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Publication Detail
Algorithms in future capital markets: A survey on AI, ML and associated algorithms in capital markets
  • Publication Type:
    Conference
  • Authors:
    Koshiyama A, Firoozye N, Treleaven P
  • Publisher:
    ACM
  • Publication date:
    15/10/2020
  • Published proceedings:
    ICAIF 2020 - 1st ACM International Conference on AI in Finance
  • ISBN-13:
    9781450375849
  • Status:
    Published
  • Name of conference:
    ICAIF '20: ACM International Conference on AI in Finance
Abstract
This paper reviews Artificial Intelligence (AI), Machine Learning (ML) and associated algorithms in future Capital Markets. New AI algorithms are constantly emerging, with each 'strain' mimicking a new form of human learning, reasoning, knowledge, and decisionmaking. The current main disrupting forms of learning include Deep Learning, Adversarial Learning, Transfer and Meta Learning. Albeit these modes of learning have been in the AI/ML field more than a decade, they now are more applicable due to the availability of data, computing power and infrastructure. These forms of learning have produced new models (e.g., Long Short-Term Memory, Generative Adversarial Networks) and leverage important applications (e.g., Natural Language Processing, Adversarial Examples, Deep Fakes, etc.). These new models and applications will drive changes in future Capital Markets, so it is important to understand their computational strengths and weaknesses. Since ML algorithms effectively self-program and evolve dynamically, financial institutions and regulators are becoming increasingly concerned with ensuring there remains a modicum of human control, focusing on Algorithmic Interpretability/Explainability, Robustness and Legality. For example, the concern is that, in the future, an ecology of trading algorithms across different institutions may 'conspire' and become unintentionally fraudulent (cf. LIBOR) or subject to subversion through compromised datasets (e.g. Microsoft Tay). New and unique forms of systemic risks can emerge, potentially coming from excessive algorithmic complexity. The contribution of this paper is to review AI, ML and associated algorithms, their computational strengths and weaknesses, and discuss their future impact on the Capital Markets.
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