How does Data Analytics Impact Trading Capabilities?

Capital Markets CIO Outlook | Tuesday, December 03, 2019

If data is the fuel, data analytics is the engine that is driving advanced trading operations in capital market firms.

FREMONT, CA: Data-driven decision-making is the reason behind the enhanced capabilities of the capital market firms. Access to data and highly efficient data analytics solutions has changed the fundamentals of trading. Digitalization has played an important role in delivering disruptive technologies to trading firms. Data analytics is one of the most highly-valued technologies that capital market firms are leveraging today. The availability of analytics and the exponential growth in data collection has resulted in the converged improvement in investment decision making and trading performance.

Improved Trading Strategies

Market data, when leveraged in real-time, can profoundly impact business outcomes for capital market firms. In addition to the advancements in technologies like artificial intelligence, machine learning, and natural language processing, data analytics solutions are helping capital market companies adapt to the modern trading ecosystem, which is marked by global participation, and rapidly changing market dynamics. With the ability to derive, consume, and analyze operational data, trading strategies can be tweaked to optimize a firm’s potential.

Enabling Automation, Driving AI

Apart from the growing significance and volume of market data, alternative data is also assuming importance. Large fragmented pools of structured and unstructured data from diverse sources contain potentially valuable information for trading firms. Leveraging analytics, machines can derive insights from these data sets. The value of the insights can be gauged from the fact that the information can be useful across reconciliation, trade management, transaction settlement, risk management, and many other areas. Besides, the availability of processed data is being used to train artificial intelligence and machine learning engines. Even automation is driven by the availability of contextual classes of information.

Predicting Market Risks

Predictive analytics also offers significant advantages to capital market firms. With predictive analytics, traders can stay prepared for disruptions in the market and conduct risk assessments easily. Capital market professionals have been able to eliminate burdensome tasks from their portfolios, thanks to the intelligence that data analytics solutions bring.

As more advanced applications of data analytics emerge, trading is set to become more efficient.

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