The Strategist

Traders name the main threat in 2020

01/31/2020 - 08:08

Lack of liquidity in 2020 will be the main problem for traders who will be facing this phenomenon every day, experts surveyed by JPMorgan Chase said. Respondents also said that they increasingly depend on artificial intelligence in their work.

The main problem that traders will be facing daily in 2020 will be a lack of liquidity. This conclusion was reached by JPMorgan Chase, having interviewed 650 professional traders as part of the e-Trading 2020 Survey.

Lack of liquidity was identified as the main problem of 2020 by 33% of respondents. Access to liquidity is “always a top priority for both traders and risk managers,” said Scott Walker of JPMorgan. He emphasized that the number of liquidity providers is decreasing.

Another 19% of traders said that the main challenge would be to ensure the efficiency of work processes. Pricing transparency was the main problem identified by 15% of respondents. Another 15% of them identified requirements for the principle of best execution, obliging the trader to create the most favorable conditions for the client. The biggest concern for another 15% of traders was the problem of data availability. The remaining 3% stated other risks.

A survey of JP Morgan traders has been running for the fourth year in a row, Bloomberg points out. Last year, the liquidity problem also ranked first. About 40% of traders spoke about it then. Other problems that experts continued to talk about this year, including performance requirements, process efficiency, and pricing, were in the top of the rating.

This year the bank for the first time included in the study questions about technologies that transform the market. As a result, 71% of traders admitted that artificial intelligence and machine learning provide them with “in-depth data analysis” in their daily work. 66% said that artificial intelligence optimizes the process of trading securities. 58% of respondents admitted that new technologies help them “hone” the ability to make decisions in the market.

“Given the data dissemination and the amount of information that we collect in various digitized channels, the ability to absorb this information using artificial intelligence tools will be transformative,” Eddie Wen, head of digital markets at JPMorgan, wrote in the study.