AI now threatens even Wall Street bond traders' jobs
Artificial intelligence has begun taking over bond trading operations in the U.S. financial world. Bloomberg reported on the 26th (local time) that major Wall Street banks and electronic trading platforms are introducing AI agents capable of performing tasks autonomously into bond trading. Financial institutions have long used AI for market analysis and identifying investment opportunities, and are now moving to entrust actual trading to AI as well.
The U.S. corporate bond market sees an average daily trading volume of about $62 billion, according to figures compiled by financial market research firm Crisil Coalition Greenwich. Barclays, a British investment bank, projected that as AI adoption expands, the share of U.S. investment-grade corporate bonds traded electronically will rise from the current 45% to 65% over the coming years. It also forecast that electronic trading's share of lower-rated high-yield corporate bonds would double to 50%. Zornitsa Todorova, head of thematic research for rates, foreign exchange and commodities at Barclays, explained, "Through discussions with financial institution clients, we are seeing a broadening movement to prepare for an era in which AI executes actual trades."
Financial institutions currently use AI agents mainly for information gathering and data analysis, reviewing complex corporate bond contract terms, and summarizing news. They are also being used to organize information needed for investment decisions before trading and to develop programs that screen bonds. As AI takes on more tasks, financial institutions are also stepping up recruitment of junior traders familiar with AI technology and quantitative analysts.
Barclays pointed out that while AI's role is expanding from providing information to executing trades, if multiple AI systems react to the same data and market signals and place sell orders simultaneously, it could trigger sudden market shifts and amplify declines in bond prices. The past failure of automated bond trading systems to function properly during periods of financial market turmoil is also cited as grounds for caution. As a result, some financial institutions restrict the use of AI agents altogether due to internal rules, and there are calls for human verification of AI-generated analysis.
John Lloyd, head of global multi-sector and corporate bonds at Janus Henderson, said, "We see AI not as a technology that replaces human decision-making but as a tool that complements judgment." Konrin also said, "Even as AI advances, we do not expect human traders to disappear entirely."
