September 2014: Change Is the Only Constant

I’m now into my 14th year of covering the financial services technology industry. A lot of change has come about during that time: We have seen financial institutions and technology firms come and go; a staggeringly large number of jobs—both technology related and revenue generating—have simply disappeared, primarily in the wake of the global financial crisis; and we’ve witnessed the introduction of an unprecedented amount of regulation, refining and bolstering the market structure and governing the way market participants are required to conduct themselves if they want to be part of this ever-changing industry. Whether all that change is a good or a bad thing is a moot point—it has come about for a variety of reasons, and the only constant we can be sure of is that there is a whole lot more change coming down the pike.
It doesn’t take a futurist to predict that technology will play a pivotal role and touch almost every business process of every capital markets firm at some point. The logical conclusion is that capital markets firms will turn to machines to manage every conceivable aspect of their day-to-day business, while humans, like airline pilots, will be on hand to take care of emergencies, take-offs and landings. Thankfully that time is still a long way off, but as James Rundle’s feature illustrates, more than a smattering of firms have adopted machine learning, underpinned by various artificial intelligence (AI) technologies, to varying degrees. The gist of the feature deals with the development of a new generation of algorithms, specifically designed to learn from past “experience” and crucially amend their “decision-making processes,” ensuring that in the event that similar scenarios arise, the most advantageous action is automatically taken.
One of the drawbacks associated with “dumb” first-generation algorithms is their relatively short lifespan—generally two to three weeks—requiring their various parameters to be tweaked in order for them to remain relevant to the market in which they operate. In contrast, algorithms possessing AI are able to adjust themselves on the fly, based on their market observations and interactions, thus ensuring that they’re constantly at the top of their game. This really is the era of “set and forget.”
An added benefit offered by AI-enabled algorithms is their ability to be assigned to various roles within the firm. For example, some might have execution tasks while other might be assigned, say, monitoring remits, specifically looking to identify instances of market abuse or where execution algorithms are acting “strangely.” Given their ability to monitor extraordinarily large numbers of activities on a near-real-time basis, this would mean that potentially loss-making instances could be all but eradicated. And that can only be a good thing.
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: https://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.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
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. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Trading Tech
Academic warns of systemic risk from AI-powered trading
Strategies generated by LLMs exhibit “very strange, correlated trading behavior”, says Lopez Lira.
The Model Context Protocol brings agents to life—along with risk
Waters Wrap: From chat to infrastructure modernization, Anthropic’s MCP offers a ‘bridge’ to agentic AI, but its early days may prove disillusioning.
NZX outlines plans to bolster fast-growing dark pool
Since launching one year ago, NZX’s dark book has 5.5% of the exchange’s total turnover, and price improvement per trade on average is 11 basis points, but the exchange has more in store.
Agentic AI comes to Bloomberg Terminal via Anthropic protocol
The data giant’s ubiquitous terminal has been slowly opening up for years, but its latest enhancement represents a forward leap in what CTO Shawn Edwards calls, “the way we should talk to the world.”
M&G Investments braves cost headwinds in pursuit of AI
The UK asset manager’s AI ambitions started with the creation of a data lake to ensure high-quality data is being fed into models.
Asic probe piles pressure on ASX to deliver Chess replacement
But market insiders think late intervention by regulators could even slow down implementation.
Stakes raised for UK bond, EU derivatives tapes after Ediphy clinches win
The pressure is on for TransFICC, Etrading, Finbourne, and Propellant Digital, who are still vying to provide the UK’s fixed income consolidated tape after Esma awarded the EU’s tape to Ediphy and its partners.
Exchange M&A, US moratorium on AI regs dashed, Citi’s “fat-finger”-killer, and more
The Waters Cooler: Euronext-Athex, SIX-Aquis, Blue Ocean-Eventus, EDM Association, and more in this week’s news roundup.