Prophecy: Wall St ruled by machine learning

Highlights from this article:

Companies have cut personnel and other expenses as revenue stagnates amid post-financial crisis regulations, low interest rates and choppy markets. Combined with the advance of electronic trading — which dominates cash equities and is gaining ground in fixed-income businesses like rates and currencies — Wall Street’s ranks may shrink as fewer people are needed to bring clients onto a firm’s systems, execute sales, settle and reconcile transactions and monitor risk and compliance.

“It’s less aggregate number of people, and a substantially different skill set,” Jared Moon, the report’s lead author, said in an interview. “You need more engineers and big-data scientists and these kinds of folks, and less pure operators. The skill set is different, the way of operating is different. It’s not an overnight shift, but a shift over time.”

Machine learning, which uses algorithms that can learn and make predictions from data, could be used to automate trade reconciliation between counterparties, Moon said. In another instance, some strategists and quants might be replaced with analytics that let clients and salespeople value structured credit products or build structured equity products, according to the report. Blockchain, or distributed ledger, technology could help speed trade settlement.

http://www.bloomberg.com/news/articles/2015-10-28/mckinsey-s-trading-prophecy-is-a-wall-street-ruled-by-machines-igar2kq4

Thanks to the NYC Contact for sending

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