Partner Article

On The Insider Track

A system is being developed in the North-East which could help to stop insider trading fraud on the world’s stock markets.

The software, named Cassandra (Computerised Analysis of Stocks and Shares for Novelty Detection of Radical Activities), is being developed by researchers at Sunderland University to detect fraud almost instantly by analysing share prices alongside business news.

Research suggests that as many as 25 per cent of UK share dealing maybe tainted by insider trading, with that figure rising to as high as 41 per cent in the US.

The researchers say that by constantly monitoring news surrounding a company, particularly those that may be subject to a major development, the system could help explain significant movements in its share price and crack down on fraud.

Dr Dale Addison, Cassandra project manager, said: “The stock market is highly volatile with stocks and shares going up and down all the time, and sometimes there is a perfectly rational explanation for these fluctuations.

“With Cassandra, we think we have a technique which has identified a gap in the market. The system looks at the news stories which may affect a particular company. So, if two companies are in the process of a merger and someone gets wind that the merger isn’t going to go ahead, a key player will go out and buy or sell stock shares and make a killing on the markets.

“Using our system, that information may be detectable by analysis of news.“The system, which has seen North-East academics work alongside Canadian company Measured Markets, has been backed by £90,000 from North-Star Equity Investors to help take it to market.

This was posted in Bdaily's Members' News section by Ruth Mitchell .