Nasdaq, the American stock exchange, has announced that it has been granted approval by the United States Securities and Exchange Commission (SEC) to operate the first exchange AI-driven order type. The approval was received on September 8.
Introducing the Dynamic Midpoint Extended Life Order
The new system, called the Dynamic Midpoint Extended Life Order (M-ELO), builds upon the existing M-ELO automated order type by incorporating artificial intelligence (AI). Unlike traditional order types, the M-ELO is "dynamic," meaning it can adapt and update itself in real time.
Order types are a set of software instructions that execute specific trade pairs at precise market pricing thresholds. While automated order types have been in use for some time, this AI-driven order type is the first of its kind to utilize real-time reinforcement learning AI to execute orders.
Enhancing Order Execution Speed
One of the key benefits of the new AI-driven order type is its ability to significantly speed up order execution times. Nasdaq has published a data sheet that explains how the system works:
"Calculated on a symbol-by-symbol basis, this new functionality analyzes 140+ data points every 30 seconds to detect market conditions and optimize the holding period prior to which a trade is eligible to execute."
By continuously analyzing market conditions and adjusting its parameters, the AI-driven system aims to optimize the timing of trade execution, leading to faster and more efficient transactions.
Stay Tuned for More Updates
As this is a developing story, more information will be provided as it becomes available. The introduction of AI-driven order types by Nasdaq marks an important milestone in the automation of stock trading, promising improved efficiency and speed in the execution of trades.
