The NASDAQ stock exchange received approval from the Securities and Exchange Commission (SEC) to launch Dynamic Midpoint Extended Life Order (DM-ELO), an exchange order type supported by Artificial Intelligence (AI). This order type is the first of its kind to utilize AI, improving efficiency. The core principle of DM-ELO is to match traders with longer-term investment perspectives, creating a more aligned trading environment. Unlike other order types, both parties involved in a trade must wait briefly before executing it, utilizing AI in this process.
A representative of for the North American Trading Services at NASDAQ, stated that DM-ELO delivers optimal outcomes by adapting to real-time market conditions, enhancing execution quality and fill rates. DM-ELO utilizes a sophisticated AI model with over 140 factors, providing real-time changes to holding periods for participants. Testing showed an average improvement of over 30% in combined volume-weighted fill rates for orders and reduced market impact. A Nasdaq spokesperson, emphasized the exchange’s commitment to responsible innovation and delivering innovative products that benefit all market participants.
This move towards using AI in the stock market is not exclusive to NASDAQ. Finance Magnates reported that eToro and Bridgewise collaborated on Fundamental AI, a diversified stock portfolio with 40 stocks designed to outperform the market.
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