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JPMorgan to cut costs and jobs by ditching trading platforms

16 February 2011  |  16786 views  |  6 JPMorgan Chase logo web screenshot

JPMorgan Chase has ditched half of its 10 trading platforms in the last two years, and plans to get rid of another three by 2014 in a bid to save $300 million a year.

According to the Financial Times, Jes Staley, head, investment banking, JPMorgan, updated investors yesterday on the $500 million project to streamline disparate technology systems gained through acquisitions and expansion in recent years.

Although the bank expects to make savings of $300 million a year by reducing the number of platforms from 10 to two, the lower costs and improved efficiency could actually reap benefits of $1 billion.

In 2010 JPMorgan employed around 3000 people to manually input trades into systems, says the FT. This has already been reduced to 1700 and is expected to come down to zero by 2014, although some staff are being redeployed.

The project has already cut the cost of a foreign exchange trade from 75 cents to 10 cents and this will fall to five upon completion, says Staley.

JPMorgan to slash trading platforms - FT (subscription)

Comments: (6)

Elizabeth Lumley
Elizabeth Lumley - Girl, Disrupted - Crayford | 16 February, 2011, 13:24

Hmm, be interesting to find out which trading systems they've decided to standardise on? Since they singled out foriegn exchange, and Thomson Reuters is known for offering tempting enterprise-wide licenses, not to mention practically inventing conversational dealing for the FX market... I wonder who the lucky provider is? 

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Brian Slater
Brian Slater - Eikos Partners - New York | 16 February, 2011, 15:20

Think this is to reduce the internal legacy trading platforms that they have from the various mergers going back to Chase times and the re-entry and reconciliation issues.  Not clear what asset classes are involved, getting to 2 sounds a little optimistic if its all.

Don't think this affects the external trading platforms they use directly.

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Matt White
Matt White - Finextra - Toronto | 16 February, 2011, 15:33

That's correct Brian.

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A Finextra member
A Finextra member | 17 February, 2011, 19:16

I guess this is great for JPMorgan but there's 3000 additional unemployed as a consequence. It's somewhat heartwarming to consider that in spite of all the automation and trading algorithms there is still work out there for traders even it is nothing but entering trades.

I understand that that IBM's Watson, after becoming a chess master, with a few improvements and bug fixes will become a Jeopardy master and following that will become a master trader.

Able to write its own algorithms, enter its own trades, trade on its own behalf, manage its own risk, regulate itself and even conduct insider trading and create recessions and unemployment with no human intervention.

 

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Brian Slater
Brian Slater - Eikos Partners - New York | 08 March, 2011, 03:53

Actually, as it turns out the plan is for 2, one for Equities which is already in place, and another called Athena which is an inhouse build using python and a number of other technologies covering all other asset classes.  Sounds pretty aggressive and somewhat optimistic to have a single solution capable of dealing with high volume businesses as well as the highly structured stuff. Still if successful they will have a cross-asset risk management capability which is a growing necessity, as well as wringing the efficiencies of common processes.  Of course the article doesn't tell us how much it is costing to save $300mm a year.  My experience indicates no one ever really goes back to check the saves, and that major, multi-year strategies like this (if they don't get derailed by budget cuts, missed deadlines, changing priorities or another merger) never actually kill off all the systems that they were supposed to displace leading to an increase in costs - maybe thats why no one goes back to check.

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Brian Slater
Brian Slater - Eikos Partners - New York | 08 March, 2011, 04:01

Sorry, it does say its costing $500mm - if you believe that.

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