Northern Trust has deployed machine learning models within its FX currency management solutions business, designed to enable greater oversight of thoughts of daily data points.
The solution has been developed in partnership with Lumint, an outsourced FX execution services provider, and will help buy-side firms reduce risk throughout the currency management lifecycle.
The technology utilised by the Robotic Oversight System (ROSY) for Northern Trust systematically cans newly arriving, anonymised data to identify anomalies across multi-dimensional data sets. It is also built on machine learning models developed by Lumint using a cloud platform that allows for highly efficient data processing.
“In a data-intensive business, ROSY acts like an additional member of the team working around the clock to find and flag anomalies. The use of machine learning to detect data outliers enables us to provide increasingly robust and intuitive solutions to enhance our oversight and risk management, which can be particularly important in volatile markets,” said Andy Lemon, head of currency management, Northern Trust.
Northern Trust announced a strategic partnership with Lumint in 2018 to deliver currency management services with portfolio, share class and look–through hedging solutions alongside transparency and analytics tools.
“Northern Trust’s deployment of ROSY amplifies the scalability of its already highly automated currency hedging operation; especially for the more sophisticated products such as look-through hedging offered to its global clients,” added Alex Dunegan, CEO, Lumint.
The solution is the latest rollout of machine learning technology by Northern Trust, as the bank continues to leverage new technologies across its businesses.
In August last year, the custodian developed a new pricing engine within its securities lending business by utilising machine learning and advanced statistical technology. By using a hybrid cloud platform for highly efficient processing of data, Northern Trust will leverage a new algorithm that identifies strategic market data points from multiple asset classes and regions to project the demand for equities in the securities lending market.
The Chicago-based global custodian is underway rolling out new capabilities using robotic processing automation (RPA) and cognitive artificial intelligence (AI) within a framework called its ‘Fund Accounting Optimisation Lab’, in a bid to reduce manual entries and repetitive tasks when producing daily net asset value (NAV) for funds.