28 Oct 2019

JPMorgan Arms Coders With Trading Licenses as Quants Advance

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By Viren VaghelaOctober 28, 2019, 1:00 PM GMT+8 Updated on October 28, 2019, 8:20 PM GMT+8

  •  U.S. bank has grown team of coders it started a few years ago
  •  ‘This is about convergence of the trader and quant’: JPM exec

JPMorgan Chase & Co.’s army of coders have gained their deepest foothold on the trading floor, winning licenses to deal in equities.

The biggest U.S. bank got regulatory approvals this month for two coders in London and New York to trade cash equities, with plans for a further eight licenses globally by year-end.

“This is about convergence of the trader and quant,” Jason Sippel, the bank’s head of global equities, said in an interview at its Canary Wharf offices. “It’s moving at warp speed and re-inventing what the trading floor looks like.”

Read more: Goldman hires coders for trading division

Wall Street’s biggest banks have spent billions of dollars in an arms race to automate trading as competition squeezes revenue. JPMorgan plans to spend more than $11 billion on technology initiatives this year. Chief Executive Officer Jamie Dimon said this month keeping up with technology was “critical” in gaining market share.

One wrong move in the high-octane world of equity trading can mean the difference between a winning and losing quarter for the bank, but JPMorgan is placing great faith in its quant revolution.

The lender set up a team several years ago called “Analytics, Automation & Optimization” with a mandate to drive the use of data across sectors like prime brokerage, derivatives and cash trading within its equities unit. Led by Hans Buehler, the unit has grown to about 180 from 86 three years ago, with those dedicated to cash equities nearly doubling to 36 this year. The newly licensed traders come from that group.

“We are hiring coders for equity sales who can tap into the reams of data we have to provide ideas,” said Sippel.

JPMorgan ranked first among global banks in equity derivatives trading in 2018 and third in cash equities, according to data from Coalition Development Ltd. In September, the bank said it had reached $500 billion in prime brokerage balances where it ranks second. In the third quarter, it posted a surprise 5% decline in equity-trading revenue, to $1.5 billion, which the bank blamed on derivatives.

Sippel said his unit has also started developing machine learning-based tools for the trading floor giving the example of “RoboTrader,” a new tool to automate pricing and hedging of vanilla equity options.

“Looking forward,” he says, “we will have much more automation.”

Source: https://www.bloomberg.com/news/articles/2019-10-28/jpmorgan-arms-coders-with-trading-licenses-as-quants-push-ahead?fbclid=IwAR10ndTAfjbJQGpRzFQqfobmB5yw6kT3AnbuGPSiX8UUE8C3nq2yM7oEjGE

2 Oct 2019

Robots to Cut 200,000 U.S. Bank Jobs in Next Decade, Study Says

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By Alfred Liu October 2, 2019, 10:52 AM GMT+8

Technological efficiencies will result in the biggest reduction in headcount across the U.S. banking industry in its history, with an estimated 200,000 job cuts over the next decade, Wells Fargo & Co. said in a report.

The $150 billion annually that the country’s finance firms are spending on tech — more than any other industry — will lead to lower costs, with employee compensation accounting for half of all bank expenses, said Mike Mayo, a senior analyst at Wells Fargo Securities LLC. Back office, bank branch, call center and corporate employees are being cut by about a fifth to a third, with jobs related to tech, sales, advising and consulting less affected, according to the study.

“It will be a dramatic change in contact centers, and these are both internal and external,” Michael Tang, a Deloitte partner who leads the consulting firm’s global financial-services innovation practice, said in an interview in the Wells Fargo report. “We’re already seeing signs of it with chatbots, and some people don’t even know that they’re chatting with an A.I. engine because they’re just answering questions.”

Wells Fargo’s Mayo joins bank executives, consulting firms and others in predicting huge cuts to the banking workforce amid the push toward automation. McKinsey & Co. said in May that it expects the headcount for front-office workers — the bankers and traders historically seen as among finance firms’ most valuable assets — to drop by almost a third with the rise of robots.

Front-office headcount for investment banking and trading fell for a fifth year in 2018, according to Coalition Development Ltd. data. R. Martin Chavez, an architect of Goldman Sachs Group Inc.’s effort to transform itself with tech, said last month that all traders will soon need coding skills to succeed on Wall Street.

— With assistance by Lananh Nguyen

Source: https://www.bloomberg.com/news/articles/2019-10-02/robots-to-cut-200-000-u-s-bank-jobs-in-next-decade-study-says