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HSBC launches AI-powered equity index family

HSBC has teamed up with IBM Watson and artificial intelligence specialist EquBot to launch equity index products powered by AI and big data.

  5 7 comments

HSBC launches AI-powered equity index family

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

The bank says it new AI Powered US Equity Index (AiPEX) family is the market’s first to use artificial intelligence as a method for equity investing.

AiPEX harnesses the power of IBM Watson and EquBot’s AI to ingest and learn from the vast amounts of publicly available and continuously generated data points. These points could include company announcements, tweets, a satellite image of a store parking lot, or even the tone of language a CEO uses during an earnings presentation.

All this information is used to "objectively" evaluate the 1000 largest US publicly traded companies and pick the ones whose stock prices are poised for growth.

Dave Odenath, head, quantitative investment solutions, Americas, HSBC Global Banking and Markets, says: “In today’s markets, investors need strategies that can keep up with the growing amount of data being generated each day.

“We are now able to offer clients solutions that not only keep up, but thrive in an increasingly complex world of data. AiPEX with Watson simulates a team of thousands of analysts and traders working around the clock to learn from millions of pieces of information and identify potential investment opportunities.”

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Comments: (7)

A Finextra member 

I am probably missing something but why index trackers and not funds that have different types of objectives, e.g. capital growth, or focus on a sector.  Is this a subtle way of training an algorithm in a real live environment? 

A Finextra member 

If these products simulate the behaviour of analysts and traders, where does the "index" part come in? Surely they are active and not passively tracking an index. The naming seems confusing.

Dirk Kinvig

Dirk Kinvig Web Services Manager at Finextra

"smart" beta? 

Ketharaman Swaminathan

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

I thought index / ETF was passive investing where you created a portfolio onetime to mirror a preexisting index and let its value go up or down based entirely on market movements - in short "set it up and forget about it" style of investing. Not sure what's the role of AI in that. OTOH, it does require AI to use alternative data in order to predict price movements of individual stocks and trade on that basis. There are dozens of solutions like that in the market but I haven't seen the term index associated with any of them.

A Finextra member 

or "cheaper" beta? 

A Finextra member 

I'm not privvy to the way Watson is being used in the solution above, but nowhere does the article claim that it's being used to "...simulate the behaviour of analysts and traders". That's an outdated view of AI and ML, touted for the most part by media wanting to dramatise it's use as a threat to jobs. In reality (or at least the way I offer it), it enhances the quality, quantitive nature and scale of data from which Researchers take their baseline. They can then 'do their magic' (often faster and more reliably), which gives traders and brokers better products to offer to their Clients. If you're seeing it as a replacement for F/O staff, you're missing out (respectfully - and I don't mean that to sound patronising). Take another look at some of the stuff online and maybe it'll change your perception. Or DM me on here or LinkedIn, if I can help.

A Finextra member 

Addendum, to clarify my comments above ref "...simulates a team of thousands of analysts and traders...". What I meant to suggest is as the article points out: "...to learn from millions of pieces of information”.

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