Nasdaq receives SEC approval for AI-based trade orders

Nasdaq announced that the United States Securities and Exchange Commission (SEC) has approved its request to operate the first exchange AI-driven order type on Sep. 8.

Called the dynamic midpoint extended life order (M-ELO), the new system expands on the M-ELO automated order type by making it “dynamic,” meaning it will use artificial intelligence to update and, essentially, recalibrate itself in real time.

⚡ Bringing AI to the capital markets: Today, @Nasdaq announced it has received @SECGov approval to launch Dynamic Midpoint Extended Life Order (M-ELO), the first artificial intelligence (AI) powered order type.

Learn more about this next step we are taking to modernize markets,… pic.twitter.com/vFkLdjM3Br

— Nasdaq (@Nasdaq) September 8, 2023

Order types are a set of software instructions that execute specific trade pairs at exact market pricing thresholds. This form of automation has been around for a while but the new AI-driven order type is the first of its kind to use real-time reinforcement learning AI to execute orders.

This should have the follow-on effect of substantially speeding up orders placed with the system. According to a data sheet published by Nasdaq:

“Calculated on a symbol-by-symbol basis, this new functionality analyzes 140+ data points every 30 seconds to detect market conditions and optimize the holding period prior to which a trade is eligible to execute.”

This is a developing story, and further information will be added as it becomes available.

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