Smart technology to track Insiders

[RichKid]

Saw this in the papers today: DocJ, might help you with your method of using chatroom activity to buy into stocks, can't find that thread of yours, post a link here to it if you do. I bet the technology costs a small fortune though.

Interesting to see all the behind the scenes surveillance, the ASX still gets it wrong or is slow to act.

Stock exchanges get SMARTS
By Rob O'Neill SMH March 8, 2005

Japanese insider traders have nowhere to hide their stock manipulations following the installation of Australian technology to sniff them out at the Tokyo Commodities Exchange.

The installation brings to 14 the stock exchanges around the world using the SMARTS system for futures, commodities and options trading activities.

SMARTS (Securities Markets Automated Trading and Surveillance) is a real-time monitoring system that highlights unusual trading activity. It is a product of the federal Capital Markets co-operative research centre, which brings academia and industry together.

Capital Markets chief executive Mike Aitken says his company is the leading provider of real-time market surveillance.

"No other party has their systems in more than two exchanges - we have our systems in 14 exchanges and five regulators in 14 countries," Mr Aitken says of its users, which include exchanges and regulators in Singapore, Hong Kong, Indonesia, New Zealand, Russia and most of Scandinavia.

He says Capital Markets is also working with the Securities and Exchange Board of India implementing systems.

At home, the company's success is low-key; the Australian Stock Exchange went live with Capital Markets late last year.

SMARTS monitors every trade in real time and allows trading activity to be re-created.

"We can replay the SEATS, the Stock Exchange Automatic Trading System, screen for any stock for any nanosecond back to 1987," Mr Aitken says.

The Capital Markets centre has developed Scamseek, which analyses text such as stock chat-room entries, to correlate with market movements to see if anyone is talking-up stocks. Another tool, Compliance Explorer, is used by 17 Australian brokers to help compliance officers detect rogue trading activity.
http://www.smh.com.au/news/Next/Stock-exchanges-get-SMARTS/2005/03/07/1110160730091.html

 

[GreatPig]

which analyses text such as stock chat-room entries, to correlate with market movements to see if anyone is talking-up stocks.

Rampers beware!

 

[RichKid]

Interesting to see all the behind the scenes surveillance, the ASX still gets it wrong or is slow to act.

Perhaps I should have mentioned ASIC too, let's hope this makes it easier to gather evidence to convict inside traders; might raise some privacy issues too.

 

[doctorj]

Interesting post RK.

It's interesting, because the forum tracking software would be rather arbitary and could be cross referenced with simple EOD data to identify any correlation in trends.

Unfortunately, as I've said elsewhere, it's very much a chicken-or-egg problem. Stocks don't often get much air time on forums unless they're going through periods of high volatility. Whether or not that's often a function of online rampers or people discussing it after the volatility increases is a question for the reader.

If anyone can prove me wrong by finding a mechanical way to trade the phenomenon, I'm all ears!