Given they predicted just such a move almost a year ago there is no surprise from Colin Lambert and Galen Stops in this week’s podcast over the announcement that Deutsche Boerse is in talks with Refinitiv to buy some or all of its FX assets. So far, so straightforward – however this is In the […]
The European Commission has published an update outlining the next steps for its efforts to build trust in AI and machine learning by creating what it terms “a European approach to artificial intelligence”. The plans have attracted criticism from the Center for Data Innovation, a non-profit research institute.
In 2018 the EC established a High-Level Expert Group (HLEG), which was tasked with creating policy and investment recommendations to help the Commission deal with the technological, ethical, legal and socio-economic challenges that can arise from the broader use of AI. Upon launch, the EC said it wanted to strengthen the EU’s competitiveness in this area.
A new Artificial Intelligence/Machine Learning survey launched by Refinitiv has found that while the use of these techniques is pervasive in the financial community, poor quality data impedes their ability to leverage the advantages.
The survey found that 90% of the c-level executives and data scientists surveyed have already deployed machine learning, while all of the c-level participants said it is core to their business strategy.
On the downside, 43% cite poor quality data as the biggest barrier to adoption followed by a lack of data availability (38%).
Singapore-based absolute return global AI fund Ensemble Capital, has gone live with Numerix’s Oneview Asset Management solution for risk and portfolio management.
Founded by former JP Morgan FX option traders Atsuo Ogaki and Damien Loh, Ensemble Capital uses machine learning and deep learning AI algorithms to analyse market data, forecast moves and trade currency and currency options in order to generate uncorrelated returns to traditional asset classes. Ensemble’s proprietary AI models instil discipline and provide a systematic approach to markets.
BNP Paribas today announces the launch of the BNP Paribas MGI Systematic Currency Alpha Index using artificial intelligence through machine learning. The index, created by BNP Paribas in partnership with Millennium Global Investments (MGI), went live in Q1 2019.MGI provides systematic FX signals to BNP Paribas, determining the long or short exposure to four liquid currency pairs selected to represent the global FX market (USD/GBP, USD/EUR, USD/AUD and USD/JPY). In a statement, the firms say the Index can be considered as a new frontier for investors seeking cross-asset portfolio diversification, as it is enhanced by signals generated by an artificial intelligence model that uses machine learning to identify the dominant factors driving the performance of currency pairs each day.
Scepticism abounds in this week’s In the FICC of It podcast as Colin Lambert and Galen Stops take a look at the latest bank to unveil a digital markets strategy – including all your favourite buzzwords. While Stops believes this is the latest move in what will be a growing trend, our podcasters also wonder whether it’s not really just a rebranding exercise?
They then move into more traditional areas and discuss JP Morgan’s survey on FX market conditions, and while they agree with a lot of the findings, there are one or two areas that raise an eyebrow, not least around internalisation and AI.
AI-generated trading and liquidity are also the forefront as they move on to share their thoughts around the flash crash in Jardine Matheson stock last week in Singapore, including asking the question, what does it mean for market maker programmes and certain order types?
The discussion then moves on to look at the latest FX turnover surveys from the world’s FX committees, with particular attention on three interesting/puzzling (delete as appropriate) elements of the UK report surrounding RMB, NDFs and voice brokers.
The podcast ends on with Lambert praising “the optimism of youth” after Stops highlights what he thinks could be a very important line at the end of the latest document detailing an FX-related fine in the US – in other words, the cynic in him won the day!
The availability of liquidity is the biggest daily issue facing FX traders right now, according to a new survey by JP Morgan.The survey results come from 200 of JP Morgan’s largest Institutional clients, with the majority being FX traders and the rest being rates and commodities traders.In total, 40% of survey respondents cited liquidity availability as the biggest day-to-day issue facing traders in 2019, with 25% instead pointing to efficiency of process, 18% to best execution requirements and 17% to price transparency
At the Profit & Loss conference in Singapore Damien Loh, CIO of Ensemble Capital, talked how AI tools can be applied to FX trading.
Profit & Loss: Artificial intelligence has become a big buzzword in finance. What does this term mean to you and how are you actually using this technology?
Damien Loh: So it’s a very buzzy term, and that’s why we make a distinction by saying that we’re using deep learning. AI can just be a general definition where any process that requires thinking is automated in some way and there are people using the AI catchall buzzword that just have a linear regression in an excel spreadsheet.. And you can tenuously call that AI, but it’s nothing really game changing.
This is a pretty horrible time for CTAs, not only because of the sector’s very visible performance issues, but because it’s even worse than the numbers suggest. After all, the big selling point for CTAs has always been they are a good hedge in falling equity markets – but they clearly have not been this year. It may not be all doom and gloom, however, for using new technologies and techniques they have the opportunity to re-engineer their models to meet the challenges of the modern market structure.
“I have a great idea,” said P&L’s managing editor Colin Lambert. “Let’s record the podcast by the pool…”
Yes, we are back on the road again with this week’s podcast recorded in Hong Kong on the sidelines of the Profit & Loss conference there and thankfully our audio engineers managed to alleviate the worst impact from Lambert’s “clever” suggestion.
So listen in as regular podcasters Lambert and P&L editor Galen Stops are joined by returning guest John Ashworth, CEO of Caplin, who immediately “owns” them by dropping a fantastic Hong Kong fact into the conversation very early.
Topics include a discussion about a very eye-opening chat at the start of the conference which looked at the chaos in Washington DC, the evolution of AI and Fintech and the differing attitudes to crypto markets in Asia and the US.
The podcast also includes Lambert’s observations on some very interesting answers to his questions on the future of the FX swaps market during the liquidity panel, however this week’s edition does come with a warning as it closes out by providing an image that some listeners may find disturbing!