Nasdaq announced it received the go-ahead from the U.S. Securities and Exchange Commission (SEC) for its Dynamic Midpoint Extended Life Order (M-ELO), an artificial intelligence (AI) based exchange order. As an industry first, the global trading platform stated the move forms part of its continued strive to modernise the markets and leverage the latest technologies.
Nasdaq gets the SEC green light for first AI exchange order type
Dynamic M-ELO aims to speed up order matches and minimise market impact, boosting the efficiency of an already speedy stock market even more. According to the exchange, this will establish better trading outcomes.
This initiative follows predictive AI, the Strike Price Optimisation Programme, implemented in the Nasdaq U.S. options market earlier this year. It enhanced efficiency by better-aligning strike lists and demand across the Nasdaq’s U.S. options exchanges. As the market handles roughly 1.5 million individual options, it identified the need to improve the determination of new strike listings.
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As for its newly approved M-ELO, the Nasdaq’s president of market platforms, Tal Cohen, commented:
As part of our commitment to modernising markets, Nasdaq takes a thoughtful, long-term approach to technology adoption and advancement to ensure we drive innovation in a responsible manner. AI-powered Dynamic M-ELO is a purpose-built solution that encapsulates our ambition to cultivate the quality of our markets and underscores our commitment to delivering innovative products and tools that benefit all market participants.
The Executive Vice President of North American Trading Services at Nasdaq, Kevin Kennedy, echoed the sentiment, stating that the exchange has the experience and underlying technological infrastructure to use AI and improve market efficiency.
