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.
Authors
- Ziyang Liu (ORCID: https://orcid.org/0000-0001-5419-1250)
- Ke Yan (ORCID: https://orcid.org/0000-0002-1611-6636)
- Qian Wu (ORCID: https://orcid.org/0000-0002-0558-2500)
- Yang Qiu (ORCID: https://orcid.org/0000-0002-4091-5243)
- Zilong Hou
Institutions
- Beijing Institute of Technology (CN)
- China Association for Science and Technology (CN)
- Asia Pacific Institute of Management (IN)
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
- 0.00