Electronic Trading to AI; JLN’s Path of Non-Price-Oriented Risks

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John Lothian

John Lothian

Executive Chairman and CEO

This newsletter is about non-price-oriented risks. Back when it started, the largest risk to the financial markets, including futures, options and securities trading, was the advent of electronic trading. Electronic trading was the runaway train that was going to run over everything and everyone in its way. It was a risk to everyone’s job, especially the people standing on trading floors conducting commerce the same way it had been for over 100 years. 

Open outcry trading is largely gone. Remnants exist in niche sectors, but most everything trades electronically these days, proving my original thesis for this newsletter correct. But there were other risks that went along with the move away from open outcry trading, risks involving new regulations, new technologies, new products, new competition, globalization of trade, algorithmic trading, high-frequency trading, co-location and more non-price-oriented risks. 

In recent years the rise of bitcoin and cryptocurrency trading presented new risks to the markets and to established players and all the people employed by them. JLN has covered that story from the beginning as Bitcoin attracted attention on Wall Street to today’s regulatory crackdown on major crypto players. We launched CryptoMarketsWiki.com as a separate wiki when crypto was too toxic for established players to touch, then combined that content into MarketsWiki and decommissioned CryptoMarketsWiki.com as crypto went mainstream. Crypto and tokenization remain large non-price-oriented risks to the larger markets and financial markets industry. 

The ultimate destructive risk to the markets is war, which is why JLN follows the Ukraine-Russia war and the Israeli-Hamas conflict so prominently. Nothing can corrupt markets or the reallocation of resources like a war. 

But there is a new risk that I believe tops crypto as a risk and that is artificial intelligence, or AI as it is called. I believe AI has the same potential risk to change everything in the financial markets and the financial markets industry as did electronic trading. AI is a powerpack that can be loaded into many different aspects of trading, clearing and settlement. 

I believe AI will influence nearly every job in the industry in some way, it is just a question of how and when. 

The coverage in JLN of the big kerfuffle in Silicon Valley over Sam Altman being fired by the board of OpenAI and then returning and the board being replaced was not just because it was interesting. It was also important. Discussions about the future of AI are taking place and it is important who has a seat at the table. We should all be informed about the debate and the issues and that is why JLN is covering this important topic. 

The goal of JLN is to make the world a better place by supporting market-based solutions and providing clarity for participants and stakeholders about non-price-oriented market risks. AI has become a non-price-oriented risk that JLN will continue to follow, as it impacts us all. 

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