Hudson River Trading (HRT) is utilising AI to enhance trading efficiency and make short-term price predictions, giving its traders a competitive advantage. Iain Dunning, the Head of AI Research at HRT, discussed the firm's AI applications, which go beyond traditional machine learning and algorithmic approaches that have been used by quantitative firms for decades. HRT's AI Lab focuses on innovation, with interns leading projects involving deep learning and reinforcement learning to tackle real-world trading challenges.
HRT's success is also attributed to its Prism unit, which specialises in mid-frequency trading strategies operating on time horizons of minutes, hours, or even days. This approach has generated significant profits, with Prism alone generating over $2 billion. The company's AI systems are designed not only for performance but also for fairness, reliability and scalability.
However, HRT faces challenges, including competition from AI startups poaching its staff. Despite offering high pay, the firm has seen members of its development team leave for companies like OpenAI and Reducto. This shift reflects the increasing demand for AI talent and the evolving landscape of financial markets, where AI plays a crucial role.
