LSEG Plans to Provide AI Trading Solution For Its Clients

The London Stock Exchange Group (LSEG) wants to create bespoke generative artificial intelligence (AI) models with the help of tech giant Microsoft.

AI has several use cases in niches such as education, healthcare, and the military. In addition, the technology can also be a useful tool for trading strategies and risk management.

LSEG Plans to Help Customers With AI Models

Microsoft is one of the companies at the forefront of AI innovation. And the LSEG wants to harness that AI expertise to create “bespoke large language models” for its clients.

According to the Financial Times, David Schwimmer, the CEO of the LSEG, said: 

“We are having conversations with customers about the opportunity for them to use the vast amount of data we have available, to commingle that with their data in a secure proprietary [manner].”

Banks and trading firms cannot risk using other AI models with their data. There is an inherent risk of losing the proprietorship of the data by feeding it into the other LLM models. Hence, the LSEG wants to provide a solution for banks to securely use the AI models for trading strategy and risk management while maintaining the secrecy of the data.

Equity researcher Michael Sanderson believes AI will be valuable for financial analysis. He said:

“There clearly is a value creation potential for the key clients but also for…  the LSEG alongside them.”

But on the other hand, the US Securities and Exchange Commission (SEC) chair Gary Gensler is concerned about the usage of AI in the financial market. He believes that opaque decision-making using AI could create market instability and volatility.

Microsoft’s AI Partnership Spree

Microsoft has been expanding its AI footprint in various countries through partnerships. On July 27, it partnered with the Japanese government to deploy ChatGPT for administrative tasks. And on July 20, it joined forces with competitor Meta to launch the open-source AI model Llama 2.

Microsoft stock has been up by nearly 50% year-to-date. But it has been tightly consolidating between $351 and $326 since June. As of writing, the stock is trading at $329 in pre-market, and a breach of support at $326 might result in the reversal of the trend.

Meanwhile, the stock price of LSEG is down by around 1.3% from Thursday’s close.  The price is taking support from a trend line and the 200-day Simple Moving Average (SMA). A breach of support could potentially result in a potential downtrend.

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