International Journal of Science, Engineering and TechnologyAuthors: Dr.Rashi Malik, Shreya Sehgal, Kashwin, Aakash
Abstract: Recent advancements in Artificial Intelligence (AI) have significantly transformed the landscape of global financial markets through the increasing integration of AI-driven algorithmic trading. This study explores how such technological developments affect market efficiency and volatility across major exchanges worldwide. AI algorithms, capable of executing trades within milliseconds, have revolutionized the speed and accuracy of market operations. The research evaluates to what degree these innovations enhance market efficiency—through improved price discovery, narrower bid-ask spreads, and increased liquidity—while also assessing their potential to heighten volatility during times of economic uncertainty. Using a quantitative research approach, this study applies time-series analysis and regression modeling based on data from major global exchanges, including the NYSE, NASDAQ, and LSE. Key variables include multiple indicators of market efficiency and several measures of volatility. Findings indicate that AI-based algorithmic trading supports market efficiency by accelerating information assimilation and improving price accuracy. However, the study also reveals that these systems may induce short-term volatility spikes under specific conditions due to noise and rapid transaction frequencies.
