- JPMorgan’s new equity trading "bot" is part of a set of developments which could cut the firm’s trading costs by hundreds of millions of dollars a year.
- The project was spearheaded by Neil Joseph, European head of equity trading at JPMorgan Asset Management. He said it’s part of a broader overhaul of automation of processes at the bank.
- "We’re increasingly recruiting technologists from firms like Google and Microsoft."
JPMorgan says it’s ramping up the electronic revolution at the firm, accelerating the integration of traders and tech with a new global equity trading bot that is at the forefront of a three-year initiative.
The product, developed earlier this year, is being rolled out in the bank’s asset management division, where it says the technology is among is the first of its kind among fund managers. Asset management is a key revenue driver for JPMorgan, and the bank sees a big win in both cost-cutting and in winning clients by simplifying their trading processes.
Automation has been seen as a harbinger of doom for the industry, threatening thousands of jobs. Last year, Citigroup warned that about 20,000 staff could lose their jobs over the next five years due to automation, the Financial Times reported.
But Joseph said it’s more of a pivot to technology rather than an outright gutting of trading jobs, and America’s biggest bank is on the lookout for top talent.
"On a net basis we’re adding headcount, not subtracting, but we’re increasingly recruiting technologists from firms like Google and Microsoft," Joseph said.
"Compared with 10 years ago, we are far more integrated as a trading desk, which has made us more agile and efficient," Neil Joseph, European head of equity trading at JPMorgan Asset Management, told Business Insider in an interview.
Asset management is a particularly competitive space. Passive investment products have dominated the industry, while active stock-picker funds scramble to win a bigger share of the ever-shrinking pie of fees.
The bot has the potential to lower equity trading costs, increase scalability, lower risk, and create more integration with portfolio managers, JPMorgan says. The project is just one of many being covered by JPMorgan’s $11.4 billion in annual technology spend.
The bank’s asset management teams have received greater training in recent years in programming languages and machine learning. And automating orders has reduced trade execution costs by about 20% over the past few years, the bank said.
"It’s too early to say the exact saving because of this change because the data was never previously captured," said Joseph, who spearheaded the project with a handful of quant colleagues.
Below are the bot’s target capabilities:
- Intelligent Notification Service: Portfolio managers are notified of market or price moving events in messages sent directly to their mobile phones. The bot generates the alerts automatically based on the stocks that those portfolio managers hold.
- Block Indications: The process automates the hunt for big blocks of stock via its Symphony messaging service and quickly executes those trades at a cheaper cost.
- RFQ: Through the equity trading bot the previously manual process is altered with the technology able to monitor, read, record and respond to "request for quotes" automatically.
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