The implementation of AI and ML on the fixed income trading desk is underway, and will only continue to grow as more firms start to adopt and adapt these technologies. The overall success of AI and ML will be down to how each individual investment firm chooses to implement them, in order to mitigate risks and to ensure that their compliance and legal teams are also fully aware of how to use them, too.
By ensuring that enough internal members of staff with in-depth knowledge about their particular sector of fixed income trading are included at the start of the process, any issues resulting from the implementation process should be reduced.
Although the benefits of implementing automation are clear, there are limitations to this new technology – as we’ve seen with “potential for system errors” would not result in the timely manual processing and bad data skewing the decision-making process. It will be a while before automation starts to impact the larger, more detailed and packaged trade orders which require a more traditional approach; however, traders will have more time to dedicate to these than they have had in the past.
With the closing of the skills gap in coming years, more execution desk traders will have the formal training to push these algorithms further in order to identify key areas to boost the overall number of orders that can be automated. Clearly, in the past five years alone, the role of a fixed income trader has changed and a new order will be fully underway in the coming five years.