J.P. Morgan formed an Electronic Trading Management Committee (ETMC) about five weeks ago comprised of top executives heading its markets businesses to cut across different asset classes.
The purpose of the ETMC is to share best practices in electronic and algorithmic trading across asset classes and to serve as a decision-making body for the CIB’s electronic trading investments and resources, according to the bank.
Michael Cavanaugh and Daniel Pinto, co-CEOs of JP Morgan’s Corporate & Investment Bank (CIB) formed the committee to maintain and strengthen the bank’s position as a liquidity provider. “It’s a recognition of the importance of electronic trading across asset classes to the enterprise,” said Frank Troise, Global Head of Electronic Client Solutions at JP Morgan, in an interview with Advanced Trading.
JPM is making significant e-trading investments in each of the asset classes, noted Troise. “The purpose of the committee is to create greater connectivity and collaboration across asset classes that have historically tended to run fairly independently,” he explained.
According to Troise, who was appointed chair of ETMC, the committee will meet frequently to discuss a wide range of topics. The discussion can include sales, service models, product management, technology architecture, core infrastructure, analytics and modeling.
“This is a committee that will come together as a clearinghouse to leverage ideas across products. It will serve as a forum for the heads of electronic trading in the various asset classes to get together and share ideas about electronic trading infrastructure and market structure and get more value for the scale,” said Troise.
As an example, over the past 18 months, the ECS has leveraged significant investments that the firm made in electronic equities, listed options, and futures. “We cut across the asset classes where we put this stuff to work,” said Troise.
The move is a sign that the bank is strengthening its position as liquidity provider in asset classes such as FX, rates, fixed income and credit derivatives that are undergoing a transformation to electronic trading. The markets businesses generated $19.8 billion in revenue for the bank in 2012, up from 12.2 billion in 2006.
“There’s potential for new thinking to come into the equities side as well. There’s a lot of subject matter expertise built into that committee,” emphasized Troise in the interview.
Members of the new committee include: Jeremy Barnum, Markets CFO, Chris Bruner, Credit, Richard James, Global Emerging Market, Ravit Mandell, Quantitative Market Modeling, Frank Troise, Equties/Chair Mike Urciuoli, Markets & Investor Services Technology, Sanoke Viswanathan, Strategy, Scott Wacker, Electronic Sales/JP Morgan Markets, Scott Weinstein, Commodities, and Eddie Wen, FX and Rates.
Electronic trading was highlighted as a priority of the business at the bank’s recent Investor Day event in March, where it described many of its e-trading initiatives across multiple asset classes. In a slide presentation for shareowners, the bank’s CIB said it was building ‘best-in-class’ electronic trading capabilities. JPM estimated that it could add $300-to-$400 million in revenue as it gained a leadership position in electronic trading.
In particular, JPM’s presentation indicated it is continuing to close the gap in equities, driving full integration of electronic voice, sales and trading, and full integration across cash, derivatives and prime brokerage offerings. The bank stated that its algorithms and trading infrastructure are now on par with market leaders.
On the fixed income front, JPM is building platforms — for both request for quote (RFQ) and central limit order book models — that allow it to trade in any new format. It also launched JPM Morgan Markets, a platform aggregating all research, execution, analytics and post trade services across fixed income. Also, it disclosed plans to scale FX, rates, and commodities trading capabilities to reach more products and clients and continuing to invest in cross-asset infrastructure and venue connectivity.
It's not clear whether the ETCM committee is collaborating on new risk management capabilities following trading losses from the London Whale incident. However, the Investor Day presentation shows screen shots from Athena, a next generation platform for product structuring, pricing, risk management, analysis and trade management that spans different asset classes including swaps.
Overall, JPM predicted that the growth of electronic trading will continue to drive higher flow volumes at tighter spreads, and that players with the best electronic capabilities will gain competitive advantage, laying the groundwork for why it has formed the new committee.
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio