algorithm can identify an error in three seconds, a human analyst would take at least 20 minutes for the same task. This significant reduction in time underscores the potential of AI to bolster regulatory oversight through rapid and precise error detection.
The AI testing initiatives took place last year, focusing on two prototypes developed internally in collaboration with Scuola Normale Superiore university in Pisa in 2022, along with a third AI model. The integration of AI is expected to elevate the effectiveness and quality of scrutiny in tracking and pinpointing regulatory violations.
The plan now is to transition from the testing phase to embedding AI into the regular operational framework of Consob. Such a move aligns with broader trends observed in other regulatory bodies globally. In the United Kingdom, for instance, the Financial Conduct Authority has already been leveraging AI to shield consumers from online scams.
