I will admit it, I spend far too much time on social media. My use of social media has extended from keeping up with family and friends across the globe, to receiving daily WhatsApp from the Singapore Government for the latest COVID stats, Facebook shopping, receiving instantaneous news from Twitter, and exploring local services through Instagram pages.
The list seems endless but somehow the pandemic has found a way to keep my social media footprint here in Asia growing further every day.
While Asian social media is growing, the Covid pandemic has also brought a rise in retail investors entering the market. Retail trading has traditionally played a larger role in Asia compared to other markets. This has been extended further over the past year by a significant boost in trading activity from a younger generation resulting in record breaking trading activity.
While this provided a welcome boost to local markets, it also provided a boost to market manipulators. Market manipulation schemes are nothing new, but the speed at which information can be spread and the audiences it can now reach are. Couple this to the Covid related displaced work environment where confidential, non-public information may be accessed without traditional corporate safeguards, and the opportunity for wrong-doing increased dramatically.
Both the SFC and MAS regulators have seen a sizeable increase in market abuse schemes facilitated online using platforms such a Telegram, WeChat, Facebook and even LinkedIn. Bad actors can utilize these platforms to spread false news about a company, or pose as an investment expert to coerce investors into trading a particular way.
As such, cracking down on market manipulation through social media has become a high priority for the local regulators. What is very clear is the challenge regulators face in monitoring these platforms, requiring comprehensive data collection and sophisticated tools for analysis.
This inevitably requires heavy investment in technology to utilize AI, big data and other analytical tools such as NLP/sentiment analysis to identify and pre-empt market abuse. Singapore’s MAS has been actively deploying these tools to combat financial crime, with 28 case studies being cited in a recent report by the Financial Stability Board.
It follows suit that regulated firms in Asia will have to enhance their surveillance programs as well. Investing in new tools with holistic technologies that integrate multiple data channels, and encompass structured and unstructured data to pro-actively monitor behavior using real-time detection techniques is now required.
Combining the meteoric rise in the use and number of social media channels plus the growth in both retail as well as institutional investors has certainly created a new climate of heightened financial risk. The technical challenges for supervisory bodies to effectively detect and report market manipulation need to be overcome. Investing in a new generation of advanced automated surveillance systems is no longer an option – it is an essential requirement to ensure integrity of financial markets and investor confidence.