AI Case Study

JPMorgan's new AI program for automatically executing equity trades in real-time out-performed current manual and automated methods in trial

JPMorgan has trialled its AI program LOXM which automates equity trading in real-time, optimising speed and price for vast quantities without causing market disruption.

Industry

Financial Services

Investment Banking And Investment Services

Project Overview

"The bank has been testing its AI program, LOXM, since Q1 2017 in Europe, and plans to roll it out across its Asian and US operations in Q4 after trials proved successful. It is being applied directly to trade execution. JPMorgan claims it is the first major bank to apply AI technology to real-time trades, as opposed to applying the technology only to post-trade allocations like many of its peers. Although LOXM will be applied to trade automation initially, it may later be trained to thoroughly familiarize itself with individual end clients to take their behavior and reactions into account when executing a trade, says Daniel Ciment, head of global equities electronic trading at JPMorgan. He adds that delegating such customization to a machine means personalization can be achieved more efficiently and at a larger scale."

Reported Results

"LOXM delivered significant savings and far outperformed both manual and automated existing trading methods in trials, according to JPMorgan."

Technology

"LOXM was trained on billions of historic transactions to enable it to execute equities trades at maximum speed and at optimal prices, and to offload large equity stakes without causing market swings."

Function

Operations

Trading

Background

"Financial institutions (FIs) are increasingly looking at how to deploy AI to reduce their operational costs as the technology becomes increasingly adept at crunching vast amounts of data and learning from its experiences. And as more of these players reduce their outlays, the pressure on their peers to do the same is intensifying. That a player as powerful as JPMorgan — the world's biggest investment bank in revenue terms — has committed so heavily to the technology will now make the situation even more critical for its rivals."

Benefits

Data

Historic transactions