Neil Joseph, European head of equity trading, JP Morgan Asset Management
As automation continues to permeate buy-side technology and trading operations, the use of automated bots within trading technology workflows is also beginning to show signs of value for asset managers.
JP Morgan Asset Management (JPMAM) developed and rolled out its own bot, referred to internally as BETSI (Bot for Equity Trading Symphony Integration), earlier this year to automate and optimise certain trading desks workflow process, such as notifications, indications of interest for block liquidity and enhancing request for quotes (RFQ).
Speaking to The TRADE, JPMAM’s European head of equity trading, Neil Joseph, said that the launch of BETSI – believed to be the first of its kind among buy-side asset managers – is part of the firm’s rolling three-year strategic plan to accelerate its equity trading technology evolution.
The bot was built through close collaboration between JP Morgan’s EMEA equity trading desk and its technology team, “working as one team with that common goal to improve operational efficiency by automating the routine so as to enable traders just to focus on more complex order flows and continue to reduce execution costs and integrate more with the investment process,” Joseph explained.
The three key areas of operational functionality the BETSI bot offers are an intelligent notification service, block indications of interest, and RFQ enhancements, all of which align with the guiding principles for JPMAM’s equity trading desk.
The BETSI News function generates alerts for the systematic distribution of stock, market or liquidity news to portfolio managers, whereby traders instruct the bot to notify portfolio managers of relevant developments which is delivered via the Symphony messaging application to either mobile or desktop. It’s a scalable and targeted solution which initiates a two-way conversation and keep the relationship between trader and portfolio manager as close as possible, according to Joseph.
“Prior to having a bot like this, traders would generally have to manually identify relevant recipients of those indications and typically they would be manually communicating to those specific portfolio managers in a more ad-hoc basis,” he explains. “BETSI News enables a desk to send out those news and liquidity notifications in a consistent and auditable manner to that systematically determined audience.”
BETSI Indications works to identify automate and improve the communication of block liquidity signals, which enables brokers to post targeted indications that are fed directly into JPMAM’s proprietary order management system, Spectrum Trading. By optimising the identification and execution efficiency for block liquidity, traders are given an “integrated and consistent view” and can monitor liquidity opportunities in real-time, Joseph added, while also reducing impact on the market and total trading costs.
The third functional area of the bot is BETSI Bids, which Joseph describes as a “relatively simple but very important workflow”, directing the flow of communication around RFQs through the Symphony platform, with the bot monitoring, reading, recording and responding to quotes automatically.
“BETSI Bids enables brokers to register bids in response to risk price requests,” Joseph explained. “We request a risk price in a basket of stocks and BETSI will validate the bid in a broker-specific room, and they then flow directly into Spectrum Trading, responding to the broker as well. Even so far in Q1, the desk has executed over 150 trades using BETSI Bids.”
While the bot has only been live on the JPMAM equity desk since Q1 this year, Joseph said that BETSI is already showing promising results in terms of its operational efficiencies and added value to the trading workflow, whereas quantifiable metrics may be harder to come by for some of BETSI’s functionalities.
“BETSI Indications, for instance, can be measured: So far we’ve rolled this out to 13 brokers and received an excess of 15,000 different indications since go live on 29 April this year,” he said. “So, what was previously so difficult to quantify, what was previously fragmented and difficult to consume across the multiple chat windows or phone calls, is now available in the consolidated Spectrum Trading platform.”