“Machines Can Trade. But Can They Govern?”“Machines Can Trade. But Can They Govern?”

“Machines Can Trade. But Can They Govern?”“Machines Can Trade. But Can They Govern?”

Blog Article

During a speech delivered at one of Southeast Asia’s top business schools, Joseph Plazo, argued that automation may have outpaced accountability.

He offered a sober reminder: faster trades are not always wiser ones.

“AI can make correct decisions. But are they the right ones?”

???? **When the Code Needs a Conscience**

Mr. Plazo is not a critic from the fringe. He has helped shape the future of machine-driven investing.

But that success, he suggests, carries risk.

“Optimisation without orientation is simply acceleration in an unknown direction.”

He cited a case during the COVID-19 pandemic when a bot under his supervision flagged a short on gold—just before the US Federal Reserve announced an intervention.

“We cancelled the trade. It interpreted data, not decisions.”

???? **Strategic Friction as a Form of Risk Management**

Plazo referred to what he terms **“strategic friction”**—the time it takes to think before a trade.

“That pause is not inefficiency,” he said. “It is governance.”

He presented a framework his firm uses, called **Conviction Calculus**. It includes three questions:

- What are the reputational implications of this decision?
- Does the broader geopolitical or sectoral context support it?
- If this fails, will someone take responsibility—or will the blame lie with the code?

???? **Asia’s Automation Drive and Its Oversight Deficit**

Plazo’s comments come at a time of accelerating fintech growth across Asia. From Singapore to Seoul, AI-led investing is seen as both policy strategy and capital advantage.

But as Mr. Plazo points out:

“You can scale capital faster than accountability.”

In 2024, two hedge funds in Hong Kong lost billions after AI models failed to factor in geopolitical risk—a result of logic executed too quickly, and too narrowly.

“The outcome was rational—and disastrous.”

???? **AI That Understands More Than Market Signals**

Plazo remains bullish on AI’s potential—but not its current limitations.

His firm is building what he describes as **“narrative-integrated AI”**—systems that account for macro context, cultural tone, and regulatory environment, not just price and volume.

“Data is abundant. Insight is scarce.”

Investors from Tokyo and Jakarta reportedly expressed interest in these models after the speech. One regional fund manager noted:

“This is the first practical answer to AI’s ethical vacuum we’ve seen in Asia.”

???? **What Happens When the Machine Is Always Right—But Still Wrong?**

Plazo ended with a line that encapsulated his check here thesis:

“The next financial crisis will not be triggered by emotion—but by perfect logic, executed too quickly, and left unquestioned.”

For investors and policymakers alike, the message was clear: AI is here to stay. But leadership cannot be automated.