It’s the final month of the year at last, a year full of all the economic, technological and political developments that we could possibly have imagined, and a fair few that we didn’t. Brexit continues to rumble along, US elections throw their own unique curveballs, trade wars are still breaking out, and financial regulation of everything from cryptocurrencies to disclosure is ongoing. It’s enough to keep everyone in financial markets on their toes.
This month, our focus topic is machine learning – a tool that is increasingly favoured by asset managers when creating their investment strategies. While machine learning is nothing new, having first been mooted in 1959, what has changed in the financial universe is the amount of high-quality data available for analysis and the capacity – and sophistication – of the software that processes it. Investors are always seeking anything that will give them an edge when it comes to generating returns – machine learning is increasingly one of the tools in their box. And it’s not just investors. From the SEC to FINRA, regulators, too, have been using machine learning to assess market activity with a view to preventing risk events from occurring, or alert them to potential violations of the rules. Finally, in our focus on South Korea, we look at how the use of machine learning in Korea is primarily aimed at improving efficiency in trading execution rather than investment strategies.
Finally, I hope as always that you will enjoy this month’s edition of ‘Thinking Ahead’. We’ve chosen, as ever, to focus on some of the most topical subjects in financial markets with the aim of keeping you abreast on the key developments. Do send any comments or suggestions on the magazine to me at ThinkingAhead@commerzbank.com.