AiX Aims For 75% of IBD Revenues
Jos Evans, founder and chief executive of AiX, said the artificial intelligence broker is aiming to disrupt the interdealer broker market and capture three-quarters of revenues within five years.
He told Markets Media: “We are aiming for between 5% and 10% market share in our first year. After five years we are aiming for 75% of revenues.”
AiX has estimated that the largest three IBDs had annual revenues of more than $6.5bn (€5.6bn) last year.
Evans previously worked in interdealer brokers for a decade and started Red Ops, his own IDB business for commodity options, which was sold in 2012.
“There is a lot of friction in interdealer broking and the current model is unfit for purpose,” he added. “Manual processes make costs too high and automation can reduce commissions by between 50% and 95%.”
Since selling Red Ops, Evans has been investing in artificial intelligence and big data. He began investigating the possibility of using AI in the IBD market in 2016 and began to develop AiX last year.
AiX communicates with multiple traders for the best price, allows for tailored bidding, and feeds real time information when conditions fluctuate, all in a fraction of the time it would take when dealing with traditional brokers. A chatbot with built-in voice capabilities will replace ‘boxes’ used for voice trades with an Alexa-style device that traders will be able to consult for quotes while AiX will also provide standard chat functions over any instant messaging platform.
Evans said: “A key metric is how liquidity is being accessed for trading and AiX will always cover the entire market.”
The artificial intelligence is powered by Rainbird, the first auditable cognitive reasoning engine, and can emulate human decision-making and natural language to handle thousands of conversations simultaneously, both with traders and systems. Every trade then has a complete regulatory audit trail of immutably written onto a permissioned blockchain.
This month AiX announced today it had completed the first trade brokered by a chatbot using artificial intelligence technology instead of the traditional human brokerage model – a cryptocurrency transaction between Rockwell Capital Management and TLDR Capital.
Jon Knipper, partner at TLDR Capital, said in a statement: “This is a historic moment for market making. Not only for crypto assets, but with the potential to change traditional equity and fixed income markets.”
Through using machine learning AiX will discover the best and most relevant deals for traders and over time will anticipate decision making.
Consultancy Oliver Wyman said in a report this year that the deployment of machine learning in capital markets is still in a nascent stage, but it is becoming clear that it will have a large long-term impact.
“It is the very ability of machine learning to make complex decisions that will enable firms to improve their revenues, and the reason why the technology may ultimately become widespread. Once firms tap into that potential, asset management and trading businesses may not look anything like they are today,” added Oliver Wyman. “Machines will play a much bigger role in supporting traditional capital markets roles, such as traders, portfolio managers, and equity analysts.”
The report continued that machine-learning models are being deployed on trader’s desktops to analyze everything known about a client’s trading history, potential future needs, and customer-relationship strategies before the trader even picks up the phone to take an incoming call or reaches out to generate business. “The aim of these investments is to increase trader productivity and optimize client relationship management,” added Oliver Wyman.
AiX is currently finalising its series A investment round and Evans said the firm is backed by a Wall Street brokerage that has successfully navigated markets for 25 years.
The platform is slated to launch in September this year. It has been developed for all futures and options but should cover all products a year after launching.
Evans added: “From our conversations in the market, the reception has been unanimously positive.”
Technology makes illiquid pricing more science than art.
Financial services looks to productivity-based measurements and initiatives.
Fintech exec Stu Taylor notes demand for 'AI as a Service'.
IBM dips its toe into algorithmic trading.
Wall Street to relax its hyper-focus on AI-powered apps.