No More Fat Fingers: JPMorgan develops robot to execute trades

Fat Fingers: A thing of the Past

JPMorgan will soon be using the first-of-its-kind robot to execute trades across its global equities algorithms business after a European trial of the bank’s new artificial intelligence (AI) programme showed it was much more efficient than traditional methods of buying and selling.

The AI — known internally as LOXM — has been used in the bank’s European equities algorithms business since the first quarter and will be launched across Asia and the US in the fourth quarter, Daniel Ciment, JPMorgan’s head of global equities electronic trading, told the Financial Times. Full Story

When we first started to talk about AI and robots, several subscribers thought we were full of it or joking. The trend changed, and that is why we started to discuss this topic. And since then the number of companies embracing AI has continued to surge. This program can work faster than any human, and it keeps learning; it also never forgets The main benefit is that banks will save millions and possibly billions when they replace these highly paid carbon-based elements (humans) with AI. Hedge fund managers and mutual fund managers should start to worry. There is nothing that 90% of these individuals do that AI could not do better.

AI & Robots Will Completely Eliminate the Fat Fingers Problem

Prices for financial services will suddenly start dropping at an alarming rate. All these overpaid fund managers will have nowhere to turn to; their skills will become obsolete overnight. JP Morgan is the 1^st bank to do this, and it’s the World’s largest FX interbank dealer by volume; imagine the chaos that could be unleashed if hackers breached the system. Other banks will soon follow suit; we can expect many flashes crashes in the years to come. Oh, by the way, the banks already know this will happen and will purposely do nothing to put in all the necessary measures to prevent this from occurring. Why? It provides them with a “me culpa” type situation. For example, blame the hackers for the crash, and it provides them with a chance to buy top assets for next to nothing. Remember the housing bubble was only possible because of “liar loans”. The banks knew they were playing with fire and that they were fuelling a bubble, but nothing was done to prevent it. Did the major banks lose any real money? You already know the answer so we don’t need to answer that question.

Worst Fat Fingers Trades

After a corporate golf day and a few too many drinks, oil trader Steve Perkins decided to place some trades from his laptop at home. Over the course of the next 24 hours, he ordered seven million barrels of crude oil for around £345 million, representing around 69 per cent of global trading in oil at that point – and saddled his employer with a rather large bill. Perkins was banned from trading for five years by the FSA and enrolled on an alcohol rehabilitation programme.

Cost: £7.3 million and one trading career

. An employee at South Korea’s Samsung Securities mistakenly allocated 2.8 billion shares to the company’s other employees instead of giving them a dividend of 2.8 billion won as intended. This was more than 30 times the number of shares Samsung actually had available, but this did not stop some members of staff from promptly cashing in their windfall of “ghost” shares, making around 10 million won each.

The mistake led to an investigation into Samsung Securities and into trading in South Korea as a whole. The company’s value plunged by more than 10 per cent, it was publicly criticised by South Korea’s national pension fund, an important client, and it saw the scandal become the subject of a petition to South Korea’s president.

Cost: Could have been as much as $100 billion, but only some shares were sold. Full Story

Fat Fingers: A thing of the Past

AI & Robots Will Completely Eliminate the Fat Fingers Problem

Worst Fat Fingers Trades

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