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TRADERS Q&A: BNP’s Wikström Talks AI, Alt Data and TCA

Traders Magazine Online News, March 21, 2018

John D'Antona Jr.

What is the buy-side talking about these days?

Aside from the usual lamentations regarding not being able to find natural liquidity, lack of blocks and the cost of data feeds, the buy-side is looking at new ways of applying artificial intelligence (AI), employing alternative data and trade cost analysis (TCA) to generate alpha. Some are looking to their brokers as partners in navigating this new business climate.

In an interview with Traders Magazine’s editor John D’Antona Jr, Petra Wikström, Global Head of FX Execution & Alpha Solutions, BNP Paribas shared her thoughts on the buy-side’s focus on these aforementioned topics and how her firm is trying to assist its clients. She also touched on how automation and TCA applies across OTC, over-the-counters in futures and future TCA technology applications.

What follows is an edited version of the conversation:

Traders Magazine: So, we'll start with the recent buy-side focus on AI and using alternative data. Why                                       don't you tell me what you're seeing from your point of view? 

Petra Wikström:    Bridging quant and sales we naturally interact with a lot of our buy-side clients on technical questions and aspects, and some of their new AI initiatives or uses of alternative data.  This is a topic that just over the last year is coming out more and more frequently in discussions. For example, what we see is that execution desks and analytics teams are looking into broader use of artificial intelligence, AI, and how to incorporate that into their processes.

TM:                     Is this a deep dive by the buy-side?

Wikström:          From what we see at this stage, it's very much exploratory. I think everyone wants to be prepared for when this becomes mainstream, to be able to say we have done all our due diligence and testing and we are technically aware of how to use it. This is relevant across both the active or passive manager community and really all client segments, and they may also be collaborating with academia for specific projects.

TM:                     Where does the data aspect of AI fit in here?

Wikström:          The AI and the technology is actually one piece of the puzzle, but then you also want to make sure that you are incorporating data in the right way, and know how to process and interpret the results. One of the things we've seen from clients is in these projects is that they have some of the data, but they are also in need of a bigger universe of data. This is an area where there needs to be strong coordination of data scientists and practitioners.

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