Big Data and the Regulation of Financial Markets

Sharyn O'Halloran, Sameer Maskey, Geraldine McAllister, David K. Park, Kaiping Chen

Abstract: The development of computational data science techniques in natural language processing (NLP) and machine learning (ML) algorithms to analyze large and complex textual information opens new avenues to study intricate processes, such as government regulation of financial markets, at a scale unimaginable even a few years ago. This paper develops scalable NLP and ML algorithms (classification, clustering and ranking methods) that automatically classify laws into various codes/labels, rank feature sets based on use case, and induce best structured representation of sentences for various types of computational analysis. The results provide standardized coding labels of policies to assist regulators to better understand how key policy features impact financial markets.