January 2014: Do Algorithms Dream of Super-Fast Sheep?
![victor-anderson-portrait victor-anderson-portrait](/sites/default/files/styles/landscape_750_463/public/import/IMG/912/271912/victor-anderson-portrait.jpg.webp?h=ec4f65b5&itok=iURTO8hM)
Apologies to those readers who scoff at my somewhat obvious play on the title of Philip K. Dick’s Do Androids Dream of Electric Sheep?, published in 1968 and which served as the premise for one of the finest science-fiction movies ever made: Ridley Scott’s Blade Runner. I’m not especially a fan of sci-fi movies as a genre, but few works come as close to cinematic perfection as does Blade Runner, which broods from one low-lit, rainy scene to another, set against Vangelis’ sublime soundtrack, and culminating in Rutger Hauer’s partially ad-libbed and now iconic “Tears in the Rain” monologue. Yes, I’m a big fan.
But there’s more to my rhetorical question than simply conveying my appreciation of Blade Runner. Since their introduction to the capital markets more than a decade ago, algorithms have been evolving in terms of their sophistication, from basic computer programs designed to fire buy and sell orders into the marketplace when the optimum conditions occur, to entities that possess a certain artificial intelligence that allows them to undertake far more than merely financial firms’ donkey work.
Now, algorithms have the ability to “learn” from past “experience,” intentionally routing orders to specific destinations to obtain the most advantageous and likely fills. While this behavior is far from anything approaching a consciousness and the ability to genuinely make their own decisions based on something other than programmed inputs, surely that time will come sooner or later.
In the meantime, the capital markets remain awash with hundreds of thousands of algorithms watching and waiting for their opportunities to strike. While that characterization might sound a little sinister—and to those commentators who point the finger of blame at rogue algorithms responsible for fiascos such as the Flash Crash, I’m sure it does—it’s important to remember that as intelligent as they are, they are really only the coded manifestations of quants’ calculations, designed to carry out their work in a logical and consistent manner. The fact that algorithms’ behavior is closely tied to many of the most serious technology glitches to have occurred in the last five years is irrefutable. But if they could defend themselves, they’d be quick to argue that even the rogues among them are doing only what their human masters have commanded, and no more.
And so, while we might still be some way off from witnessing the introduction of genuinely intelligent algorithms that possess an artificial consciousness, it doesn’t hurt to speculate about what they might end up dreaming about in the early hours when their minders have left the office.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Emerging Technologies
Ace high or busted flush? Digital Asset’s mixed fortunes mirror DLT adversity
The vendor hoped to remodel post-trade using blockchain technology—and it still might—but its bumpy progress raises questions over the future of DLT in finance.
AI could cut time for money laundering checks by 99%
Leading crypto exchange rolling out large language model for enhanced due diligence checks.
Standard Chartered keeps faith with quantum experimentation
The bank is aiming to future-proof itself with the ability to adopt new technology at an early stage.
Waters Wrap: CME, Google and the pursuit of ultra-low-latency trading
CME Group and Google have announced Aurora, Illinois, as the location for the exchange’s new co-location facility. Anthony explains why this is more than just the next phase of the two companies’ originally announced project.
This Week: Genesis/Interop.io; S&P Global; Finos/OS-Climate and more
A summary of the latest financial technology news.
GenAI: US Fed reveals its five use cases
Internal sandbox used to assess viability and risks; coding and content generation on the agenda.
Natixis refines in-house interoperability model
The French asset manager has refined its canonical data model over the last decade, as the interoperability movement continues to evolve.
UK asset manager: AI in macro trading ‘very overblown’; useful for nowcasting
The managing partner of Fulcrum Asset Management said that the firm has been developing nowcasting tools that even central banks have consulted on.