JPMorgan Chase & Co. is seeking to become one of the world’s three biggest stock brokers, lifting a division that has fallen behind capital markets, equity derivatives and investment banking.
The largest U.S. bank is trying to boost electronic trading and increase commission pools to climb from sixth place in cash-equities trading, said Tim Throsby, global head of equities in London. JPMorgan is ranked first in investment banking, equities origination, fixed income, commodities and currencies, while it comes second for derivatives products, according to research firm Coalition Ltd.
“One of the big themes for the firm is to bring cash equities up to that same level,” Throsby said in an interview in London. “There are some very obvious areas where we are working to improve, and where we think there is a great opportunity. Third or fourth place would be a realistic medium- term ambition, with second or third in the long term.”
The lender isn’t planning to hire more staff to accomplish the task, he added.
JPMorgan is betting that investments in electronic platforms and hedge-fund services will help it leap over rivals in an industry that has suffered from declining volume and profitability. The New York-based bank was late in boosting those offerings as it focused on advisory and sales, said analysts including Derek de Vries at UBS AG.
Equities revenue climbed 8 percent in 2013, helped by rising sales from derivatives, JPMorgan said in January.
The lender trailed Goldman Sachs Group Inc., Morgan Stanley and Credit Suisse Group AG in equity sales and trading revenue in 2013, according to data compiled by Bloomberg. It topped the others in fixed income, currency and commodity sales and trading revenue. JPMorgan came after Goldman Sachs as the top underwriter of equities last year.
“For JPMorgan, with its large number of leadership positions, the strategy is clear,” UBS’s De Vries, who recommends buying JPMorgan shares, said in a phone interview from New York on March 25. “Cash equities is one business that really stands out as having more work to do. It is not like the bank is a significant laggard that ignored the equities business. It is just that it is a competitive business.”