JPMorgan approves global rollout of AI-driven trade execution bot
JPMorgan has given the go-ahead for full deployment of its LOXM artificial intelligence trade execution bot after successful tests earlier this year. The system is expected to go live in Asia and the US in Q4, having been tested in the European equities sector. Driven by machine learning, based on analysis of billions of past trades, LOXM is said to have learned how to deal with a range of issues, including avoiding market price movements by jettisoning large equity stakes. 
Are Artificial Intelligence (AI) programs more efficient than traditional buying and selling methods? JPMorgan is the latest bank to pursue research into this field, developing a first generation bot to execute trades across its global Equities Equities Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling pa Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling pa Read this Term algorithm business. Per the group’s latest trial however, the AI utility known as LOXM was shown to demonstrate improved efficiency over existing means, per an FT report.

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Exactly what this means for the broader equities industry is simply a matter of conjecture at this juncture. Robotic trading or the use of AI rather has long been seen as a natural evolution amongst financial firms. However, humans have retained an integral focus at all major venues even as the industry moves towards more algo-focused trading regimes.

LOXM is in control

JPMorgan had been developing its own AI, LOXM, which was given a trial run for its European equities segment. More specifically, the AI has been live since Q1 2017 with early performance analysis yielding positive returns. The performance has evidently been so successful that the lender is green lighting its launch for Q4 in Asia and the US across its platform.

Indeed, David Fellah of JPMorgan’s European Equity Quant Research team, commented: “Such customisation was previously implemented by humans, but now the AI machine is able to do it on a much larger and more efficient scale.”

Many other lenders have been tinkering with AI capabilities as well, though a Q4 launch would make JPMorgan one of the industry’s first to go live. The move is an endorsement for LOXM, whose central role is to execute client orders with optimized speed at the best price.

Cost efficiency driving innovation

This has been achieved through Machine Learning Machine Learning Machine learning is defined as an application of artificial intelligence (AI) that looks to automatically learn and improve from experience without being explicitly programmed. Machine learning is a rapidly growing field that also focuses on the development of computer programs that can access data and use it learn for themselves.This has many potential benefits for most industries and sectors, including the financial services industry. Machine Learning ExplainedMachine learning can be explained Machine learning is defined as an application of artificial intelligence (AI) that looks to automatically learn and improve from experience without being explicitly programmed. Machine learning is a rapidly growing field that also focuses on the development of computer programs that can access data and use it learn for themselves.This has many potential benefits for most industries and sectors, including the financial services industry. Machine Learning ExplainedMachine learning can be explained Read this Term techniques, i.e. using lessons it has learnt from billions of past trades on a simulated and real-time basis. Consequently, the AI has learned how to effectively reconcile a range of issues, including avoiding market price movements via the jettisoning of large equity stakes.

Ironically, the investments in LOXM as well as other AI initiatives were originally designed to help curtail costs for existing functions at investment banks. While hardly the only pioneer in this field, JPMorgan’s efforts and research appears to be paying early dividends, which can help cut down tremendously on multiple time consuming human-designated tasks, such as client post-trade allocation requests, among others.

A broader industry adoption could also yield a windfall for other banking segments, including gains across automatic hedging, market making, and others.