FSB Q&A – “The Future of Trading”
With Richard Thorp, Business Development Director at FSB
Q1: To what degree is the automation of trading rooms already a done deal?
That deal is signed. It’s more a question of when it comes into full effect, which naturally depends on the tools any operator has at their disposal. FSB are in the vanguard of this charge towards complete automation. In fact, we’ve staked our business model on it. The human trader was king. No longer. For speed and accuracy, the algorithms win by an order of magnitude every time. And the gap is only widening, such is the doubling power of technological progress, according to Moore’s Law. But this isn’t to say that role of the trader is dead. It’s simply evolved. For now, wily punters can occasionally fool the trading tools, so manual intervention remains important. For all the sophisticated software at the airport, profiling customers’ suspect behaviour is still better left to mankind, with the instinct and insight only a fellow primate can bring! And it’s a similar story in trading, where the intentions of carpet-baggers, and clients ranging from shrewd to clueless can still be best demystified by a trained trading eye. As in every intelligent endeavour, though, AI systems will surpass us one day. And universal basic income beckons.
Q2: Are differing sports at different stages along the road to automation?
Absolutely. The key differentiator is any sport’s complexity, or how tricky it is to get a trading handle on the key variables that impact performance, activity and scoring. Football is streets ahead not because of its popularity, but because an absolute knowledge of these variables is more easily acquired. Tennis is catching up quickly, although a lack of reliability can creep in when demotivated “scouts” or even match umpires react slowly or poorly to feed the scoring system. It’s another case of man being fallible, I’m afraid! Ultimately, if you set the automated dials correctly, above all in-play, there should never be a need for a market suspension around a penalty, a break point, even a Hawk-Eye challenge. There should always be a live price. However, it’s a rockier road in other sports. Take horse racing where riddles like sectional timings, stride length and horse heart rate are far harder to solve. Some in the industry are working on it, however.
Q3: What role will the trading desk have in the future?
Of course, its role will necessarily change in step with the ground it concedes to automation. Essentially, however, its position as the nerve centre of a trading operation need not alter that much. It can still prove the assembly point of all these progressive feeds: advanced pricing, accurate modelling, scoring data, team and player updates, weight of money, even opinion. Corralling all these inputs and distilling precise answers for risk management and trading strategies remains the challenge – whether a human’s at the controls, or merely overseeing the machine-learning equipment. Indeed, fresh services can sometimes emerge unexpectedly out of lightning progress. Verifiable tracking is one such new test for the trading desk, but it’s also given it a new job as an integrity tool. Think of the data specialists or the sensitive market-models that now sit behind the tennis tours to guard against match-fixing – or at least flag it. Refining these tools and counting out the vagaries of human misdeeds and misinformation is the task for the brightest minds allied to the finest AI systems.
Q4: Will the suppliers multiply in this landscape?
I reckon this will prove a receding game of musical chairs as opposed to an expanding conga line. Knowing your punter through these AI systems will become increasingly straightforward. And not just for trading, for marketing techniques, too – making it easier to bonus, restrict or bar. At FSB, we’ve dedicated ourselves to reengineering tired industry methodologies through our game-changing platform. A comprehensive solution, managing everything from raw sports data through to the user interface, is for nothing if it’s not underpinned by the most advanced AI trading tools around. This is what sets FSB apart and explains why our trading team now manages sportsbooks for some 30 brands and counting. Of course, I’m sure we’ll stop shy of a monopoly in this domain. Yet this is a dog-eat-dog environment where only the fastest and most flexible will survive.
Q5: What newer technology will be brought to bear in the trading arena? What does AI mean for trading, for instance?
AI will undoubtedly be the definitive driver of growth for operators over the next 12 months and beyond. You’ll have seen the hyperbolic movies on the rise of the robots, but artificial intelligence for igaming is no less transformative, even if no-one’s going to make a film about it. Machine-learning promises generalisable tools which can adapt and improve their own programmatic code, giving operators the edge on the competition and a deep understanding of their customers. For example, there’s an old maxim in trading that the further ahead of an event you bet, the cannier you are likely to be as a punter. Of course, that’s a generalisation with myriad exceptions. But it explains why operators relax their limits closer to the start time of any event, when most unknowns are known, so it’s harder to steal an advantage. However, the latest AI tech can probabilistically drill down on these “tells” (e.g. time / size of bet, location, gender) across the board and effectively profile your customer within a few trades. Bonus abusers get weeded out, high rollers who got lucky early on get accommodated. You get the idea. After all, we are creatures of habit. Whereas AI is simply a bigger-brained beast. As the trading algorithms kick in, the client-specific marketing strategy must inevitably follow, paving the way to a truly personalised experience for the punter. For any operator, the dream is to know their consumer from log-in. With AI, that dream is now an attainable reality.