SEC Approves Nasdaq's AI-Powered Order Type

SEC Approves Nasdaq’s AI-Powered Order Type

Time Stamp: September 8, 2023 12:29 PM
SEC Approves Nasdaq's AI-Powered Order Type PlatoBlockchain Data Intelligence. Vertical Search. Ai.

On September 8, 2023, Nasdaq announced that it had
obtained approval from the Securities and Exchange Commission (SEC) to launch Dynamic Midpoint Extended Life Order, an
exchange order type that is powered by Artificial Intelligence (AI ). It is the
first exchange order type that is backed by AI to enhance efficiency.

According to a statement
by the SEC-regulated exchange , the core principle behind Dynamic M-ELO is to
match traders who share longer-term investment horizons, fostering a more
aligned trading environment. What sets the order type apart is its requirement
for both parties involved in a trade to wait briefly before executing the
trade. Here is where the AI comes into play.

Kevin Kennedy, the
Executive Vice President for the North American Trading Services at Nasdaq,
remarked: “Dynamic M-ELO delivers optimal outcomes to market participants
by intelligently adapting to real-time market conditions, which improves
overall execution quality and fill rates. As our clients operate in an
increasingly dynamic market environment, we look forward to partnering and
supporting them.”

Dynamic M-ELO leverages
a sophisticated AI model encompassing over 140 factors that provide real-time
changes to holding periods for participants. This adjustment is reportedly
designed to improve order fill rates and reduce market impact. During testing,
the model showed an average combined volume-weighted improvement of over 30%.

Tal Cohen, the President
of Market Platforms at Nasdaq, emphasized the exchange’s commitment to
responsible innovation in modernizing markets. He stated: “AI-powered
Dynamic M-ELO is a purpose-built solution that encapsulates our ambition to
cultivate the quality of our markets and underscores our commitment to
delivering innovative products and tools that benefit all market participants.”

AI Sweeps Traditional
and Crypto Markets

In addition to its AI-powered
order type, Nasdaq has introduced predictive AI in its US options markets. This
initiative aims to enhance overall efficiency and align strike lists more
effectively with market and client demand across all of Nasdaq’s US options
exchanges.

Nasdaq is not the only
player pivoting towards AI in the stock market. In a recent report by Finance
Magnates, eToro and
Bridgewise partnered to
introduce Fundamental AI, a
stock portfolio with 40 diversified stocks that reportedly offer investors a
chance to outperform the market. The technology encompasses a list of 1,000
large companies available on eToro.

In
the cryptocurrency landscape, cryptocurrency exchange Bybit recently unveiled
TradeGPT, an AI-powered
education tool designed to transform how traders engage with the crypto market.
Rival Crypto.com has introduced its AI-enabled platform based on Open-AI’s
ChatGPT, while Binance operates an AI-enabled learning tool integrated into
Binance Academy.

On September 8, 2023, Nasdaq announced that it had
obtained approval from the Securities and Exchange Commission (SEC) to launch Dynamic Midpoint Extended Life Order, an
exchange order type that is powered by Artificial Intelligence (AI ). It is the
first exchange order type that is backed by AI to enhance efficiency.

According to a statement
by the SEC-regulated exchange , the core principle behind Dynamic M-ELO is to
match traders who share longer-term investment horizons, fostering a more
aligned trading environment. What sets the order type apart is its requirement
for both parties involved in a trade to wait briefly before executing the
trade. Here is where the AI comes into play.

Kevin Kennedy, the
Executive Vice President for the North American Trading Services at Nasdaq,
remarked: “Dynamic M-ELO delivers optimal outcomes to market participants
by intelligently adapting to real-time market conditions, which improves
overall execution quality and fill rates. As our clients operate in an
increasingly dynamic market environment, we look forward to partnering and
supporting them.”

Dynamic M-ELO leverages
a sophisticated AI model encompassing over 140 factors that provide real-time
changes to holding periods for participants. This adjustment is reportedly
designed to improve order fill rates and reduce market impact. During testing,
the model showed an average combined volume-weighted improvement of over 30%.

Tal Cohen, the President
of Market Platforms at Nasdaq, emphasized the exchange’s commitment to
responsible innovation in modernizing markets. He stated: “AI-powered
Dynamic M-ELO is a purpose-built solution that encapsulates our ambition to
cultivate the quality of our markets and underscores our commitment to
delivering innovative products and tools that benefit all market participants.”

AI Sweeps Traditional
and Crypto Markets

In addition to its AI-powered
order type, Nasdaq has introduced predictive AI in its US options markets. This
initiative aims to enhance overall efficiency and align strike lists more
effectively with market and client demand across all of Nasdaq’s US options
exchanges.

Nasdaq is not the only
player pivoting towards AI in the stock market. In a recent report by Finance
Magnates, eToro and
Bridgewise partnered to
introduce Fundamental AI, a
stock portfolio with 40 diversified stocks that reportedly offer investors a
chance to outperform the market. The technology encompasses a list of 1,000
large companies available on eToro.

In
the cryptocurrency landscape, cryptocurrency exchange Bybit recently unveiled
TradeGPT, an AI-powered
education tool designed to transform how traders engage with the crypto market.
Rival Crypto.com has introduced its AI-enabled platform based on Open-AI’s
ChatGPT, while Binance operates an AI-enabled learning tool integrated into
Binance Academy.

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