JP Morgan to launch high-speed platforms across Asia

Investment bank JP Morgan is expanding its electronic trading activities in Asia by launching a number of low-latency platforms across various markets in 2012-13.

Michael Green, head of equity trading Japan, and head of electronic trading solutions Asia Pacific, JP Morgan, has told the firm plans to roll out a low-latency platform in Tokyo, Australia, Korea, Taiwan, with a view to launching in Hong Kong and India “further down the road, as and when market structure and the regulatory environment allows”.

The move is part of significant global investment by JP Morgan in electronic trading after hiring Frank Troise as global head of equities electronic client solutions in 2010. Troise was previously head of equities electronic trading at Barclays Capital and was at Lehman Brothers from 2005 to 2008 and at agency broker ITG from 1997 to 2005.

Green said the firm’s team of locally-based quant specialists have been working on optimising the platform’s algo strategies – “rebuilding the strategies from the ground up in partnership with our local developers who have rolled out a next-generation platform end-to-end”.

He added that JP Morgan’s quant team had produced dynamic real-time pricing inputs and queuing capabilities, advanced crossing intelligence, dynamic re-profiling using real-time market data, predictive momentum signals and complex event processing (CEP).

“These teams have done a highly credible job of taking us from the middle of the pack to a market leader in terms of strategy performance, innovation, platform stability, customisation capabilities, and being thought-leaders in this space,” said Green.

This year in Asia JP Morgan has already added low-latency DMA expertise on both the product side and the sales side. The firm’s current Electronic Client Solutions (ECS) offering includes a full suite of algorithms for both lit and dark venues, customisation, advanced overlays, liquidity strategies including smart order routing and its dark pool, JPMX.

“JPMX has tied up with some of the dark pool aggregators in the region, and discussions with others are currently underway,” said Green. “We’re seeing a good linear increase in volumes in all of the markets we’re operating in. The transaction-based cash equities business that we’re in is based around scale economics, execution technology, and the ability to internalise – one must have the ability to transact large volumes as efficiently as possible, which plays into an electronic-based execution strategy.”

Green said JP Morgan now had clients in Japan who executed 100% of their flow through the firm, either using algorithms or DMA.

“That’s a big change from five years ago,” he said. “A number of locally-domiciled Japan clients are now more progressive and sophisticated in their preferred execution methodology than many global institutional investors.”