Human traders are now able to gather much better bid prices than ever before thanks to the introduction of artificial intelligence (AI). One of the latest financial institutions to jump on board with this kind of trading room robot technology is Dutch lender ING with its AI tool, Katana.
Katana will help bond traders get better bond prices quicker by using data from thousands of trades. In a recent trial, the AI software managed to cut trading costs by a quarter while producing faster pricing decisions in 90% of all trades. Others that have also introduced AI to their trading floor include UBS and JPMorgan.
However, when it comes to ING’s approach it’s somewhat different to others as instead of replacing traders, it empowers them. “What we use Katana for is to improve the quality of the decisions….our traders make, it’s a performance improvement tool,” said Santiago Braje, global head of credit trading an ING Wholesale Bank.
JPMorgan integrated AI into its trading platform earlier this year when it allowed the robot to carry out some of its equity business trades. USB uses AI to come up with strategies for trading volatility and handles post-trade allocations for the firm.
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While some people are concerned that the introduction of AI in this way will put hundreds if not thousands of people out of work, but Frank Derks, head of ING’s advanced analytics team says that’s not the case just now. “Further ahead in the future, it [AI] will probably have an impact on our workforce [numbers]… It’s not a key focus for ING to go for that goal immediately.”
Already ING has around 250 staff, including machine learning experts and data scientists working on various AI projects across the bank. The bank is confident that with Katana now on board it will win even more business. “These are highly competitive markets,” said Mr. Braje. “Every price that we quote, we are competing with 10 people… We only win if we provide the best price.”
Sometime in the near future Katana may provide quotes directly to clients rather than going through ING’s traders first. “We are in fact already working with a major…asset manager in the Netherlands to develop a tool to tackle a completely different investment problem based on the same principles and on the same platform,” said Braje.
Source FT
