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Mumbai/New Delhi: After catching crooks by logging into Facebook and online matrimonial sites, the securities watchdog is now on the hunt for more, this time equipping itself with high-end social media surveillance tools to nab market manipulators.

The Securities and Exchange Board of India (Sebi) is in the process of building its social media technological capability to monitor and prevent market manipulation, chairman Ajay Tyagi said on Thursday.

“Regulators worldwide are increasingly acknowledging that there is much more surveillance input that can be gained from such social media platforms," Tyagi said at a research conference organized by the National Institute of Securities Markets. “Sebi is acquiring capabilities to monitor and analyse social media posts to keep a tab on possible market manipulations."

In 2018, in a case related to Deep Industries, Sebi found that entities involved in an insider trading case were Facebook friends and had regularly liked each other’s posts. In December, the regulator traced links between two entities in an insider trading case pertaining to Fidelity Group to a profile on matrimonial site jainshubhbandhan.com.

Sebi has also sent show- cause notices to 10 entities that allegedly leaked unpublished financial information of listed companies on WhatsApp groups with analysts and journalists as members. It is scanning Instagram to find pictures of individuals, who could be connected to manipulators or insiders in ongoing probes.

Sebi has now increased social media monitoring to establish links between potential offenders in insider trading cases, as conventional tools such as tracking shareholding patterns and know-your-customer rules fail to yield results, Tyagi said.

“We want to acquire technology and unstructured data analysis because the structured data analysis is not helping much; manipulators use all sorts of things," he said. A tender has also been floated for acquiring such technology, he added.

“Sebi has already planned a data lake project to augment analytical capability with advanced tools such as pattern recognition, processing of structured and unstructured data," said Tyagi.

Sebi is enhancing its own analysis and surveillance of social media using artificial intelligence (AI) and big data analytics. “To some extent, we are already doing social media screening relating to corporate announcements, relating to price-volume issues," he added.

Social network analysis tries to look up all entities, which are connected to each other. It is not limited in scope to popular platforms like Facebook or Twitter, but also looks for connections on linked platforms and uses graph database technology to retrieve interconnected information and find hidden patterns.

Social media platforms have tonnes of data, which means the task of monitoring can be complex. Sebi can also emulate the IT ministry’s Project Insight, which uses AI and analytics to generate a 360-degree profile of taxpayers to find those under-reporting incomes.

“AI/ML (machine learning) would definitely be very helpful from a technology point of view and would also discourage fraudsters from using social media for any such activities," said K. Purushothaman, chief executive of cybersecurity firm K7 Computing. He added that the tools would depend on specific requirements. “Also, the legality of this is going to be questioned as this will have privacy implications."

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