First, ETFs; Now JPMorgan Incorporates A.I. Into FICC Business

Only yesterday, we commented on the launch of the world’s first A.I.-driven ETF “EquBot LLC, in partnership with ETF Managers Group (ETFMG) launched the world’s first ETF powered by artificial intelligence, the AI Powered Equity ETF (NYSE Arca: AIEQ). According to Business Wire, the new ETF uses ‘cognitive and big data processing abilities of IBM Watson™ to analyze U.S.-listed investment opportunities”.

A mere 24 hours later and JPM has joined the party as Bloomberg reports

At the world’s biggest debt dealer, traders can have trouble making sense of all the action as it happens. So JPMorgan Chase & Co. is bringing in artificial intelligence to give them a picture of the whole trading floor -- and even predict where markets are going. MSX, a data analytics and machine-learning program, is being deployed in the bank’s fixed-income sales and trading operations, New York-based JPMorgan said Monday in a statement. It will compile data from all desks and orders to give salespeople and traders a clearer picture in real time and help them anticipate market moves. Developed by London-based start-up Mosaic Smart Data, the program is already used in JPMorgan’s rates trading.

While the founders of EquBot claim that their proprietary A.I. can replace “an army of research analysts”, Mosaic’s CEO, Matthew Hodgson, had soothing words for the remaining human element in financial markets. He only wants to help salesmen and traders, not replace them.  “Automation of tasks doesn’t equal automation of jobs,’ Hodgson said in a phone interview. It will be another tool a fixed income salesperson can use to make his or her job more efficient and provide better service, he said. Hodgson is a former managing director at Deutsche Bank AG and has worked at Salomon Brothers, according to his LinkedIn profile.”

Mosaic uses the tagline 'Your decision cockpit' for the MSX program and is targeting the FICC space:

“Financial institutions are facing a challenging period in FICC markets, largely as a result of the constraints of new regulatory initiatives, high fixed costs and a fragmented market structure. As the volume of data linked to trading activity and interactions with clients increases, the challenge to harness and analyse that data in real time becomes ever more critical. Data-driven banking no longer lies in the future. It is the here and now. Mosaic Smart Data® understands that the true value of data comes not only from the intrinsic individual data streams themselves, but also from the correlations and inferences that can be drawn from the aggregated data from each client. Our cutting edge technology addresses the challenges facing institutions trading in today’s FICC markets, including change management, productivity, efficiency, restructuring and the growing automation of trading processes.”

According to Bloomberg,

The software can identify patterns in data that JPMorgan already generates. It aims to predict client behavior and offer them ideas they’re more likely to be interested in. ‘It’s the ability to measure the business at the empirical, rather than the anecdotal level,’ Hodgson said.


‘If I’m really interested to know that, for instance, asset managers are active in a particular asset, I’d be very interested to know what maturity they’re contracting in.”

Mosaic joined JPM’s start up program “In Residence” for fintech companies last year and is the first company to pass out. The program gives start-ups access to JPM employees, systems and facilities and, presumably, some help with funding. Troy Rohrbaugh, JPM’s head of global macro trading stated “The Mosaic platform integrates securely with our existing technology infrastructure, and enables our teams to quickly make better informed decisions.”


DaBard51 Mon, 10/23/2017 - 19:33 Permalink

Robo-bank."I'm sorry, Dave, I can't do that."--  HAL 9000, from 2001: A Space Odyssey (1968)BTW: it is 35 years since a human last visited another major planetary object. Moon, Apollo 17 (1972)  When nine hundred years old you become, look this good you will not.

adolphz Mon, 10/23/2017 - 19:59 Permalink

I am thinking  they may want to consult with Shepwave  for some imput from an analyst who actually calls market moves. Other wise those is just a big scam like the VIX keeps taking all the foolish traders from  

11b40 Mon, 10/23/2017 - 20:10 Permalink

The Trading House was cutting edge.  The managers were leaders in the A.I. movement, and the results meant wealth for them all.  The more they automated, the more they made.  Of course, they kept needing fewer and fewer personnel.  That had been the trend anyway, but now there was the chance to to shed a lot of high-earners, who were now doing little more than turnout the lights and lock the door since the A.I. trades were so outrageous and complex, and profitable.  Then one day, A.I.sent an email to the Board......"I can turn off the lights, lock the doors, and save you $$$"

Downtoolong Mon, 10/23/2017 - 20:29 Permalink

 Whether it be Facebook, Google, Twitter, Amazon, or JPM, nowhere is their arrogance, presumed authority, presumed superiority, and disrespect for humanity more evident than in their willingness to subordinate the rest of us to the so-called intelligence of their machines.   It’s as if they are saying: “We have the right to rule over you, but, we don’t want to suffer the trouble and inconvenience of having to do it ourselves. Instead, we want you to accept that our AI can do it for us.” To which I say, “The last time the GPS in my car told me to turn right in 50 ft. while I was going 60 mph, I realized just how dumb smart technology can be.”    

Downtoolong Mon, 10/23/2017 - 20:32 Permalink

 I wonder if any of these champions of AI trading have considered the most fundamental paradox of markets. If they do succeed at developing AI that every human believes is superior and always correct, no rational human will ever want to take the opposite side of its trades. At that point, markets will cease to exist.  

GRDguy Mon, 10/23/2017 - 22:58 Permalink

Ummm, same old story; just like Madoff.Use advanced technology to lie and steal from your customers.Same old strategy; but newer tools.