JPMorgan has launched capital commitment services for its portfolio trading equities desk and recruited Andrew Bieler, managing director and head of U.S. program trading at Goldman Sachs in New York, to the new position of head of execution for portfolio trading. While most firms, including JPMorgan, already offer capital commitment for single stock trades, in which the bank uses its balance sheet to create liquidity, risk management of portfolio trades is more complex. This has delayed the firm extending the service until now, noted one professional.
Portfolio trading involves trading a portfolio of equities in a single transaction and often includes utilizing over-the-counter derivatives, such as puts and calls, for hedging. Bieler, who quit Goldman last November (DW, 11/23), starts on Feb. 9 and could not be reached.
JPMorgan already has a strong agency business, which the firm anticipates will benefit from offering capital commitment, said the official. Often when the firm is willing to commit its own capital, clients will be more inclined to send agency business their way as well, she noted. JPMorgan has been building algorithmic programs for over a year in preparation for this effort.
Portfolio trading is a fast growing business and represents an increasing volume on the New York Stock Exchange, noted one observer, saying more firms are seeking to offer capital commitment as a means of capitalizing on this growth.
At JPMorgan, Bieler reports to James Brett, head of cash trading in New York, who was out of the office and could not be reached for comment. Ed Canaday, spokesman at Goldman in New York, did not return calls.
