Improving Market-Making Profitability and Efficiency With SparkCognition Trading Suite


To survive and thrive in the current investment and trading landscape, traders need the ability to operate with unerring accuracy, incredible speed, and high volume. 


Market-making today is ultra-competitive, with more players than ever trying to capitalize on fleeting opportunities. Regulatory constraints often limit market players’ ability to respond as aggressively as they’d prefer, and margin compression pushes investors to do more with less. Navigating the increasingly narrow gap between risk and return on investments requires a highly attuned ability to leverage optimal hedging strategies while maximizing margin retention.


Until recently, banks tended to use traditional methods like statistical analysis, reversion analysis, mean-variance reduction, and statistical arbitrage to facilitate complex investment strategies. But it’s tough to secure a competitive advantage when everyone is using the same approach, especially under market pressure. Not to mention that statistical-based methods suffer from a relative lack of agility—lagging in the space between when a new insight is discovered and being able to act on that insight.


Artificial intelligence presents the most potent and holistic solution class to respond to this pressurized investment and trading environment. Accordingly,  the global AI in banking market is expected to top $64.03 billion by the end of the decade, growing at a CAGR of 32.6%. Organizations are finding a high return on investment when leveraging AI to improve analytical accuracy, hedge more effectively to minimize risk, accelerate reactions to fluctuating market conditions, and achieve differentiation in a growing and crowded field.


Customer success story: Nomura’s extraordinary results leveraging Trading Suite to improve efficiency and profitability 

Nomura Holdings, Inc., the century-old financial services company—and one of the world’s preeminent full-service global banks for investment, liquidity, financing, and hedging solutions today—was no exception to the aforementioned challenges. The need to rapidly service thousands of RFQs of all sizes in seconds while appropriately balancing the risk, profit, and market share targets in the face of ever-changing market conditions put enormous pressure on the company’s traders. 


Recognizing the potential to optimize their trading desk performance with AI-powered technology, Nomura deployed SparkCognition Trading Suite on their European government bonds balance sheet, leveraging AI-based multi-agent reinforcement learning to:


  • execute trades
  • perform client profiling
  • predict market trends
  • optimize pricing
  • fulfill hedging and risk management
  • catalog all auditable records for regulatory compliance


Trading Suite uses reinforcement learning to find the price quote response that optimally satisfies the client’s RFQ and aligns with the senior trader’s risk axis—at that moment, for that client. Using Trading Suite for market-making, Nomura has automated their ability to provide a fast and accurate feed of price that stays aligned with market conditions, never exhibits extreme margin, and always follows the trader’s risk axis. The reliability of output Trading Suite created for Nomura has helped the top-tier company significantly increase its market share and enhance its reputation as a preeminent market-making partner for clients large and small. 


Trading Suite has become Nomura’s extremely fast, reliable, objective, repeatable, and entirely confidential trading solution to improve efficiency and profitability on its government bond trading desk. 


Discover the remarkable results SparkCognition has helped Nomura achieve in our case study:

Doubling Profitability and Increasing Market Share for a Top-Tier Investment Bank

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