First, ETFs; Now JPMorgan Incorporates A.I. Into FICC Business
Only yesterday, we commented on the launch of the world’s first A.I.-driven ETF “EquBot LLC, in partnership with ETF Managers Group (ETFMG) launched the world’s first ETF powered by artificial intelligence, the AI Powered Equity ETF (NYSE Arca: AIEQ). According to Business Wire, the new ETF uses ‘cognitive and big data processing abilities of IBM Watson™ to analyze U.S.-listed investment opportunities”.
A mere 24 hours later and JPM has joined the party as Bloomberg reports,
At the world’s biggest debt dealer, traders can have trouble making sense of all the action as it happens. So JPMorgan Chase & Co. is bringing in artificial intelligence to give them a picture of the whole trading floor — and even predict where markets are going. MSX, a data analytics and machine-learning program, is being deployed in the bank’s fixed-income sales and trading operations, New York-based JPMorgan said Monday in a statement. It will compile data from all desks and orders to give salespeople and traders a clearer picture in real time and help them anticipate market moves. Developed by London-based start-up Mosaic Smart Data, the program is already used in JPMorgan’s rates trading.
While the founders of EquBot claim that their proprietary A.I. can replace “an army of research analysts”, Mosaic’s CEO, Matthew Hodgson, had soothing words for the remaining human element in financial markets. He only wants to help salesmen and traders, not replace them. “Automation of tasks doesn’t equal automation of jobs,’ Hodgson said in a phone interview. It will be another tool a fixed income salesperson can use to make his or her job more efficient and provide better service, he said. Hodgson is a former managing director at Deutsche Bank AG and has worked at Salomon Brothers, according to his LinkedIn profile.”
Mosaic uses the tagline ‘Your decision cockpit’ for the MSX program and is targeting the FICC space:
“Financial institutions are facing a challenging period in FICC markets, largely as a result of the constraints of new regulatory initiatives, high fixed costs and a fragmented market structure. As the volume of data linked to trading activity and interactions with clients increases, the challenge to harness and analyse that data in real time becomes ever more critical. Data-driven banking no longer lies in the future. It is the here and now. Mosaic Smart Data® understands that the true value of data comes not only from the intrinsic individual data streams themselves, but also from the correlations and inferences that can be drawn from the aggregated data from each client. Our cutting edge technology addresses the challenges facing institutions trading in today’s FICC markets, including change management, productivity, efficiency, restructuring and the growing automation of trading processes.”
According to Bloomberg,
“The software can identify patterns in data that JPMorgan already generates. It aims to predict client behavior and offer them ideas they’re more likely to be interested in. ‘It’s the ability to measure the business at the empirical, rather than the anecdotal level,’ Hodgson said.
‘If I’m really interested to know that, for instance, asset managers are active in a particular asset, I’d be very interested to know what maturity they’re contracting in.”
Mosaic joined JPM’s start up program “In Residence” for fintech companies last year and is the first company to pass out. The program gives start-ups access to JPM employees, systems and facilities and, presumably, some help with funding. Troy Rohrbaugh, JPM’s head of global macro trading stated “The Mosaic platform integrates securely with our existing technology infrastructure, and enables our teams to quickly make better informed decisions.”