Leveraging algorithms in all aspects of forex trading: in conversation with J.P. Morgan | Insights | Bloomberg Professional Services (2024)

As the use of algorithmic execution tools in the foreign exchange market continues to grow, clients are now seeking more sophisticated, objective analysis of their trades. Capitalizing on this shift in the forex space, J.P. Morgan has built Algo Central, giving clients the ability to assess pre-, current and post-trade algo performance, with the ability to change speed, execution style and strategy while orders are live.The platform is now available on Bloomberg via the APP Portal{APPS JPAC <GO>}.

Bloomberg recently spoke with Richard James, J.P. Morgan’s Co-Head of Macro Markets Execution, to discuss the firm’s move into the foreign exchange market, how algorithms can add value throughout the full life cycle of a trade, and leveraging Bloomberg’s app functionality helps deliver J.P. Morgan capabilities to more clients.

Where does J.P. Morgan fill a market need within forex algorithmic trading?

FX algos are a natural extension of the execution tools we give our clients. When combined with better market transparency and visualization tools, we make it easier for clients to decide which execution tool best meets their needs. Through automating aspects of the liquidity seeking and scheduling, it allows clients to manage the execution at a less granular level, supporting fewer but higher quality manual interactions to optimize an execution.

What is the current foreign exchange market dynamic?

We have seen a large increase in the usage of FX algos over the last 12 months, which demonstrates a higher level of confidence with execution via an algo, as we see users move from simple to more complex algo orders.

With the introduction of pre-trade TCA tools, we give clients the ability to compare the costs vs. benefits of different execution tools more quickly and easily. MiFID II placed an increased focus on understanding and demonstrating best execution, especially on European and Global accounts. This has resulted in a significant growth in the use of pre, current and post trade TCA tools to help evaluate the quality of our clients’ execution decisions. While individual tools already exist to address each separate aspect of this trend, there has been a recent focus in not only upgrading the quality of these tools, but integrating them into a more efficient execution workflow. Ultimately, delivering J.P. Morgan’s advanced FX algo capabilities across a broader range of OMS/EMS platforms was one of the development objectives of Algo Central.

What is Algo Central?

Algo Central provides client access to not only our entire algo suite, but to our comprehensive pre-trade, real-time, and post trade analytics — all in one place. It integrates seamlessly into Bloomberg’s FXEM and FXOM capabilities, and leverages the Bloomberg APP portal by docking directly into the Bloomberg Launchpad and supporting direct user authentication – so no additional login or passwords to remember.

Algo Central gives clients access via a single window, to all of J.P. Morgan’s proprietary analytics. It supports pre trade estimates for liquidity, spread, and volatility and provides real time execution visibility, in flight strategy amends, and access to a more informed and higher quality execution window. It is the first FX trading app available via Bloomberg’s APP portal and is also available through our own platform Execute.

What are the benefits of executing via an algo? What were clients using previously?

Algorithms are an extension of the traditional execution tool kit. With increased market fragmentation and the need for transparent execution excellence, algos can access a broad range of liquidity pools, tailoring their approach to each pool’s characteristics. They use dynamic, programmable instructions to take certain actions in response to market variables such as time, price and volume, allowing users to specify benchmark performance criteria that the algorithm can use to optimize performance.

What sets J.P. Morgan’s Algo Central apart from competitors?

J.P. Morgan’s FX Algo suite utilizes the same algos that we give our internal traders and use for systematically managing our eFX franchise. Our algos are hybrid, allowing the user access to a combination of internal and external liquidity that best meets their execution criteria. We have recently enhanced and developed the analytics tools we give to both internal and external clients, such as Algo Central,that are available throughout the lifecycle of the trade — providing the control, transparency and data needed to assess and refine trading strategies.

How did you get involved with Bloomberg App portal?

We are continually looking for ways to innovate and enhance the user experience we provide. Juggling multiple screens and login requirements while evaluating and implementing various execution strategies can be cumbersome. So by making Algo Central accessible via the Bloomberg App Portal, seamless integration enables us to deliver a value-added service to the end user, with no distractions.

What has the value been since partnering with Bloomberg? Any unexpected changes or benefits for the client as a result?

Absolutely. Critically, we have a much better understanding of the different client workflows within Bloomberg. This has increased the collaboration between J.P. Morgan and Bloomberg, with the single aim of improving our shared clients workflows and executions.