JP Morgan establishes SI for all fixed income products

JP Morgan becomes first US investment bank to register as a systematic internaliser for all non-equity instruments.

JP Morgan has become the first US investment bank to officially register to operate a systematic internaliser for all fixed income products ahead of MiFID II.

A client note seen by The TRADE revealed the decision was made in order for JP Morgan to continue providing market making pricing for its clients once MiFID II comes into force.

“Even as we all work to implement the extensive, new regulation and prepare for its impact on our products and services, we want to ensure that trading with us remains as straightforward as possible,” the note said.

JP Morgan explained it currently provides vast amounts of pricing and liquidity, meaning if it was not an SI, clients could be deterred from accessing its liquidity due to MiFID II’s post-trade requirements.

It added the decision to opt-in into the SI regime ahead of the official deadline in September next year, means that if it does not meet SI thresholds at that time, it will reconsider its voluntary SI status in the relevant sub-asset classes.

During the voluntary opt-in period, trades for in-scope traded on trading venue (TOTV) products executed bilaterally with JP Morgan SIs will be reported by the firm via Tradeweb or BATS, its Approved Publication Arrangements (APA).

Last month, Deutsche Bank became the first European bank to establish an SI for bonds and derivatives trading, which will launch on MiFID II’s 3 January go-live date.

Deutsche Bank also said the decision would allow it to take on post-trade reporting obligations, a major challenge for its clients.

JP Morgan will also act as an SI for equity derivatives, after registering as an SI for cash equities earlier this year.

The investment bank followed Goldman Sachs, Credit Suisse, UBS, Deutsche Bank and others, some of which have been listed on the register since MiFID in 2007.

Morgan Stanley and Denmark’s Spar Nord Bank also registered to operate as an SI prior to MiFID II in May this year, according to the regulator’s market identifier code database.