The low volatility conditions observed in FX markets over the past year have posed challenges, with market makers facing spread compression and reduced turnover. Despite these obstacles, JPMorgan has maintained a high level of performance. The firm has consistently ranked highly across multi-dealer channels. Additionally, JPMorgan continued to expand its dominance in the FX options market, further solidifying its reputation as a top player in the space.
This past year has as seen JPMorgan making transformative changes to how it handles market-making operations. The development of a centralized leakage management team, covering spot, non-deliverable forwards, bullion and soon swaps, has enabled increased efficiencies for sales and trading to manage client pricing during all trading conditions.
This initiative has also promoted transparency and provided crucial feedback across these products, improving trading approaches and sustaining healthy liquidity in the market. The integration of third-party transaction cost analytics into the bank’s framework has further bolstered transparency, offering clients the ability to make more informed decisions based on independent analytics.
In FX spot markets, information leakage continues to be a threat to any maker, leading JPMorgan to create this team to centrally focus on preventing and controlling price/skew leakage in a bid to eradicate this problem entirely in global FX spot markets. Its latest protocols ensure accuracy and typification of connections at the client and vendor level are transparent from the point of initial connectivity, information dissemination and trade execution. It also captures potential gaps in information before they become detrimental to the wider franchise, further allowing consistency of pricing and spread management.
JPMorgan’s efforts to centralize its market-making operations have also yielded substantial improvements in testing, data capture and overall analytics. By standardizing procedures across client and vendor connections, the bank has achieved economies of scale and enhanced the consistency of pricing and spread management. Additionally, JPMorgan’s sales teams have navigated complex discussions with clients regarding pricing and liquidity issues, which are particularly crucial when addressing leakage events detected through price aggregators.
The franchise’s focus on skew management resulted in the maximization of internalization – flow that is not traded outside of JPMorgan’s direct trading relationships – by attracting high-quality flow and reducing an external footprint that regularly sees internalization exceed 95% daily.
This award reflects the dedication of our teams … We will continue to push the boundaries of innovation and deliver outstanding results in the FX market
Gergana Thiel
Achieving consistent, top of the charts ranking on multi-dealer portals, execution management systems has marked JPMorgan out from other market makers. It global approach to delivering superior pricing and performance led to its status on the leading spot streaming and request-for-quote channels.
Due to the scale of the JPMorgan franchise, it gave high priority to a server upgrade to shorten the processing time for both pricing and trades booking. The bank also upgraded its network to address the importance of latency to key client segments, notably systematic funds trading actively on micro market structure change.
“This award reflects the dedication of our teams and we are thankful to our clients and partners for their continued trust and support, which inspire us to strive for excellence every day,” says Gergana Thiel, global co-head of macro sales. “Together, we will continue to push the boundaries of innovation and deliver outstanding results in the FX market.”
