The line between coders and traders at investment banks is starting to blur even further.
And leading the charge is JP Morgan, whose coders have now obtained licenses to deal in equities, according to Bloomberg.
The bank got regulatory approvals this month for two of its coders in London and New York to trade cash equities. JP Morgan is targeting eight more licenses for coders, globally, by the end of the year.
Jason Sippel, the bank’s head of global equities, said: “This is about convergence of the trader and quant. It’s moving at warp speed and re-inventing what the trading floor looks like.”
The move comes at a time when the largest investment banks have shelled out billions to automate trading while competition heats up. JP Morgan plans to deploy more than $11 billion just on technology initiatives alone this year. CEO Jamie Dimon has said that keeping up with technology is "critical" to the bank's mission of gaining market share.
As such, JP Morgan is placing even more faith into its quants.
The bank has an “Analytics, Automation & Optimization” team that it set up years ago that is focused on using data across sectors like prime brokerage, derivatives and cash trading within its equities unit. The team is led by Hans Buehler and has grown to about 180 employees, from 86, in just three years. Employees dedicated to cash equities have doubled to 36.
Sippel continued: “We are hiring coders for equity sales who can tap into the reams of data we have to provide ideas.”
Sippel says his unit is also working on developing machine-learning based tools for the trading floor, like "RoboTrader", a new tool that allows the company to automate pricing and hedging of equity options.
JP Morgan is the top ranked bank for equity derivatives trading as of 2018 and, in September, the bank said it had reached $500 billion in prime brokerage balances, ranking it in second. In Q3, the bank posted a surprise 5% decline in equity trading revenue to $1.5 billion.
Sippel concluded: “Looking forward, we will have much more automation.”