More than half the respondents to a JP Morgan survey of 835 institutional and professional traders said AI and ML would have the most influence on trading in the next three years, up from a quarter in 2022.
The survey showed that while there is still interest in blockchain, the appeal of crypto has waned. Some 72% of institutional traders reportedly “have no plans to trade crypto”, while just 14% plan to trade cryptocurrencies within five years.
“Blockchain in terms of settling and managing trades is going to be very interesting. It’s a little further down the line. But in the same way that AI and machine learning weren’t quite there a couple years ago, blockchain technology is poised to move up the ladder.”
Scott Wacker, Head of FICC e-commerce sales, JP Morgan
“Machine learning is already having a big impact on the trading landscape and that will only grow with the increase in data that electronic trading brings,” said Scott Wacker, Head of FICC e-commerce sales, JP Morgan. “It is being applied to more products across the trading industry, and can be used for a range of purposes to optimise outcomes for clients. Blockchain in terms of settling and managing trades is going to be very interesting. It’s a little further down the line. But in the same way that AI and machine learning weren’t quite there a couple years ago, blockchain technology is poised to move up the ladder.”
But crypto may continue to be popular with retail investors, who now account for 23% of trading volume, the highest percentage ever. The years 2020 and 2021 saw a surge in retail investor activity, caused by the Covid-19 lockdowns and facilitated by easy-to-use trading apps. This was followed by a slump in the tech stock markets, leading to mass layoffs in 2022.
“We’re also seeing asset managers using data in a more dynamic way, using AI-enhanced technologies to assess and improve how they’re executing trades,” said Waker.
Blockchain and distributed ledger technology (DLT) was found to have the third-largest impact on trading after AI and Application Programming Interface (API) integration.
