THE FUTURE OF MARKET INFRASTRUCTURE:

THE RISE OF THE MACHINES

 
10 years ago, the ‘Rise of the Machines’ (i.e. the introduction of high frequency trading (HFT) algorithms and AI) completely altered the terrain of what we call the capital markets.
 

MARKET INFRASTRUCTURE

Before the machines, markets were a place that humans with roughly equal information and reflexes set the prices of financial assets by buying and selling. After the machines took over, markets became dominated, in terms of volume, liquidity and pricing, by machines, artificial intelligence (AI), and algorithms that operate in time frames of a millionth of a second. We will explore these impacts and future developments of technology in today’s and tomorrow’s capital markets.

Not only are today’s markets something the human traders of a generation ago would fail to recognise, but they are no longer a place where human actions of any sort have much of a remaining role. The digitalization of the workplace has provided organisations with a brand new set of options for getting work completed more efficiently. It is time to move beyond alarmist rhetoric about market automation and to now consider how human-machine collaboration can deliver a higher level of operational productivity. The question to ask is not how many finance jobs will be replaced by artificial intelligence (AI) and robotics, but how work can be reconfigured in order to achieve the optimal integration of talent and machines. From liquidity improvements, to big data, settlement technology, and blockchain – we are now in a new wave of automation, AI in the capital markets is here to stay.

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Disclaimer

ISDA® is a registered trademark of the International Swaps and Derivatives Association, Inc., and Storm-7 Consulting Limited is neither sponsored by nor affiliated with the International Swaps and Derivatives Association, Inc. (ISDA), and the public is hereby informed that Storm-7 Consulting Limited holds no commercial, private, or other relationship with ISDA.