March 1, 2014

Fast Forward

JPMorgan's Troise and Ciment Discuss Business After Rebuilding Its Electronic Trading Desk

By John D'Antona Jr.

Four years ago, JPMorgan found itself behind in the electronic trading game. Its offerings were outdated and its trading desk behind the times. In 2010, the firm brought on Frank Troise, a Barclays Capital alum and trading veteran, as its new global head of electronic trading, to spearhead a complete build-out of the desk-from soup to nuts. Troise told Traders in an interview at the time that his mandate was to establish a world-class electronic trading desk with a full palette of algorithms, smart order-router technology and post-trade analytics. Then, once the task was complete, get the word out that the bank was ready to compete.

That was then, this is now.

Now, four years later, Troise, global head of electronic client solutions, and Daniel Ciment, Americas head, electronic trading solutions, sat down again with Traders to discuss how the build-out unfolded, its algorithmic trading suite and how the bulge firm plans to stay relevant in the current market structure.

Frank Troise

Traders: With the execution side of the business all complete now, how does your research platform factor into your business model? How do you see that factoring into how the firm performs in the broker vote?

Frank Troise: We have a highly ranked research house. If we are investing to have high-execution capability and high-quality research, we want that to come through on a broker vote on research. Of course, we look at building out best-in-class research and execution to provide the best service to clients.

Traders: What's going on in the electronic desk? It has been four years - how is J.P. Morgan doing?

Troise: We are in full gear. We are in production mode, constantly working with clients to fine-tune products. We are still investing heavily so that we do not pare back the offering.

Traders: How many algos are in the algos suite?

Troise: Well, we have all of our baseline benchmark algos: VWAP/TWAP with volume, and the implementation shortfall, IS. And then we have an algo called Aqua, which is our liquidity-seeking algo that has a number of degrees of urgency.

Traders: All that customization is done in-house?

Troise: It is done in-house. Looking at 2010, it was a platform-build year with a technology infrastructure team. In 2011, there was a product rollout on top of that platform. The past two years have been full-bore allowing us to gain credibility with the client base. We did that in spades in 2013 by delivering quantitative expertise around the execution process. We have not stepped back; we have just continued to invest in the outcome.

Traders: When it comes to the smart order-router logic, did you have to start from the ground up, or did you have something to work with already?