JP Morgan employs HFT for US government bonds

JP Morgan enters into three-year agreement to implement Virtu Financial’s proprietary technology.

JP Morgan has enlisted high-frequency trading (HFT) firm Virtu Financial’s technology to trade US government bonds, in a three-year deal.

Virtu Financial announced JP Morgan will use its proprietary systems and order routing through a trading partnership in the dealer-to-dealer US treasuries market.

The firm – launched in 2008 – is one the largest US-based HFT companies, which focuses on the development of proprietary trading and execution technology.

Chief executive at Virtu, Douglas Cifu, described the collaboration of trading and technology with JP Morgan as a “natural progression”, adding that the US bank has been a “key partner since our founding.”

Virtu said the deal is a “win-win”, as JP Morgan will benefit from employing the HFT technology in US treasuries markets, whilst Virtu can “leverage its technological footprint” from partnerships like the one with JP Morgan.

The agreement is for a minimum of three-years.

A recent study found large institutions in the US are shifting to algorithmic and high-frequency trading in an attempt to deal with market volatility. 

The agreement with JP Morgan highlights the recent sell-side trend to buy in HFT tech, despite large banks once being the main suppliers of cutting-edge trading technology.