AI and Best Execution: the Investment Bankers' Dream Team - Chris Skinner's blog

I don't often blog about investment banking as it bores my readers who are cool and trendy retail bankers and geeks, mainly, but keep coming back to this article about JPMorgan's Best Execution AI engine, LOXM. LOXM's job is to execute client orders with maximum speed at the best price, by using lessons it has learnt from billions of past trades -- both real and simulated -- to tackle problems such as how best to offload big equity stakes without moving market prices … JPMorgan believes it is the first on Wall Street to use AI with trade execution and said it would take rivals 18 to 24 months and an investment of "multiple millions" to come up with similar technology. The reason I keep coming back to it is that best execution is a critical regulatory requirement, argued over extensively by the big bods of the European Union a decade ago when they were introducing the Markets in Financial Instruments Directive, MiFID. What the regulator wanted was a method to ensure that investment banks gave customers the best deal, but how to define what the best deal was became a big issue. Is the best deal the best price?