Nasdaq Integrates AI to Simplify and Accelerate Bank and Insurance Risk Calculations

Core Viewpoint - Nasdaq has developed a new methodology utilizing advanced machine learning to enhance investment portfolio risk calculations and predictive analytics, which will be integrated into its Calypso platform for financial institutions [1][3]. Group 1: Nasdaq's Technological Advancements - Nasdaq's machine learning technology can process complex trading and regulatory risk calculations up to 100 times faster while maintaining high accuracy, significantly reducing the physical infrastructure needed for these calculations [3][4]. - The new XVA Accelerator employs Chebyshev Tensors and a patented technique from MoCaX Intelligence, allowing for rapid adjustments during market volatility by identifying fewer 'smart' scenarios for timely risk analytics [7][9]. - The XVA Accelerator adapts dynamically to changing market conditions, providing accurate approximations with fewer calculations, thus lowering energy requirements and carbon footprint [8][9]. Group 2: Industry Context and Regulatory Environment - The rise in market volatility and regulatory requirements has led to increasingly complex risk calculations, with typical portfolios requiring up to 1 trillion calculations per day [1][6]. - Financial institutions are enhancing their internal risk frameworks to meet the demands of regulations like the Basel III Endgame, which introduces more complex calculations for XVA [5]. - The Credit Value Adjustment process, which involves millions of Monte Carlo simulations, is critical for managing risks and has become more complex since the Global Financial Crisis of 2007-2008 [2][6].