Innovation in data science and capital markets
Reza Chady …challenging conventions
Innovation around us…
Impacting our lives…
Agenda
Welcome &
disclaimer
Innovation game
Lab work
MACHINEINTELLIGENCE
BIGDATA
VISUALISATIONCRYPTOGRAPHY
AUGMENTED REALITY / VIRTUAL REALITY
BLOCKCHAINQUANTUMCOMPUTING
MICROSERVICES
TECHNOLOGY TRENDS SHAPING FINANCIAL SERVICES
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Impacting our
everyday lives
An Innovation
Game
Let’s take a few…
Threats to our nutrition
9 Billion by 2050
Obesity
What is in our processed food?
Food innovation
Organic farming everywhere
3D Printed food
Insects as protein
Health, Love & Sport
Stress
Longer lifespan
Increasing medication
Health, Love & Sport
(e)Sport, Gambling, & AR/VR sports
AI Augmentation of General
Practice
Data driven entertainment
Work
Working longer hours
Rising automation
Lacking in meaning and
security
Work
Emergence of the gig economy
Innovation in Capital Markets for start ups and
job creation…
Uncovering tax avoidance,
market manipulation and
other financial crime
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Foundational ideas:What happened to the people yelling at each other?That is (was) called OPEN OUTCRY.
It’s long gone in most developed markets around the world, but people still hang on to the mental image.
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Trading evolution
Types of trading:ALGO(RITHMIC) TRADING = a method of sending orders to market based on an automated algorithm.HFT = HIGH FREQUENCY TRADING = a subset of algo trading that sends lots of order management messages to market in a short period of time. Orders can result from management of large orders, or for taking advantage of opportunistic trading opportunities.ULTRA-HIGH FREQUENCY TRADING = a subset of HFT that sends lots of order management messages to market in a really short period of time.
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Market Manipulation“MARKET MANIPULATION is a deliberate attempt to interfere with the free and fair operation of the market and create artificial, false or misleading appearances with respect to the price of, or market for, a product, security, commodity or currency.”https://en.wikipedia.org/wiki/Market_manipulation
Traditional methods include RAMPING, MARKING THE CLOSE, WASH TRADING, and SPOOFING.
More recent innovations include QUOTE STUFFING, RUMOURTRAGE.
At the fuzzy uncertain edges of dodgy practises is the reverse engineering and subsequent exploitation of trading algorithms, and even some order types offered by exchanges (e.g. .
NASDAQ IS TRANSFORMING
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New vision for capital markets
• Smart Beta• Analytics• Machine Intelligence
Applications• Geography Expansion
• Post-Trade & CSD offering• Blockchain Enabled Solutions• Holistic Surveillance• SMARTS Buy-Side Offering• Index Calculator• Bwise eGRC• NPM & Linq Platform
• Canadian Equities• ISE• eSpeed Elect• NFX• NLX
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WHAT?
Community Engagement
Profile & Behaviour
Data Tools & Strategy
Insights & Visualisations
Alerts Analytics
Simulators
LabData Engineering
StatisticsMachine Learning
Visualisations
NASDAQ INNOVATION LAB
5 FOCUS AREAS FOR MARKET SURVEILLANCETO BUILD MVP AND GUIDE SOLUTIONS FOR PRODUCTION
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SMARTS ALERTS
SCORING
PEER GROUP BENCHMARKI
NG
DATA POLICY, AUDIT &
STRATEGY
PARTICIPANT CLUSTERS
AND PROFILE
HOLISTIC MARKET
MONITOR
5 ENABLING TECHNOLOGY PROJECTS IN 2017-18MEDIUM TERM INNOVATION PROJECTS
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VISUALISATION
ARCHITECTURE
ANOMALY DETECTION
BLOCKCHAIN
PARTICIPANT BEHAVIOURAL
GRAPH MAPPING
EVOLUTION OF DATA SCIENCE
SECURE DATA STOREOnly parties who should access it, can access it.
STABILITY THROUGH DECENTRALIZED
CONSENSUSInput is guaranteed / validated
through decentralized consensus.
CRYPTOGRAPHY ENSURES INTEGRITY
Data remains consistent, once written it cannot be
modified.
WHAT IS THE BLOCKCHAIN?
FOUNDATIONAL TECHNOLOGY
It is not a financial asset, it is not a business.
GROWTHPotential enabler for cost savings but also for growth, new business
models and market structures.
INNOVATIONPart of Nasdaq’s larger tech
innovation portfolio.
SECURITY. INTEGRITY. CONSENSUS. FOUNDATIONAL. GROWTH. INNOVATION.
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NASDAQ’S BLOCKCHAIN JOURNEY2013-2016
Linq, proxy voting, establishing clearing
and settlement partners
20152013
Nasdaq recognizes applicability of
blockchain technology to Financial Technology
Nasdaq Linq enables first-ever Private
Securities Issuance documented with
blockchain technology
Nasdaq R&D –Blockchain tuned to
handle the U.S. equities trading
volume -1st Nasdaq patent filed investment in
chain.com
MT Design Studies
2016Design studies and
Proof of Concepts(POCs) with Market Technology
customers
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R&D
PILLARS OF INTEREST
POST
TRA
DE
PLU
MBI
NG
RELA
TIO
NSH
IP
ISSU
ERS/
INVE
STO
RS
REG
ULA
TORY
TR
ANSP
AREN
CY
Cheaper Operations
Faster Processes
Provenance
Regulatory Reporting
Reduced Reconciliation
Cross border Solutions
Alternative Business-and Market Models
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NASDAQ PROXY AND E-VOTINGSECOND OFFICIAL BLOCKCHAIN PROJECT
“Nasdaq is to use blockchain technology to streamline proxy voting on companies listed on the Tallinn Stock Exchange”
• Streamlined service for proxy voting• Votes are tracked stored in the immutable ledger• Digital authentication to onboard users• Issued and recorded votes on the blockchain• Built on Nasdaq Financial Framework
We are going to put proxy voting on the blockchain, on the immutable ledger and obviously enable people to do that with their cell phone and have that record with them forever.”
- Nasdaq CEO Bob Greifeld in Bloomberg, Oct 2015
““
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HURDLES TO WIDE-SCALE ADOPTION OF BLOCKCHAIN TECHNOLOGY IN CAPITAL MARKETS
The technology itself needs to evolve and be
proven
Visions need to be distilled down to workable market
models and structures
Existing legislation and regulation does not
anticipate new business models
enabled by blockchain technology
New technology and market structures
need to be integrated with existing complex
ecosystem of infrastructure
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ASSURANCE
AUTOMATION
AGENCY
EVOLUTION OF DATA SCIENCE
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Impacting our
everyday lives
THANK YOU