ROLE OF TECHNICAL ADVANCEMENTS IN IMPROVING MARKET EFFICIENCY WITH SPECIAL REFRENCE TO AI TRADING

The integration of Artificial Intelligence (AI) into modern trading systems has revolutionized the global financial landscape, significantly improving market efficiency. This study explores how technical advancements—particularly AI tools like algorithmic trading, high-frequency trading (HFT), and predictive analytics—enhance key components of market performance such as trade execution, price discovery, and liquidity. The research adopts a mixed-method approach, including primary survey responses from 100 participants (investors, traders, and fintech professionals), and secondary analysis from credible sources including Bloomberg and IMF. Statistical tools like regression, correlation, and chi-square tests were used for analysis. The findings suggest that AI-driven systems reduce execution time by up to 35%, enhance price accuracy, and increase market liquidity, although they may also trigger short-term volatility. Despite risks such as lack of transparency and algorithmic errors, the study indicates a strong link between perceived benefits and recognized risks of AI trading. The research underscores the importance of regulatory oversight and recommends adopting Explainable AI (XAI) and global compliance standards. The results contribute valuable insights for policymakers, traders, and financial institutions aiming to optimize AI implementation for improved market outcomes.