Nasdaq’s AI-Powered Trading Mechanism Receives SEC Approval
Nasdaq has obtained approval from the Securities and Exchange Commission (SEC) to launch its “Dynamic Midpoint Extended Life Order,” a new order type that utilizes artificial intelligence (AI) to match buyers and sellers who intend to hold stocks for longer durations. Unlike the traditional approach of fixed waiting periods, Nasdaq’s AI adjusts waiting times based on real-time market conditions, resulting in a 20% increase in fill rates and an 11% reduction in unwanted trades during tests. By analyzing over 140 factors, the technology suggests optimal holding periods, minimizing the impact of trading on stock prices and efficiently connecting long-term investors.
Nasdaq’s Commitment to Innovation
Nasdaq President Tal Cohen expressed the exchange’s dedication to delivering innovative products and tools that enhance the quality of their markets and benefit all market participants. In addition to the AI-powered order type, Nasdaq has also implemented AI in its options markets to predict potential new options contracts that are likely to trade, improving liquidity while maintaining the same number of listed contracts. This integration of advanced technology reflects both traditional finance and crypto exchanges’ ongoing efforts to modernize and provide faster and more efficient trading experiences for investors.
Hot Take
The SEC’s approval of Nasdaq’s AI order type demonstrates the increasing adoption of advanced technology in the financial industry. As both traditional and crypto exchanges leverage AI tools, we can expect further advancements to enhance market efficiency and provide new opportunities for traders and investors.
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