JPMorgan takes AI use to the next level (JPM)

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August 2, 2017 2:57 PM

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Major financial services (FS) players have long been applying algorithms to make equity trading more efficient. Now, however, JPMorgan says it has developed an artificial intelligence (AI) system to take such automation to new heights.

The bank has been testing its AI program, LOXM, since Q1 2017 in Europe, and plans to roll it out across its Asian and US operations in Q4 after trials proved successful. LOXM was trained on billions of historic transactions to enable it to execute equities trades at maximum speed and at optimal prices, and to offload large equity stakes without causing market swings. LOXM delivered significant savings and far outperformed both manual and automated existing trading methods in trials, according to JPMorgan.

Here is how JPMorgan says LOXM outdoes existing algorithmic trading:

It is being applied directly to trade execution.
It could be applied to client management.

JPMorgan's announcement is further evidence that automation using AI in financial services is inevitable. Financial institutions (FIs) are increasingly looking at how to deploy AI to reduce their operational costs as the technology becomes increasingly adept at crunching vast amounts of data and learning from its experiences. And as more of these players reduce their outlays, the pressure on their peers to do the same is intensifying. That a player as powerful as JPMorgan — the world's biggest investment bank in revenue terms — has committed so heavily to the technology will now make the situation even more critical for its rivals. Moreover, if LOXM does deliver the benefits JPMorgan claims it can, this will not only push FIs to automate using AI, but to do so to higher standards. This means FIs that haven't yet turned their attention to large-scale AI deployment cannot afford to delay much longer.

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