Around the 2000s, financial markets such as stocks, futures and options markets began to shift from being physical markets to being almost fully electronic. This shift transformed trading, as it also became possible for computers (algorithms) to trade. Algorithms now account for the majority of trading activity. They act automatically and much faster: sometimes their actions are not even perceivable by the human eye. This also creates new challenges for regulators as data size has increased tremendously and new types of market manipulation have emerged. Where do you start looking when there is so much data?
This is where particle physics can help.
Particle physics has decades of experience in storing, processing and handling big, high-speed data. There are similarities between the billions of particle collisions in CERN's particle accelerator (Large Hadron Collider; LHC) and the high-speed trading on financial markets in which multiple orders per nanosecond are placed. Most collisions in the LHC show no anomalies, but when they do, this may lead to new ground-breaking insights for physicists. Project HighLO uses similar algorithms and tools CERN uses, to identify anomalies on financial market data. When there are anomalies in financial markets, market participants, exchanges and authorities want to know what happened, how the market responded and how they should respond.
Applying particle physics tools to financial data opens up a whole new world of analysis and research. It makes us able to see behavior and patterns that we did not see before.
Research
Project High Energy Physics Tools in Limit Order Book Analysis (HighLO) applies particle physics methods and tools to financial market data.
Goals
We aim to identify malicious trading behavior such as market manipulation, to better protect markets.
For society
Our research enables governments, regulators, exchanges and market participants to better understand what happens when malicious trading occur, and how to respond.
Latest news and events
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Research pillars
Anomaly Detection
Inspired by the anomaly detection CERN uses for their particle collider, Project HighLO aims to identify malicious anomalies in futures and options markets that have a high probability of being market manipulation.Energy Markets
Project HighLO aims to detect market manipulation in energy markets, using a holistic overview of all connected European energy markets. This ensures a smoother transition towards more sustainable energy.Agent-Based Simulations
Project HighLO uses the state of the art simulation software BioDynaMo - developed at CERN - to simulate financial markets, thereby creating a safe environment to experiment and test market events and conditions.Latest publications
Energy Reports
https://www.sciencedirect.com/science/article/pii/S2352484724006073
Wageningen University
https://edepot.wur.nl/660427
Electric Power Systems Research
https://doi.org/10.1016/j.epsr.2024.110750
Sustainable Energy, Grids and Networks
https://doi.org/10.1016/j.segan.2024.101368
[see all publications]
People
Wageningen University & Research
CERN
Affiliated researchers
International expert group on market surveillance (IMS Group)
About
IMS Group is a collaboration between eighteen regulatory agencies across the world. It facilitates international collaboration and bridges the gap between high-energy physics, regulators and exchanges through co-creation and applying research findings in practice.
Objective
IMS Group aims to jointly tackle issues and challenges related to financial market surveillance. Academic research and breakthroughs are combined with expert knowledge from the industry. This allows, among others, for creating consistency in regulation, definitions and interpretations of the law.
Members
Exchanges and regulators from the Netherlands, Germany, France, Switzerland, Italy, United Kingdom, Norway, United States and the European Union are members of IMS Group.
Get in touch
To apply as a future partner and for media enquiries please contact highlo-info@cern.ch.