Fast-Converging and Trustworthy Federated Learning Framework for Privacy-Preserving Stock Price Modeling

Stock price modeling under privacy constraints presents a unique challenge at the intersection of computational economics and machine learning. Financial institutions and brokerage firms hold valuable yet sensitive data that cannot be centrally aggregated due to privacy laws and competitive concerns. To address this issue, we propose a novel Fast-Converging Federated Learning (FCFL) framework that enables decentralized and privacy-preserving stock price modeling. FCFL employs a dual-stage adaptive optimization strategy that dynamically tunes local learning rates and aggregation weights based on inter-client gradient divergence, accelerating convergence in heterogeneous financial environments. The framework integrates secure aggregation and differential privacy mechanisms to prevent information leakage during communication while maintaining model fidelity. Experimental results on multi-institutional stock datasets demonstrate that FCFL achieves up to 30% faster convergence and 2.5% lower prediction error compared to conventional federated averaging approaches, while guaranteeing strong ε-differential privacy. Theoretical analysis further proves that the framework attains sublinear convergence in O(logT) communication rounds under non-IID data distributions. This study provides a new direction for collaborative financial modeling, balancing efficiency, accuracy, and privacy in real-world economic systems.

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Publication Details

Journal
Electronics
Published
2025-11-12
DOI
https://doi.org/10.3390/electronics14224405
Primary Topic
Stock Market Forecasting Methods
Type
article
Field-Weighted Citation Impact
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article

Fast-Converging and Trustworthy Federated Learning Framework for Privacy-Preserving Stock Price Modeling

Ziyang Liu, Ke Yan, Qian Wu, Yang Qiu et al.
Electronics
Stock Market Forecasting Methods
article

Fast-Converging and Trustworthy Federated Learning Framework for Privacy-Preserving Stock Price Modeling

Ziyang Liu, Ke Yan, Qian Wu, Yang Qiu, Zilong Hou
article en

Abstract

Stock price modeling under privacy constraints presents a unique challenge at the intersection of computational economics and machine learning. Financial institutions and brokerage firms hold valuable yet sensitive data that cannot be centrally aggregated due to privacy laws and competitive concerns. To address this issue, we propose a novel Fast-Converging Federated Learning (FCFL) framework that enables decentralized and privacy-preserving stock price modeling. FCFL employs a dual-stage adaptive optimization strategy that dynamically tunes local learning rates and aggregation weights based on inter-client gradient divergence, accelerating convergence in heterogeneous financial environments. The framework integrates secure aggregation and differential privacy mechanisms to prevent information leakage during communication while maintaining model fidelity. Experimental results on multi-institutional stock datasets demonstrate that FCFL achieves up to 30% faster convergence and 2.5% lower prediction error compared to conventional federated averaging approaches, while guaranteeing strong ε-differential privacy. Theoretical analysis further proves that the framework attains sublinear convergence in O(logT) communication rounds under non-IID data distributions. This study provides a new direction for collaborative financial modeling, balancing efficiency, accuracy, and privacy in real-world economic systems.

ElectronicsVol. 14(22)
Beijing Institute of Technology (CN), China Association for Science and Technology (CN), Asia Pacific Institute of Management (IN)
Openalex Percentile: Top 60%
Stock Market Forecasting Methods
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