JP Morgan has become the second bank after Citi to offer a single electronic trading platform combining post-trade reporting and settlement with execution.
The US firm revealed it was migrating clients from its more than 30 e-trading venues onto one multi-asset-class network, JP Morgan Markets.
This e-platform allows banks and asset managers to process trade data on their over-the-counter (OTC) derivatives into a readily reportable format that can be fed directly into repositories.
It comes as regulators globally look to implement rules this year that require financial institutions to clear and report their OTC transactions, in adherence with the G20 Pittsburg commitment of 2009 and the US Dodd Frank Act.
Within Asia, Taiwan, Hong Kong, Singapore and Japan have all unveiled their reporting requirements, as regulators try to understand risks in the OTC market with the potential to disrupt the global financial system.
Damian Roche, JP Morgan’s Asia-Pacific head of sales and marketing for market and investor services, says the bank spent two years putting the multi-asset platform together.
This replaces over 30 pre-trade, trading and post-trade venues that had been serving clients’ in various asset classes.
“Very few service providers are offering customisable access to a single platform that allows them to obtain research and pre-trade analysis, execute trades, as well as manage all these data for regulatory reporting purposes across multiple asset classes,” says Roche.
“Internally, when facing their own end-investors, our transaction cost analysis will help asset managers deliver better visibility into the cost of transactions achieved by their trades across asset classes.”
In Asia, JP Morgan is aiming to on-board new clients and migrate existing clients onto its single platform by the end of 2013.
One contact at the bank says asset managers will be able to divide allocation of a block trade into sub-funds, splitting up these baskets of securities on the same platform electronically from one main account into many sub-accounts.
However, so far JP Morgan Asset Management has not indicated any plans to migrate onto the new platform, suggest sources.
The existing 30-plus trading venues will gradually be phased out once the new platform has fully on-boarded existing users.
As pre-trade analytics and research will also be available, JP Morgan is hoping the new platform will be effective in moving plain vanilla transactions onto electronic execution.
But sales and traders will still step in if clients opt for a higher-touch service. Under this scenario, desk traders will give advice and execute trades for them based on information they pick up on the platform about client behaviour.
JP Morgan is not the first bank that has sought to combine its custodian services with execution. Citi has also been pushing its “E2C” service – from execution to custody – that automates the trade cycle spanning idea origination/order entry, execution, trade monitoring and settlement, to custody and post-asset services.
Such integrated execution is the result of a collaboration of the bank’s global markets and global transaction services divisions, which take care of the electronic execution business and custodian services, respectively.