Digital Assets And AI Poised To Reshape Trading
According to the latest Trader Survey by the Swiss Stock Exchange, digital assets and AI are poised to reshape the future of trading.
A recent SIX survey of participants operating on the Swiss Stock Exchange revealed enthusiasm for trading digital assets; almost two-thirds state growing interest from clients to trade digital assets. When asked about their long-term outlook for trading digital assets and crypto products, an even higher majority of traders, 80%, believe that demand will increase. When considering the impact of trading digital assets more broadly, many feel it will streamline the trading and settlement process and reduce overall trading costs.
Tony Shaw, Executive Director, London Office and Head Sales UK & Ireland in the Business Unit Securities & Exchanges at SIX, commented: “The Swiss Stock Exchange is already making significant headway in digital assets, as the world’s leading regulated marketplace to trade products with crypto-currencies as underlyings. SIX is also currently building SIX Digital Exchange, a fully integrated issuance, trading, settlement and custody infrastructure for digital assets. We are making history innovating in this space and expect many of our clients will be too, by being able to access and offer unique products and services.”
Artificial Intelligence to Reshape Trading
When asked about the impact of Artificial Intelligence (AI) on the future of trading, almost two thirds of traders believe it will create more trading opportunities for the traditional equities business. Two out of three traders also expect AI to reduce the cost of trading, something the Swiss Stock Exchange has constantly provided to its members. However, an even higher majority of 72% thinks that AI will create more volatile market conditions.
Tony Shaw, Director London Office and Head Sales UK & Ireland, Securities & Exchanges at SIX, added: “What really stands out among the many fascinating elements of this research is the sentiment amongst traders on Artificial Intelligence. Innovation in this space is going to be a key driver helping our industry become more effective at withstanding future risks and challenges presented by the market. Exchanges such as ours are currently looking at various ways it can serve to benefit clients across the entire value chain from trading to post-trade. However, it is still relatively new technology and it so it is only natural for people to be cautious about it.”
Traders Optimistic About Shorter Trading Hours
When asked about the reduction of trading hours, a majority of traders feel the move would create a number of operational benefits, including encouraging more trading liquidity (36% of respondents). Less than one-tenth of survey participants (6%) thought shorter trading periods would drive up the cost of trading.
These responses were captured in light of public consultations made by the UK Investment Association. The industry body, which represents City firms with GBP 7.7tn in assets under management, proposed to cut stock market trading from 8.5 to 6.5 hours in a bid to make work more accessible to women and working parents.
Tweet to Trade: Modern Business
Looking at the impact of unconventional political activity on trading behaviour, four out of five traders said their strategies are at least to some extent influenced by Donald Trumps tweets. Unsurprisingly, three out of four traders think that the US election will drive trading activity in 2020 (74%), while two out of three believe the threat of trade wars will be a factor (65%) and more than half expect a global recession (58%). Interestingly, Brexit was identified only by 39% as a factor driving their trading activity.
Following the EU decision not to grant Switzerland further equivalency, the smooth transition of trading volumes to the Swiss Stock Exchange is reflected in 51% of traders who stated that it hasn’t impacted their exposure to Swiss equities at all.
When asked for their three-year outlook on their function, 42% expect a stable environment. And while there are slightly more who expect headcount cutbacks than new hirings (15% vs 12%), those that expect business growth are outnumbering those that expect a slowdown (18% vs 14%).
SIX has conducted the trader survey in Q4 2019, with 126 respondents from across Europe, of which 66% traded in shares, 13% in Fixed Income, 13% in Structured Products and 5% in ETFs/ETPs or other products. The Swiss Stock Exchange has already conducted the trader survey in 2018 and 2017, focusing on MiFID II, passive investing and regulation.
The bank can access data science, artificial intelligence and machine learning for new products.
AiPEX with Watson simulates a team of analysts and traders to identify potential investments.
Machine learning models systematically scan newly arriving, anonymized data to identify anomalies.
The Cobalt programme launched in 2018 to help fintechs collaborate with the asset manager.
Users with different skill levels will be able to undertake machine learning and advanced analytics.