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Sebi could turn to AI used in casinos to crack down on insider trading: report

The Securities and Exchange Board of India (SEBI) is in talks with a major US-based artificial intelligence (AI) systems provider that has helped Las Vegas casinos track players. Sebi wants to use the system to crack down on insider trading in India, according to a news outlet.

If talks are successful, the capital market regulator will purchase such a system and customize the software to Sebi’s requirements, the Economic Times reported citing sources with direct knowledge of the matter. Sebi did not respond to the email from the business daily on the ongoing discussions.

A few weeks ago, Sebi was briefed on the software’s features, how it works, and possible customization on the platform, sources say.

Sebi is considering the proposal because the casinos’ AI systems have shown a high level of accuracy in generating alerts on abnormal transactions.

A number of casinos around the world as well as online casinos have already implemented artificial intelligence. AI is used to analyze player behavior in the casino. They collect data and use algorithms to analyze why players prefer a particular game.

A New York Times report said Macau casino operators are using hidden cameras and facial recognition technology to track gamblers’ gambling behavior. They also use poker chips with radio frequency identification technology and sensors on baccarat tables to collect data on a player’s performance and monitor collusion between players.

One of the functions of AI in casinos is to help with risk management. In this, AI is used to automatically analyze the bets placed in the casino, verify payment methods and build the player’s profile to trigger an alert in case of suspicious trends. This can be used by Sebi to crack down on insider trading.

“Casino AIs have superior risk management systems compared to traditional data analytics used by regulators because the margin of error for these AIs is very slim,” the Economic Times said, citing a source. If casinos fail to detect even a single gambler scammer, they may have to pay the seven-figure price, the source said.

For Sebi, it has become difficult to rely on human capabilities to monitor market players who use advanced software. Until now, the capital market regulator has depended on stock exchange boards and market intermediaries to investigate white-collar crimes.

(Edited by : Sudarsanan Mani)


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