I, Broker

Yael Warman

“One of the biggest perceived threats in online financial trading is security and in particular the protection of personal data of traders. Automation limits the amount of personal data that is exposed to human employees and therefore increases the security of the data.”

By Nicc Lewis, Chief Marketing Officer, Leverate

I, Robot was published in 1950 and contained nine short stories dealing with artificial intelligence and its effect on life. Asimov penned three seemingly flawless and simple laws to protect humanity:

  1. A robot may not injure a human being or, through inaction, allow a human being to come to harm.
  2. A robot must obey orders given to it by human beings except where such orders would conflict with the First Law.
  3. A robot must protect its own existence as long as such protection does not conflict with the First or Second Law.

There have been a number of books and movies dealing with the subject and including a range of predictions on how AI affects humanity. From the invaluable Lieutenant Commander Data in Star Trek to the menacing Hal in 2001. But all of this is pure Science Fiction and has no bearing on the financial trading industry … or does it?

To quote the late, great George Carlin: “… but when you think about it…”, we are already using terms like automation, big data, segmentation, EAs and copy trading – these are all here today.

Both from the side of the brokers and the side of the traders, automation based on smart machine code are on the rise. Brokers are adopting automation in order to increase their reach and drive down marketing costs by building automated flows and alerts and decreasing human interactions.

3/11/15 Picture by Ashley Bingham. Picture taken at the Forex Magnates Summit in London
Nicc Lewis, CMO, Leverate

Traders are dealing with massive amounts of data and analysis to improve their results as markets become ever more volatile and fast-paced. Initially this was via Money Managers and EAs, but today this is more increasingly done by automatic copy trading from experienced and profitable traders within social trading platforms.

A lot has been written about both subjects, but I want to take a different view and refer back to Asimov’s three laws of robotics written over half a century ago and how we prevent automation turning in a Hal and keeping it more like a Data. So here are 3 alternative laws, the 3 laws of automated brokers:

  1. An automated brokerage is far less likely to injure a trader, or through inaction, allow a trader to harm themselves
  2. An automated brokerage must obey the orders given it by regulators in order not to be in conflict with the First Law
  3. An automated brokerage is more likely to protect itself and its traders by following the First and Second Law

Much of the bad press received by the industry recently and the released circulars from CySec revolve around the “boiler room” activities of the sales offices.

Aggressive sales people “forcing” traders into “dangerous” activities. Automation, mitigates this, by guiding traders to decision-making points and lessening “harmful” human interference. By the same token, traders have a wide range of automated tools such as Stop Loss and Take Profit to protect themselves from harm.

Regulators are becoming wise to the power of automation to protect the traders. A good example is the clear guidelines for Social Trading where limits of exposure are predefined and clear to follow.

One of the biggest perceived threats in online financial trading is security and in particular the protection of personal data of traders. Automation limits the amount of personal data that is exposed to human employees and therefore increases the security of the data.

Another way that brokers are protecting themselves automatically is with the exposure and risk management. With higher than ever market volatility and the increasing number of “black swans”, automation is learning to manage brokers’ exposures in reaction to expected and unexpected events.

In Sci-Fi, when it all goes wrong there is usually a good reason. For example, the programmer overrides code designed to protect. The same is true in our world today, where the human touch is the unexpected variable. Machines think in ones and zeros, but we do not. Is automation a “must have” benefit or a “major threat”? Only you can decide or even influence.

Image courtesy of privacyliving.com

Read this next

Digital Assets

BlackRock digs further into crypto with metaverse ETF

BlackRock, the world’s largest asset manager with almost $10 trillion in AUM, is set to launch a new metaverse ETF to help investors securely monetize on the booming immersive version of the internet.

Digital Assets

Binance wins license in New Zealand as rival Huobi shutters derivatives

Binance, the world’s largest crypto exchange by traded volume, has obtained licenses to operate in New Zealand, even after rival Huobi shutdown derivatives trading last month due to concerns about regulations.

Retail FX

Hong Kong busts perpetrators of ‘ramp and dump’ scam

Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), has charged thirteen suspects of market manipulation in a joint operation with the local police.

Institutional FX

TradingView integrates market data from German Tradegate exchange

TradingView announced that it ‎has increased data coverage to allow its users to receive information from ‎and get free access to the intra-day and tick data from Tradegate Exchange.

Retail FX

Spotware Systems introduces Custom Push Notifications for cTrader mobile apps

Spotware Systems, a technology provider for the electronic trading industry, is introducing a new push notification feature to alert mobile users of price swings and market fluctuations through their cTrader app.

Market News

The Week Ahead: 30 September from David Madden, Market Analyst at Equiti Group

Sterling dominated the headlines last week, as there were concerns the UK government might struggle to service its debt.

Inside View

How does the quality of signal providers affect your business?

A must-have onboarding process for brokers with investment services like PAMM, MAM, or copy trading


DBS deploys Nasdaq Trade Surveillance

“The confidence that markets and our clients have in DBS as a safe and trusted banking group is anchored on our ability to detect and respond to anomalous activity, which in turn calls for a robust surveillance and prevention infrastructure.”

Industry News

SEC charges Justin Costello and David Ferraro for securities fraud and posing as billionaire veteran

The Securities and Exchange Commission charged Cannabis executive Justin Costello and David Ferraro, an associate of Costello’s, for promoting the stock of several microcap companies on social media without disclosing their own simultaneous stock sales as market prices rose.