Robots Could Take Over the Bond Trading Space
This article was originally published on ETFTrends.com.
AllianceBernstein Holding LP introduced a robot with the capability of executing corporate-bond trades directly with bots at dealer counter parties. The firm debuted the system in August and completed three trades with similar digital assistants at other firms—Citigroup Inc., Morgan Stanley and Royal Bank of Canada.
“We’ve taken a traditional human-to-human interaction and augmented it to allow a machine to meet another machine,” said Maryanne Richter, global head of credit electronic trading strategy at Morgan Stanley in New York.
It’s a trend that will certainly persist as more companies look to integrate artificial intelligence into their core businesses irrespective of sector.
Per a Bloomberg report, “automation is making inroads on trading desks, such as at UBS Group AG and HSBC Holdings Plc, where robots are making bond sales more efficient. More than 40% of capital market participants that took part in a Greenwich Associates survey earlier this year said that their firms are using AI for trading. Another 17% said they will introduce it within the next two years.”
“Machines are helping us to make smarter decisions and be more efficient,” said James Switzer, global head of fixed-income trading at AllianceBerstein. “I guess we could look out 5 or 10 years and start anticipating what would happen, but right now they aren’t replacing traders, they’re really just helping us trade.”
Investors can look to capitalize on disruptive tech options in 2019 and beyond that–one of those being the ARK Innovation ETF (ARKK) . ARKK is an actively-managed fund that invests in domestic and foreign equity securities of companies that are relevant to the fund’s investment theme of disruptive innovation.
Disruptive technology is not relegated to certain sectors as it will permeate into all industries in some form or fashion. For example, augmented reality is technology comprised of digital images superimposed over the real world, and its use is primed to drive industry growth–industries like real estate and manufacturing are already putting the technology to use in a variety of ways.
Another fund worth looking at is the the AI-Powered International Equity ETF (AIIQ) . Under the hood, the fund runs on the EquBot Model: a proprietary algorithm with the use of IBM’s Watson. The model analyzes and compares a multitude of data points and international companies on a daily basis to find and optimize portfolio exposures.
AI continues to disrupt the investment management space, prompting many asset managers and investors to rethink the way they invest, research and develop portfolio construction methodologies. EquBot recognized this need for advancement and broke the mold by pioneering a new method combining AI with ETFs.
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