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Digital Assets, Crypto Products and AI will Reshape Trading Industry

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Digital assets and artificial intelligence (AI) will reshape the trading industry as clients show increasing interest in trading digital assets and traders expect AI to take the market in one of two ways – either creating more trading opportunities for traditional equities and reducing the cost of trading, or creating more volatile market conditions.

According to recent research into trading trends by SIX among 126 European respondents that operate on the Swiss Stock Exchange, almost two-thirds predict growing client interest in trading digital assets in the short term, and over three-quarters expect demand to increase for digital assets and crypto products over the long term.

Will this present challenges or opportunities? According to the research participants, the impact of trading digital assets more broadly is likely to provide opportunities to streamline trading and settlement processes and reduce overall trading costs.

Reduced costs are also expected to be a result of implementing AI in trading, along with more opportunities for traditional equities trading businesses – although there is a caveat here, with nearly three-quarters of research participants expecting AI to create more volatile market conditions.

Trading hours and tweeting

The SIX research also touched on the topic of reducing trading hours. A majority of traders suggested such a move would create a number of operational benefits, including encouraging more trading liquidity. Less than one-tenth of the research participants thought shorter trading periods would drive up the cost of trading. These responses were captured in light of public consultations made by the UK Investment Association, which proposes to cut stock market trading from eight and a half hours to six and a half hours to make work more accessible to women and working parents.

Looking at the impact of unconventional political activity on trading behaviour, four out of five traders said their strategies are to some extent influenced by Donald Trump’s tweets. Three out of four expect the US election will drive trading activity in 2020, while two out of three believe the threat of trade wars will be a factor. More than half expect a global recession. Brexit was identified by about a third of participants as a factor driving their trading activity.

Finally, when asked for a three-year outlook on their function, towards half of the research participants expect a stable environment. And while there are slightly more who expect headcount cutbacks than new hires, those expecting business growth outnumber those expecting a slowdown

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