Stock exchanges are undergoing a massive transformation, guided by the relentless march of emerging technologies. At the forefront of this digital revolution is the integration of AI, reshaping the way transactions are executed, risks are managed and markets are navigated. 

In a recent interview with Tan Tiew Hin, Managing Director, Head of Technology, Shared Services & Operations at Singapore Exchange (SGX), HCLTech Trends and Insights gained a valuable overview of the intersection of AI and emerging technologies within the exchange environment. 

Tan, responsible for infrastructure and shared services since 2017, sheds light on the challenges, strategies and the pivotal role of people and data in this dynamic landscape.

AI in stock exchanges: Balancing speed, stability and agility

AI has swiftly transitioned into a fundamental force shaping the future of stock exchanges. The ability of AI algorithms to analyze vast datasets, identify patterns and make split-second decisions has become indispensable in a world where milliseconds can make or break a trade.

“AI provides opportunities for sustainable differentiation and greater workforce productivity,” Tan said. This sentiment resonates across stock exchanges globally, where the integration of AI is not merely a trend, but a strategic imperative.

He emphasizes the delicate balance between speed and stability in SGX's operations and delves into their approach in sharing ideas with industry counterparts, leveraging AI to enhance operational efficiency, customer experience, risk management and innovation.

People and data: The twin pillars of AI challenges

As exchanges pivot toward a future defined by algorithms and data, challenges emerge on the path to technological nirvana. “The two main challenges in AI implementation are people and data,” says Tan. He elaborates on the transformation from making humans more like machines to the current goal of making machines emulate human wisdom.

The discussion underlines the importance of fostering a future-ready culture within the organization, emphasizing that successful AI implementation necessitates a workforce ready to embrace innovation and navigate the uncharted territories of emerging technologies.

The conversation moves to the significance of data as a valuable resource. Tan explains: “Data is a new fuel, it’s in variable resources that power many new technologies and applications, especially in the fields of AI, analytics and automation. Data can be used to generate insights, optimize processes and transform user experiences.”

He emphasized the ethical, social and legal implications surrounding data, particularly in the context of privacy and sovereignty. As AI models become increasingly sophisticated, the accountability of decisions made based on data becomes paramount, making data privacy and sovereignty crucial considerations. 

For an organization like SGX, navigating the intricate relationship between innovation and risk management is always a fine balance. There is fear of failure within large organizations, but it’s crucial to create a risk framework that encourages innovation. A future-ready culture emerges as a crucial element in allowing space for exploration and the generation of innovative ideas.

The ABCD of change: AI, blockchain, cloud and data

Looking beyond AI, other emerging technologies such as blockchain are making a significant impact in the banking and finance sector. Tan delved into the intricacies of technological trends, focusing on the elements of ABCD — AI, blockchain, cloud and data. 

“ABCD will continue to mature. AI is now in the spotlight. Blockchain and the ongoing battle between decentralized financing (DeFi) and centralized financing (CeFi) vying for supremacy — is always advancing,” he adds. While acknowledging the efficiency of DeFi in capital asset movement across borders, he also points out its fragmentation and the ongoing importance of centralized financing for effective price discovery.

Tan references the transformative impact of cloud technology on global exchanges, citing notable partnerships such as Google with CME and AWS with NASDAQ. The strategic movements of these big tech players suggest there will be a dynamic shift in the next few years and the critical role of fair, orderly and transparent price discovery will drive the evolution of exchanges.

SGX’s contribution to Singapore’s FinTech hub vision

As stock exchanges globally embrace FinTech, SGX stands out for its collaborative initiatives with major tech companies and FinTech firms. The organization’s engagement in testing and piloting various use cases is part of its aim to contribute to Singapore's vision of becoming a global FinTech hub. 

As the sun sets over the city-state, the story of SGX and emerging technology continues to unfold. In a world where algorithms meet human wisdom and blockchain and cloud technology shape financial markets, SGX stands as a beacon of innovation.