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J . P . Morgan
Morgan expects to do well in financing across asset
J . P . classes and in synthetics – where it shone before it entered the equity finance business – as well as securities financing . And it does . “ Swaps are an important part of our portfolio , and this broker has been extremely helpful as we continue to grow that part of the business ,” says a client . “ They have worked with us on reducing costs and identifying efficiencies on when to trade on swap in certain markets .” The same client has found the bank helpful in reducing its margin costs in cleared swaps as well . “ The collateral process has improved overtime to become much more efficient and cost-effective ,” he adds . Not every client has had the same experience : Financing scores are dented by the conviction J . P . Morgan could do more to reduce costs through cross-margining . The bank does get credit for its ability to source securities from third-parties as well as internal supply . “ The stock borrow process is easy to access through the broker portal and we routinely get locates for full size and at low rates ,” writes one respondent . A second applauds “ competitive hard-to-borrow pricing .” Unusually , the score for fixed income is as good . Unlike many prime brokers , J . P . Morgan has not discouraged fixed income managers , which it continues to ply with funding as well as clearing services . An excellent score is its reward , along with the sort of comment that indicates client expectations are rising rather than falling . “ Lacks capability to book / pay 3rd party OTC options trades ,” as the respondent puts it . But there is nothing wrong with the outcome in trading and execution as a whole , where only an anxiety that some clients are more important than others dampens enthusiasm . “ Extremely satisfied with the trading and execution capabilities this broker provides ,” writes a client . “ We have been using their services for years and the relationship continues to strengthen and improve .” Much the same is true of foreign exchange , where J . P . Morgan owns an impregnable market share . “ FX trading with this broker is simple and straightforward ,” says a client . “ We get quotes very quickly and at competitive rates . The settlement process has also been streamlined to improve our operational processes .” The only conspicuous weaknesses lie in product development ( where clients want to see greater creativity ), consulting ( though one recent user is grateful for “ very useful insights across a broad range of topics ”) and especially capital introductions . The global capital introductions group has the sort of relationship with institutional investors that the brand can secure , but these respondents have not felt the benefits . “ Too few senior professionals ,” says one , while a second admits to “ not much interaction in recent years .” Performance fades in operations , though a client says that the “ operations team is solid and dependable ” and “ quick to fix issues we bring to them and also good at identifying potential issues and alerting us pro-actively .” Clients want more from the technology (“ JPMM reporting tool could be improved to match peers ”). The quality of the credit risk is resonating with clients less than their doubts about the terms on which assets can be re-hypothecated or segregated or restored . This suggests the “ prime custody ” offering is not working as well as J . P . Morgan will have hoped . Though there are plaudits for account managers – “ Our service reps are reliable and dedicated to get the results we need ” – J . P . Morgan ought to be very interested in the details of the client service as well as the asset safety scores .
51 %
By size
11 %
38 %
Weighted average scores
PROFILE OF RESPONDENTS
Large Medium Small
19 %
By location
2016 2017 2018 5.33 5.64 5.67
Weighted average scores by service area Service area
5 %
76 %
Weighted average score
Americas Europe and Middle East Asia
+/ - the global average
Capital introductions 4.70 -12.4 % Client service 5.38 -10.5 % Consulting 5.38 -8.1 % Operations 5.70 -4.5 % Technology 5.51 -1.7 % Product development 5.01 -8.2 % Risk management 5.49 -1.5 % Asset safety 5.58 -2.8 % Sales and marketing 6.18 0.8 % Trading and execution 5.81 -0.7 % Delta 1 , swaps and financing 5.52 -3.5 % Stock borrowing and lending 6.06 1.5 % Foreign exchange prime brokerage 5.78 2.0 % Fixed income 6.06 5.1 % OTC clearing 5.85 0.0 % Listed derivatives 5.90 0.3 % Total 5.67 -2.2 %
The Hedge Fund Annual 2018 globalcustodian . com 85