Best Bank Awards: JP Morgan

Regulatory winds have been reshaping the structure of the foreign exchange market over the last decade, and a wave of cost pressures have been changing the way participants on both the buy and sell side do business.

Yet, JP Morgan remains unnerved. Where some of its peers have either shuttered business lines or chosen to specialise, the US bank has cemented itself as a leader across client segments and business lines, both at home and globally.

“I think, particularly in the electronic space, consistency really matters,” says Scott Wacker, global head of fixed-income, currencies and commodities e-sales at JP Morgan. “You’ve got to constantly invest in your technology, and that allows you to continue to develop and put out great products, great pricing, and maintain consistency right through volatile and non-volatile periods.”

JP Morgan holds on to the title of the Best bank overall for FX at the 2019 FX Week Best Bank Awards. It is the third-consecutive year that clients have voted the firm the winner of the coveted prize. JP Morgan is also going home with seven other trophies: Best bank for FX for banks, Best bank for FX for investors, Best bank for spot FX, Best bank for prime brokerage, Best bank for FX in London, Best bank for FX in North America and Best bank for e-trading.

While Wacker humbly chalks it up to consistency more than anything else, JP Morgan’s leadership in the $6.6 trillion daily currency market is as much a function of the depth and breadth of its franchise, combined with the approach it has taken to external liquidity providers such as electronic communication networks.

Only about 5% to 7% of JP Morgan’s total liquidity is external. That’s because the bank is extremely rigorous about who it lets in and under what conditions, holding everyone it does business with to extremely high standards and constantly scrutinising the quality of liquidity.

Clients are increasingly data hungry. They are engaging more and more around data

Richard James, JP Morgan

Why shouldn’t the bank be demanding? Its customers are.

The pace of innovation in e-trading is accelerating, fostering greater transparency and automation across both the buy and sell side. With that, clients are increasingly focused on the quality and cost of execution, as well as efficiency. More tools are available today to help them scrutinise those executions and evaluate their counterparts.

“Clients are increasingly data hungry,” says Richard James, head of digital markets for macro products at JP Morgan. “They are engaging more and more around data; they’re engaging more and more around execution support.”

As a result, James sees a need for constant investment, change and evolution.

“What works one week in terms of our approach to top-of-book pricing or risk management, etc, needs constant reinvestment and re-evaluation to stay relevant,” he adds. “We constantly need to be investing in intellectual leadership and technology capacity.”

Amplifying algos

Since 2018, JP Morgan has invested in expanding its algorithmic order capabilities, and developing tools that both customers and the bank itself can use to evaluate the quality of execution.

In February, the bank expanded the points of access for its Algo Central workflow tool, which clients use to visualise what is happening with their algorithmic orders in real time. It provides the pre-trade ability to assess the expected outcome of an algo before launching it, as well as post-trade transparency to see whether it succeeded against those benchmarks.

Wacker tells FX Week that clients have been consolidating the number of liquidity providers they are using, after learning through data analysis that their execution quality can be improved if partners are chosen and measured carefully.

In 2020, JP Morgan intends to deepen its relationships with clients further. The bank has been growing its sales team steadily, and plans to continue engagement around market structure, execution costs and executing across multiple asset classes.

“FX is one arrow in a quiver of products. We haven’t backed away from any of our product offerings on the markets side,” Wacker says. “So, if you’re trying to think about counterparts, in terms of who you trade with, from an efficiency perspective, you’re looking for someone who is really there for you in a number of spots – and is hopefully good at a number of products and can plug into your workflows.”

The full list of winners of the 2019 FX Week Best Banks Awards