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Reza Chady - Next generation data science, blockchain and machine intelligence innovation - FutureData 2017

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Blockchain voting case study from Estonia and other Nordic region countries
- Technical and data approaches, from ideation to proof of concept
- Managing sensitive personal data through anonymisation and authentication

Embracing voluminous data, and approaches for new types of data – A markets surveillance case study
- Knowing the unknowns through different approaches to data science
- Collating and processing data from hundreds of sources
- The analytical processes
- The internal processes and approaches for legacy business models

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Reza Chady - Next generation data science, blockchain and machine intelligence innovation - FutureData 2017

  1. 1. Innovation in data science and capital markets Reza Chady …challenging conventions Innovation around us… Impacting our lives…
  2. 2. Agenda Welcome & disclaimer Innovation game Lab work
  3. 3. MACHINE INTELLIGENCE BIG DATA VISUALISATIO N CRYPTOGRAPHY AUGMENTED REALITY / VIRTUAL REALITY BLOCKCHAIN QUANTUM COMPUTING MICROSERVIC ES TECHNOLOGY TRENDS SHAPING FINANCIAL SERVICES 3 Impacting our everyday lives
  4. 4. An Innovation Game
  5. 5. Let’s take a few…
  6. 6. Threats to our nutrition 9 Billion by 2050 Obesity What is in our processed food?
  7. 7. Food innovation Organic farming everywhere 3D Printed food Insects as protein
  8. 8. Health, Love & Sport Stress Longer lifespan Increasing medication
  9. 9. Health, Love & Sport (e)Sport, Gambling, & AR/VR sports AI Augmentation of General Practice Data driven entertainment
  10. 10. Work Working longer hours Rising automation Lacking in meaning and security
  11. 11. Work Emergence of the gig economy Innovation in Capital Markets for start ups and job creation… Uncovering tax avoidance, market manipulation and other financial crime
  12. 12. 12 Foundational ideas: What happened to the people yelling at each other? That is (was) called OPEN OUTCRY. It’s long gone in most developed markets around the world, but people still hang on to the mental image.
  13. 13. 13 Trading evolution Types of trading: ALGO(RITHMIC) TRADING = a method of sending orders to market based on an automated algorithm. HFT = HIGH FREQUENCY TRADING = a subset of algo trading that sends lots of order management messages to market in a short period of time. Orders can result from management of large orders, or for taking advantage of opportunistic trading opportunities. ULTRA-HIGH FREQUENCY TRADING = a subset of HFT that sends lots of order management messages to market in a really short period of time.
  14. 14. 14 Market Manipulation “MARKET MANIPULATION is a deliberate attempt to interfere with the free and fair operation of the market and create artificial, false or misleading appearances with respect to the price of, or market for, a product, security, commodity or currency.” https://en.wikipedia.org/wiki/Market_manipulation Traditional methods include RAMPING, MARKING THE CLOSE, WASH TRADING, and SPOOFING. More recent innovations include QUOTE STUFFING, RUMOURTRAGE. At the fuzzy uncertain edges of dodgy practises is the reverse engineering and subsequent exploitation of trading algorithms, and even some order types offered by exchanges (e.g. .
  15. 15. NASDAQ IS TRANSFORMING 15 New vision for capital markets • Smart Beta • Analytics • Machine Intelligence Applications • Geography Expansion • Post-Trade & CSD offering • Blockchain Enabled Solutions • Holistic Surveillance • SMARTS Buy-Side Offering • Index Calculator • Bwise eGRC • NPM & Linq Platform • Canadian Equities • ISE • eSpeed Elect • NFX • NLX
  16. 16. 16 WHAT? Community Engagement Profile & Behaviour Data Tools & Strategy Insights & Visualisations Alerts Analytics Simulators Lab Data Engineering Statistics Machine Learning Visualisations NASDAQ INNOVATION LAB
  17. 17. 5 FOCUS AREAS FOR MARKET SURVEILLANCE TO BUILD MVP AND GUIDE SOLUTIONS FOR PRODUCTION 17 SMARTS ALERTS SCORING PEER GROUP BENCHMARKI NG DATA POLICY, AUDIT & STRATEGY PARTICIPANT CLUSTERS AND PROFILE HOLISTIC MARKET MONITOR
  18. 18. 5 ENABLING TECHNOLOGY PROJECTS IN 2017-18 MEDIUM TERM INNOVATION PROJECTS 18 VISUALISATIO N ARCHITECTUR E ANOMALY DETECTION BLOCKCHAIN PARTICIPANT BEHAVIOURAL GRAPH MAPPING EVOLUTION OF DATA SCIENCE
  19. 19. SECURE DATA STORE Only parties who should access it, can access it. STABILITY THROUGH DECENTRALIZED CONSENSUS Input is guaranteed / validated through decentralized consensus. CRYPTOGRAPHY ENSURES INTEGRITY Data remains consistent, once written it cannot be modified. WHAT IS THE BLOCKCHAIN? FOUNDATIONAL TECHNOLOGY It is not a financial asset, it is not a business. GROWTH Potential enabler for cost savings but also for growth, new business models and market structures. INNOVATION Part of Nasdaq’s larger tech innovation portfolio. SECURITY. INTEGRITY. CONSENSUS. FOUNDATIONAL. GROWTH. INNOVATION. 19
  20. 20. NASDAQ’S BLOCKCHAIN JOURNEY 2013-2016 Linq, proxy voting, establishing clearing and settlement partners 2015 2013 Nasdaq recognizes applicability of blockchain technology to Financial Technology Nasdaq Linq enables first-ever Private Securities Issuance documented with blockchain technology Nasdaq R&D – Blockchain tuned to handle the U.S. equities trading volume -1st Nasdaq patent filed investment in chain.com MT Design Studies 2016 Design studies and Proof of Concepts(POCs) with Market Technology customers 20 R&D
  21. 21. PILLARS OF INTEREST POSTTRADE PLUMBING RELATIONSHIP ISSUERS/INVEST ORS REGULATORY TRANSPARENCY Cheaper Operations Faster Processes Provenance Regulatory Reporting Reduced Reconciliation Cross border Solutions Alternative Business- and Market Models 21
  22. 22. NASDAQ PROXY AND E-VOTING SECOND OFFICIAL BLOCKCHAIN PROJECT “Nasdaq is to use blockchain technology to streamline proxy voting on companies listed on the Tallinn Stock Exchange” • Streamlined service for proxy voting • Votes are tracked stored in the immutable ledger • Digital authentication to onboard users • Issued and recorded votes on the blockchain • Built on Nasdaq Financial Framework We are going to put proxy voting on the blockchain, on the immutable ledger and obviously enable people to do that with their cell phone and have that record with them forever.” - Nasdaq CEO Bob Greifeld in Bloomberg, Oct 2015 “ “22
  23. 23. HURDLES TO WIDE-SCALE ADOPTION OF BLOCKCHAIN TECHNOLOGY IN CAPITAL MARKETS The technology itself needs to evolve and be proven Visions need to be distilled down to workable market models and structures Existing legislation and regulation does not anticipate new business models enabled by blockchain technology New technology and market structures need to be integrated with existing complex ecosystem of infrastructure 23
  24. 24. ASSURANCE AUTOMATION AGENCY EVOLUTION OF DATA SCIENCE 24 Impacting our everyday lives
  25. 25. THANK YOU

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