18 August 2022  |  Technology Innovations

Gamma and Vega Hedging Using Deep Distributional Reinforcement Learning John Hull, Senior Fellow, GRI and Professor, Joseph L. Rotman, School of Management, University of Toronto Jay Cao, Jacky Chen, Soroush Farghadani, Zissis Poulos, Zeyu Wang, and Jun Yuan Joseph L. Rotman, School of Management, University of Toronto Download the full Report – PDF Version OVERVIEW:… View Article

20 June 2022  |  Technology Innovations

A 2022 Primer for Crypto-Trading Andreas Park, Research Director, Rotman FinHub, University of Toronto Download the full paper – PDF Version

1 June 2022  |  Technology Innovations

Five Futures of Currency: Fiat vs Credit, CBDC, Stablecoins, and Crypto Lois Tullo, Executive in Residence, Global Risk Institute Download the full Report – PDF Version EXECUTIVE SUMMARY What will the future of currency be in ten years? When looking forward towards a complex and volatile future influenced by changing technological, geopolitical, societal, economic, and… View Article

7 March 2022  |  Technology Innovations

FINANCIAL INNOVATION SERIES: Adversarial Machine Learning: Risks and Opportunities for Financial Institutions Alexey Rubtsov, PhD, Senior Research Associate, Global Risk Institute Download the full Report – PDF Version INTRODUCTION In a recent study, Microsoft found that 25 out of 28 firms surveyed did not have protections against the so-called  adversarial attacks on their machine learning… View Article

16 February 2022  |  Technology Innovations

One of the areas in finance where machine learning is having an impact is the hedging of derivative portfolios. If there were no transaction costs, one strategy would be to zero out all the Greek letters (delta, gamma, vega, etc.). But in practice, a trader must follow a partial hedging strategy that reflects trade-offs between risk reduction and transaction costs.

30 October 2020  |  Technology Innovations

The race to develop and adopt global stablecoins (GSC)/central bank digital currencies (CBDC) has the potential to put the stewardship of the global financial system up for grabs.

25 August 2020  |  Technology Innovations

This research paper reviews the components of open banking, including APIs and screen scraping. The author discusses the implications for traditional banks, FinTechs and Third Party Providers (TPPs) within data-sharing frameworks. The paper then reviews the implementations in the U.K. and Australia, and the potential implications for Canada’s financial system.

21 August 2020  |  Technology Innovations

This research report explains the tools commonly used in Machine Learning, identifies some of the challenges machine learning poses for financial institutions and formulates key questions that senior management should ask with respect to machine learning applications.

18 June 2020  |  Technology Innovations

According to industry research, total cryptocurrency derivatives trading volume in futures, options, and swaps surpassed $3 trillion USD in 2019. In this research we study whether the introduction of cryptocurrency derivatives is beneficial or detrimental to the underlying cryptocurrency spot markets.

28 February 2020  |  Technology Innovations

This report discusses the implementation challenges of Natural Language Processing (NLP) and Sentiment Analysis for financial institutions. NLP is being applied by financial institutions across a number of different areas of interest: climate change, asset management, geopolitics, economic policy, monetary policy & cyber risk. This report also touches upon existing practices and dealing with challenges that currently face the financial services sector.

19 December 2019  |  Technology Innovations

Around the world, there is a steady increase in people searching for “Artificial Intelligence” and “Machine Learning” on the internet. With this increase in public interest, what is important for CROs and financial executives to understand from this?

21 August 2019  |  Technology Innovations

A recent surge of interest in Machine Learning (ML) tools within the financial services industry has exposed many challenges of ML applications in financial modelling

10 July 2019  |  Technology Innovations

To many financial industry insiders, tokens have no intrinsic merit and exist only as a way to evade regulations. We demonstrate that generic revenue-based token contracts are indeed economically inferior to equity and lead to over- or under-production.

1 April 2019  |  Technology Innovations

From a financial institution’s perspective, AI offers a wide range of potential benefits, but one must ensure that the implementation of this technology is both prudent and ethical. To aid in the understanding of how this can be achieved, this report will introduce AI and detail issues of bias, interpretability, and data security and privacy as they relate to the ethical use of AI algorithms by financial institutions.

21 March 2019  |  Technology Innovations

In this paper, we discuss Artificial Neural Networks (ANNs), one of the most common and complex Machine Learning tools. After a non-technical introduction to ANNs, we examine the risks associated with the application of this algorithm to financial data.

14 November 2018  |  Technology Innovations

In this report, we draw from a wide range of sources to provide a comprehensive overview of the global digital lending landscape. We survey recent growth trends of peer-to-peer (P2P) and other forms of alternative lending that have been enabled by digitization, and compare and contrast the major digital lending markets around the world.

13 September 2018  |  Technology Innovations

In this paper we discuss smart contracts – computer programmes running on top of a blockchain. We start with some intuitive examples that demonstrate the concept of a smart contract and then consider the Ethereum platform, the most notable platform for decentralized applications. We also outline some applications of smart contracts and discuss associated risks.

4 June 2018  |  Technology Innovations

This paper provides a non-technical introduction to blockchain technology using cryptocurrencies as an illustrative example. We describe the mechanics of blockchain and outline some risks associated with the existing cryptocurrencies.

4 June 2018  |  Technology Innovations

Research in the field of Artificial Intelligence (AI) is growing exponentially, and as a result, applications of the technology in different industries are constantly being discovered. This paper explores how AI can be applied to the field of fund management, and specifically, how it can be used to manage active funds.

2 May 2018  |  Technology Innovations

This report will consider several vantage points including that of the incumbent financial institution, the consumer, and the financial system as a whole. We will also offer some insight with regards to potential risk-mitigation strategies and commentary on the potential for fintech-related risks to become systemic.

9 March 2018  |  Technology Innovations

REPORT – A comprehensive overview of Canada’s Fintech landscape, comparing Canada to other Fintech hubs in terms of funding, regulations, and collaborations; discussing the geographic and categorical distributions of Canadian FinTech firms; and listing key players in the Canadian FinTech space.

6 June 2017  |  Technology Innovations

With this article we are kicking off a focus on the usage of Big Data and Advanced Analytics in the area of anti-moneylaundering (AML). AML has been a particularly difficult solution for global banks as the evolving regulatory standards call for banks to be able to readily monitor all transactions across the firm, which requires an in-depth knowledge of their clients and their clients’ counterparties (and often times the correspondent banks).

7 March 2017  |  Technology Innovations

“Artificial Intelligence” is a very powerful narrative. In fact, today, many leading thinkers envision a future where machines surpass humans in intelligence. In Part One of our two part series, we assess of the potential near term risks and benefits of Artificial Intelligence. Later, in Part Two, we explore how AI is expected to impact Financial Services and what specific use-cases we expect to see over the next 1-3 years.

15 January 2017  |  Technology Innovations

Natural Language Processing is a sub-section of the artificial intelligence domain that is focused on teaching computers to understand natural human languages. NLP encompasses a range of theory-motivated computational techniques which attempt to address the disconnect between human and computer languages.

14 November 2016  |  Technology Innovations

Thanks to new developments in data technology and in mobile telecommunications adoption, we see the potential rise of a third wave of innovation in banking. In this paper we will outline the key features, benefits, and strategic imperative of the Digital Bank of the Future

22 September 2016  |  Technology Innovations

Computing capacity continues to expand and transform the world we live in. With computing capacity doubling every two years, as we cram more transistors onto microprocessors. And what is the result?

26 July 2016  |  Technology Innovations

ATB financial embarked on a journey to make sense of blockchain technology by successfully leading blockchain innovation with Germany’s ReiseBank

20 June 2016  |  Technology Innovations

Machine Learning (ML) is a rapidly developing technology with applications in a wide variety of areas

9 June 2016  |  Technology Innovations

As the technology that creates a distributed ledger, blockchain is creating significant waves of disruption in industries, processes and business models revolving around the centralization of trust.