BUILDING ON SUCCESS.
Frank Troise explains how ECS is expanding its product offering and global reach.
Are you happy with the progress of the group over the past two and half years?
My main focus when joining was to revamp the product offering and strengthen our sales and client service capabilities. I am very pleased with the feedback we have received from clients. We have tracked our progress in terms of client feedback, market share, and financial results. Even in these low turnover market conditions we have grown our market share across the regions by over 25% a year.
Can you explain in greater detail about your product offering and how your client services differ from the past?
Our global product offering is geared toward accessing liquidity for our clients. As a starting point we overhauled our technology infrastructure and strengthened our quant team. Our global products leverage models designed by the quant team at the core. Combining the new infrastructure with the models, we rolled out a new suite of algos, smart order routing and crossing products. Achieving best execution is at the heart of these products. For instance, to simplify usability, we rolled out our Aqua algo. Aqua caters to client trading strategies running the gamut from passive to aggressive. Aqua employs multiple quant models including fair value, dynamic minimum fill, dark order placement and quant posting that are constantly calibrated to current market conditions.
The overhaul of our product offering ties in with our new approach to client service introduced in the fourth quarter of 2010. We added personnel and implemented a proactive approach. We now work much more closely with our clients to best match our capabilities with their trading strategies. We also have what we call a best execution task force which is a team consisting of quants, electronic traders, and product managers who work closely with clients to help optimise their trading strategies. This approach has been rolled out across the US, London, Hong Kong, Australia, Tokyo and Mumbai. A main objective for our products, client sales, and service teams is to have a global approach with local delivery and market expertise.
Staying the global theme can you please expand on your initiatives in Asia?
We have invested significantly in our Asian team and product offering and have seen the results. Our market share in Asia has grown by 50% year over year. We recognised we had a big gap in our product offering in the region and decided to act on this opportunity. We were not pursuing the same strategy as in the West and we have changed that by rolling out the same products and platforms in Europe and the US into Asia. We now have client facing personnel on the ground in Tokyo, Hong Kong, Sydney, and Mumbai and our next generation execution products are already live in Tokyo, Hong Kong, Australia, Taiwan, Singapore, Indonesia, India, and Malaysia with Thailand and the Philippines planned for delivery in the next few months. Lastly, we deployed technology and quant teams locally in this region.
What multi asset class offering do you have?
Multi asset class trading has become increasingly important for clients. We built our infrastructure and product architecture to enable clients to trade equities, options, futures, or any other instrument that trades on a public venue or an electronic bulletin board. We have made a big push with Neovest, our execution management system. Earlier this year we launched 15 new futures markets as part of a drive to build out the global platform. The new futures markets include Brazil, Dubai, Singapore, Sydney and Tokyo, bringing the total number of accessible futures markets on the platform to 29. Our electronic options platform has been up and running in the US for the past couple of years and we’ve recently added options algos to the offering.
There are many banks trying to do the same thing, what do you think are your main differentiators?
Liquidity has been and continues to be one of the most important priorities for our clients. An important factor in achieving best execution is having access to natural liquidity as early as possible in the trading process. We have created an internal pool of differentiated liquidity by consolidating various sources of order flow within J.P. Morgan. For example, we source house liquidity from the private bank, clearing business, equity derivatives, transition management, as well as third party brokers. This is an ever evolving business and we seek to enhance our client service and product capabilities constantly. We have the scale and commitment to invest in client facing personnel and technology across the globe.
How has the role of the broker changed?
Brokers have always and continue to be in the business of providing research, advice, calendar, and execution services. Clients have investment ideas that need to be implemented and brokers offer all of the full service products as well as multiple execution channels to meet their trading styles. Clients can use the traditional high touch cash program channels in addition to having more control of the execution process at their fingertips via electronic execution products. With respect to electronic execution, brokers are now much more engaged in educating clients about market structure, trading venues, and counterparties. Additionally, brokers are more involved in assisting clients in trade planning and historical and real time execution quality analysis. Clients are looking for much more transparency and analytics tools to understand better the behaviour of electronic execution products. The more we understand clients’ goals and objectives the more effectively we can work with them on developing customised solutions.
Where do you see the greatest challenges?
Combining rapidly advancing technology and regulatory changes results in a set of new execution methods and trading opportunities. Current market structure demands a significant investment in technology and risk management capabilities. We must constantly keep up with the technology arms race and be as nimble as possible while at the same time tightly managing operational and market risk. Although this is not an easy equation to optimise, we feel our scale and commitment to clients’ goals will lead to continued growth in this evolving space.[Biography] Frank Troise is global head of equities electronic client solutions (ECS) at J.P. Morgan. He was previously the head of equities electronic trading product at Barclays Capital. Prior to Barclays Capital, Troise worked at Lehman Brothers from 2005 to 2008 and at ITG from 1997 to 2005. He holds a bachelor’s degree in electrical engineering from Boston University, an M.S. in operations research from Columbia University and an M.B.A from MIT Sloan School of Management. ©BestExecution