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Macro Hive Conversations With Bilal Hafeez

Ep. 227: Álvaro Cartea on AI Manipulating Markets (and What to Do About It)

Aug 2, 2024
Álvaro Cartea, a Professor of Mathematical Finance at the University of Oxford and director at the Oxford-Man Institute, dives into the intersection of AI and financial markets. He discusses the evolution of AI trading strategies and the unintended consequences of AI market makers. Álvaro highlights the regulatory challenges posed by algorithmic trading and the risk of market manipulation by self-learning algorithms. He also compares the competitive atmospheres of prestigious universities, revealing how they shape future financiers.
55:42

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

  • Álvaro Cartea emphasizes the transformative role of AI in trading, shifting from manual methods to algorithmic strategies that enhance decision-making.
  • The podcast discusses the potential risks AI poses to market integrity, notably the possibility of black box algorithms creating non-competitive prices.

Deep dives

Alvaro Cartier's Academic Journey

Alvaro Cartier shares his unique path to becoming a professional in finance and mathematics, beginning with his education in Venezuela where he studied economics. He later transitioned to the UK to pursue a degree in pure mathematics, realizing that extensive mathematical knowledge was crucial for understanding economic theories. His experience at the University of Chicago, where he combined studies in mathematical finance and economics, solidified his decision to focus on finance over macroeconomics. Ultimately, he discovered that financial mathematics has a profound impact on people's lives, a realization he acknowledges with both humility and responsibility.

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