Management Information Systems

INDIVIDUAL TERM REPORT

ON
CASE STUDY 3
“SAS HELPING SEBI CHECK
EQUITIES - TRADING MALPRACTICES”

POST GRADUATE DIPLOMA IN MANAGEMENT”

“(Term-I; Batch 2019-21)”

SUBMITTED TO: Prof. S Ramaswamy

SUBMITTED BY: Ankita Srivastava
Q.1) From your understanding of the case, discuss the role of
SEBI. Also discuss the need for analytics at SEBI.
The Securities and Exchange Board of India was established on April
12,1992 in accordance with the provisions of the Securities and Exchange
Board of India Act, 1992. SEBI is managed by six members.
One chairman (nominated by Central Government), two members (officers
of central ministries), one member (from RBI) and remaining two members
nominated by Central Government.
Functions of the Securities and Exchange Board of India are written in the
preamble "to protect the interests of investors in securities and to promote
the development of, and to regulate the securities market and for matters
connected therewith or incidental thereto"
SEBI acts as a watchdog for all the capital market participants and its main
purpose is to provide such an environment for the financial market
enthusiasts that facilitate efficient and smooth working of the securities
market.
To make this happen, it ensures that the three main participants of the
financial market are taken care of, i.e. issuers of securities, investor, and
financial intermediaries.
Role of SEBI:
 Issuers of securities: These are entities in the corporate field that
raise funds from various sources in the market. SEBI makes sure that
they get a healthy and transparent environment for their needs.
 Investor: Investors are the ones who keep the markets active. SEBI
is responsible for maintaining an environment that is free from
malpractices to restore the confidence of general public who invest
their hard-earned money in the markets.
 Financial Intermediaries: These are the people who act as
middlemen between the issuers and investors. They make the
financial transactions smooth and safe.
SEBI Analytics Need:
Comprehensive data development leveraging SAS data storage and
business analytics would speed up SEBI's analysis of suspicious
transactions and improve investor confidence. As a first step towards this
SEBI, SEBI has set up its own data warehouse with the assistance of SAS.
“SEBI off-late has improved its surveillance and is now utilizing social
networking to set connections between loopholes in cases of insider
trading. Such links are now more useful, particularly when traditional
methods for locating potential rogue traders via shareholding routine and
KYC don’t operate,” Chairperson, Ajay Tyagi explained.
“The ruler will enhance surveillance and analysis of social networking
through tools like artificial intelligence and large data analytics. SEBI has
already proposed an information lake job to reinforce analytical capacity
using innovative tools like pattern recognition, processing of unstructured
and structured information,” explained Tyagi.
SEBI tracks over 200 million transactions annually and is able to store up to
25 GB of data per day, projected to exceed 80 inches in just a few years '
time. Fraud with the help of SAS may be reported regularly, weekly,
monthly or quarterly. With its introduction next day, SEBI officers will hold
regular and organized data ready for investigation. SAS is now supporting
SEBI T.
Q.2) Why was an enterprise data ware house (EDW) required
at SEBI? List the sources of data and the different ways in
which EDW is utilized at SEBI.
With the help of SAS, SEBI has developed a company data warehouse. As
SEBI records over 200 million transactions each day, equivalent to 25 GB
of data, and is likely to reach 80 GB in the coming years. This system is
designed for monitoring and analysing the data collected. This allows the
monitoring engine to generate alerts so that investigation can be conducted
on a case-by-case basis.
The Data Warehousing tool will allow SEBI:
o To exploit the computer power and data analysis speed of modern
technology.
o To speed up the investigation and execution of quasi-judicial
proceedings arising from stock exchange infringements.
o Pattern recognition algorithms can also be hosting on the platform,
which monitors SEBI's trade and order data to identify networked
customers who collectively might commit securities infringements.
Most modules tackle offences such as insider trading, front running,
etc.
o Databases across SEBI departments will be linked to the system in
order to make efficient use of the benefits of stored data in
accordance with SEBI's mandate for the protection of investors and
market regulations.
SEBI is able to detect fraud on a daily, weekly, monthly and quarterly basis,
using SAS help, when transaction data from NSE, BSE, USE, NSDL and
CDSL are collected, and after data have been charged to the warehouse
from the exchange. It also collects data uniformly from different security
exchanges, which helps to avoid duplication of data. As the records are
transferable, vulnerable and illegal conduct can be observed.
Q.3) Discuss the features of SAS analytics that are used by the
SEBI for fraud detection and prevention.
o SEBI can make use of SAS analytics, recommendations, blogs and
annual reports in order to understand the impact of social media on
investor behaviour and to link it to reports of fraud by studying the
behaviour of market participants.
o It allows for the SEBI parallel data processing, which means that it
performs key statistically and analytical functions in the warehouse
itself instead of moving your personal data into a different application.
o SEBI pursued comprehensive storage, high-end analytics, and
improved statistical analysis and text mining to tackle data
development and to build a closer fraud detection and investigative
network.
o Improved controls and oversight allow for sophisticated analysis and
tracking of industry malpractice and export enforcement.
o The Securities and Exchange Board of India (SEBI) has chosen SAS,
the software and service supplier for business analytics, as its
investigation department to ensure robust oversight to ensure
unbiased trading platforms.
o The SAS regulator often utilizes research methods to classify
suspected trends of market manipulation, such as circular trade and
pumping.
o SAS provides superior management and data integration.
o SEBI will use SAS analytics to understand the impact of social media
on the behaviour of investors and to connect them to suspected
manipulation through analysing the actions of market participants.
Q.4) Discuss the advantages of using analytics to convict
fraudsters.
The Securities and Exchange Board of India (SEBI), while fostering the
growth of securities markets, protects investors ' rights. Nevertheless,
SEBI's position on the capital market of India has raised investor
confidence to the point that is possibly India's biggest regulator.
The value of tracking approaches is highlighted by new regulations and
increasing market attention.
SEBI used SAS for the monitoring software and high-performance analytics
sufficient to identify and prevent fraud with over 200 million transactions per
day.
In order to gain a better understanding and understanding of the potential
fraud, SEBI has implemented a comprehensive SAS Business Analysis
Platform including the company database to collect and analyse large
quantities of data from exchanges and elsewhere.
Organizations that use machine learning enable their decision-makers with
the ability to access data, understand its meaning and make informed
choices to combat fraud before it impacts the bottom line of the company
and the brand as a whole.
Professionals in the areas of protection, risk management, and fraud
prevention face a great many challenges to applying a fraud solution
involving prices, deployment times, data access, identification of valid and
illegitimate requests, customisation and market dimensions, etc. Machine
learning improves the ability of a company to stay ahead with criminals,
irrespective of their tools and tactics for fraud.
Q5. Differentiate the difference between “supervised learning
“and “unsupervised learning “, with reference to Machine
Learning.

Basis Supervised Learning Unsupervised Learning

Process Variables for output and Only the input value will be
input will be defined. defined

Input Data Data Input Labelling is Algorithms for non-

used for algorithms for labelling information are
processing. used.

Computational Quite simple method Complex Technique

complexity

Use of data Output data is used No use of output data

Results Highly accurate and Lesser accurate

accuracy reliable method

Real Time Offline learning method Learning method is Real

Learning time

No. of classes It is known It is unknown

Main In supervised learning, the Detailed data classification

Complexity definition of big data can information cannot be
be a real challenge. obtained and the output is
classified and not
recognized as used in
unmonitored learning.