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For Stock exchanges globally, the recovery is digital. Today’s stock exchanges should innovatively leverage data to hyper-personalize the value they offer to ecosystem partners, embracing the potential of platforms and bespoke digital infrastructures to become evolutionary attuned to the changing needs of their divergent market stakeholders. Artificial intelligence and machine learning are driving the morphing world of exchanges. Both technologies are delivering a richer client experience, predicting market trends or enabling sophisticated market surveillance.

This means that stock exchanges can now have a faster, smarter and smart monitoring capabilities as a result, securing and maintaining our market integrity.

A recent survey conducted for the World Economic Forum (2020) has shown that a large majority of players in finance worldwide (85%) already use some form of AI and a large group (65%) expects to become an adopter of AI for mass financial operations. A joint survey of the Bank of England and Financial Conduct Authority (FCA, 2019) shows that most financial firms are currently building the infrastructure to deploy large-scale AI, with 80% already using AI in some form.

In the race to bring efficiency into Nigerian Exchange Group (ngxgroup.com), it is critical we exploit AI as an efficiency-enhancing technology. Understanding that AI is helpful in front-office activities that directly involve financial service customers (e.g., User Utilization Platform using Social Media APIs- investment management, and payment systems) as well as back-office activities (e.g., capital optimisation, risk management, and market analysis).

For user Utilization platform, Virtual assistants or chatbots are assisting customers to interact and operate with their financial institutions smoothly, even to extent substituting human interaction. Chatbots, in particular, are ML algorithms relying on NLP that provide financial service users with updated information, solicited but also they are also a relevant source of additional data for AI systems, thanks to their direct interactions with customers.

A fraud palaver

Sadly, anti-money laundering has proven difficult in tackling because of scanty data available to train ML algorithms to detect illegal activities. That’s changing. There are successful applications of AI algorithms (in particular artificial neural networks (ANN), support vector machines, and random forests) that outperform classical logistic regression models (traditional models), at least when training data contains a relatively high frequency of illegal activities. With this, ML helps predict fraud by managers, for example, stock market manipulations. Totally, AI can significantly improve financial market integrity and strengthen trust, a vital ingredient of the financial sector.

Innovations in the regtech space means that NGX can standardized information collection into prespecified templates that financial institutions can populate over time with automated routines and that supervisors could access through befittingly designed API interfaces. A machine-readable regulatory handbook could enable NGX’s clients to interpret and execute regulations automatically.

However, The ascent of AI has led to the possibility to design ”screening algorithms” that systematically and continuously monitor financial markets identifying risks and manipulations, with a better balance between false positive and false negative than humans. The Netherlands Bank, for example, uses automated analysis of orders and executions of banks to identify funds transferred to the same recipients via different routes in high-risk jurisdictions.

NGX’s collaboration with other Monetary jurisdictions could open new possibilities. “AI screens” helps detect misconduct and frauds in stock markets. It works like this, unsupervised AI algorithms scan markets looking for general patterns. Once anomalous patterns are flagged out, supervised ML algorithms step in to predict actual risks.

Financialization of market

Emerging technologies have enabled the financial markets to becoming more international and integrated. That’s because technology and related organisational innovations are driving these changes; making stock exchanges to be technologically competitive through economy of scale or by redefining markets as seen by international consolidation of the securities exchanges business. This has led to the integration of settlements systems across national boundaries powered by the diffusion of ICT innovations in different areas of global and local economies.

A Retail revolution

In our post-pandemic world, our economic recovery will be digital and it demands bold leadership to dive into a digital future. We saw it with the arrival of bitcoin in 2008 and that same year the US Fed reinvented QE. it is time for NGX to lead us into the future: a borderless, tamperproof, and inflation resistant age. Stock exchanges are being upended by this paradigm shift. We are witnessing a seismic shift in the architecture of financial settlements as trading floors get connected to bitcoin and Ether/ERC20 nodes. The future is rapidly happening before our eyes. NGX would need a response to these seismic changes.

Hidden behind Bitcoin, looms large the boom in Decentralized Finance, payment/settlement networks outside our banking system powered by smart contracts on the Ethereum network. We have seen its staggering growth, from Nov 2020 to now, these networks have grown, staked and traded assets from less than $2b to $43b+ bolstered by rise in institutional staking (buying and holding) and trading of derivatives (unusually CME and Binance). Platforms such as Maker, Aave, Compound and Uniswap pay interest to stakers and settle trades and coupons.

AI is reshaping retailing as traders globally have joined the stock and crypto party in large population in an unprecedented manner. This is also aided by social influencers and Youtube and Reddit, with enormous impact. Day trading is the new social media network and apps are open 24/7, enabling rich interactions-trade, chat, post and trade.

We should see DF as “investible” disruptions. We believe DeFi revolution has a more structural and measurable disruptive potential for Nigeria’s financial industry. Smart contracts built on public blockchains like Ethereum, have the potential to push NGX, our clearing houses, and all forms of financial instrument trading into the realm of instant settlement bringing dramatically lower costs to our financial services industry. But regulatory-policy innovations will have to meet DeFi in a way that advances our collective prosperity.

In all, for NGX, the key focus should be to drive Africa’s digital revolution. More importantly, it must explore AI-enabled reporting metrics that relate to our talent, culture, ESG, supply chains, cyber-attacks, and eerily- data breaches. Leveraging exponential technologies in it NGX’s reporting around deepening liquidity measures and its green credentials will strengthen NGX, making her an attractive partner for visionaries in investible disruptions.

Nations rise when pioneering entrepreneurs emerge. Without those pioneers, the capacity to combine factors of production to redesign economic structures and fix market frictions stall. As America begins to debate the SPACE Tax Act structured to make sure billionaires and millionaires who sojourn to space pay taxes for the experiences, it becomes evident that America has created another sector. 

Before the American steel industry, Carnegie had to emerge. Before the US energy sector, Rockefeller existed. From JP Morgan to BY Mellon, men were ahead of the government in setting the ordinance of  US banking.  And in this era, Jeff Bezos, Elon Musk and Richard Branson are unlocking the broad space tourism.

Space tourism, which in recent months has witnessed a frenzy as billionaire-enthusiasts take turns to fly miles above the earth’s surface, has unveiled a multi-billion dollar economy. From SpaceX to Blue Origin to Virgin Galactic, the space transport companies have seen burgeoning demands for their high cost seats by wannabe astronauts in what has been described as “billionaires’ luxury trips.”

But as budding space tourism takes shape, and more people show interest in experiencing the full force of gravity through orbital and suborbital space flights, the United States Congress is seeing an opportunity to make more revenue for the government.

U.S. Rep. Earl Blumenauer (D-Oregon) plans to introduce legislation called the Securing Protections Against Carbon Emissions (SPACE) Tax Act, which would impose new excise taxes on space tourism trips. The exercise is targeted on commercial space flights carrying human passengers for purposes other than scientific research.

There is a lesson here:  Nigeria cannot have it the other way around: the government has never led anything and we cannot expect everything to be anchored by bureaucrats.

Like Nollywood, Nigeria’s movie industry, which emerged without any memo to the government, our pioneering innovators must do the same in other sectors. Sure, when you do it, they will come with a tax bill. And that is the beauty of it. By 2040, space tourism is projected to be a $1.1 trillion business. Yes, more tax revenue for America!

Africa needs PIONEERING entrepreneurs – they are the high priests to shared prosperity and future abundance in nations. They redesign economies and unlock latent opportunities, driving optimist exuberance for national political leaders because they expand economies and tax dollars.