APS Data Analytics and Visualisation Award 2023
Finalists
- Closing the Gap Insights (National Indigenous Australians Agency)
- Project ARTEMIS – Automatic Detection of Suspected Insider Trading (Australian Securities and Investments Commission)
- Aged Care Market Intelligence (Department of Health and Aged Care)
Winner
Project ARTEMIS – Automatic Detection of Suspected Insider Trading, nominated by Australian Securities and Investments Commission.
What was the purpose of the project?
Project ARTEMIS (acronym - ATO, RDR, TraderID Enhanced Market Insider Scan)
ARTEMIS is the Greek Goddess of Hunt, symbolic of our use of advanced data analytics to hunt for market misconduct and protect market integrity. Insider trading poses one of the biggest threats to market integrity, causing Australians significant financial harm, undermines public confidence in our financial markets, adversely affects liquidity and increases cost of capital for Australian businesses.
Insider trading is hard to detect and prove due to the nature of the suspicious trading patterns and information passing through often personal relationships. Traditionally, detection relies heavily on manual analysis and is highly dependent on skilled and experienced analysts’ time.
Through development in analytic technology, combining data from various sources (ASX, ASIC, ATO, Commercial Vendors), Project ARTEMIS introduced stronger surveillance capabilities, automation at various laborious stages of investigation and analytical tools against previously hard to detect matters. Project ARTEMIS can automatically 1) detect profitable and suspicious trading patterns and 2) identify connections between traders and potential sources of inside information. The Project Team effectively brought together in-depth domain expertise in market structure and surveillance along with strong data capabilities and familiarity with academic methodologies, for ideation and project design. The results produced by Project ARTEMIS are very compelling and strongly proves its regulatory efficacy in identifying real-life cases of suspected insider trading. It has been back tested against historical cases and in some respects outperformed in uncovering suspicious instances.
In what way is your project innovative?
Project ARTEMIS took a regulatory-problem-driven and technology-enabled approach to innovation. The Project led to the development of new system tools and dashboards that use advanced algorithms to automatically scan the market for collusive misconduct. It generates advanced stock to portfolio metrics across all trading ahead of material price sensitive company announcements to isolate the most abnormal trading behaviours for further inquiry. Based on unique trader identifiers and relations data, it can produce connection maps of varying degrees of separation and strength of relationships to detect potential pathways of insider information. It also generates Natural Language descriptions of the suspicious matter detected for easy interpretation by human analysts.
Demos of this project have elicited significant interest, positive feedback and confidence from government and industry. Engagements with international regulatory counterparts have also elicited positive impressions and validations of ASIC’s strengths in digitally enabling/enhancing markets regulation and supervision.
In what way will your project benefit the Australian community?
Project ARTEMIS benefits the Australian Community in the following ways:
1) Cleaner and Fairer Markets for All Australians – improved market integrity and investor protection for financial consumers. Australians can invest with greater confidence that odds are not stacked in favour of privileged access to information. Ensure Australia’s reputation for fair and efficient financial markets.
2) Listed Companies and Capital Formation – seminal academic literature show that effective enforcement against insider trading can indirectly reduce transaction costs and costs of capital to companies, by increasing investor confidence.
3) Better Outcomes across Government Agencies cross agency data sharing helps ASIC’s capability and efficiency in detection of serious market misconduct and ATO with its mandate..
4) Lower Cost of Regulation for Industry – ASIC traditionally issued s912E Notices under the Corporations Act 2001 to brokers for identifying clients involved in suspicious trading (approximately 500 each year). This can now be done without Notices, significantly reducing industry’s compliance burden.