Not long after that, JPMorgan, which had been an Atriax investor through its merger with Chase Manhattan, asked Hudson to join as a business manager in its London foreign exchange business. It was 2003, and the bank was just coming to terms with its failure to adopt electronic trading in currencies, the biggest and most liquid of the world’s markets. While electronic brokering systems were faster and less error-prone than people, offering audit trails and better transparency, JPMorgan was heavily invested in traders and salespeople whose primary technology was the phone. The bank slipped from a top ranking in FX to ninth by 2006.
So Hudson came aboard to help incorporate electronic trading in the fixed-income business, and then he had managerial stints in equities structured products and fixed-income hybrids, two units that were wound down after the financial crisis. He left to be chief operating officer for equities sales at Nomura Holdings, then returned to JPMorgan’s foreign exchange unit to help global head Troy Rohrbaugh, ultimately becoming CFO of the trading businesses until his promotion last year.
In the years after the financial crisis, JPMorgan gained share in fixed income and equities trading, becoming the world’s top Wall Street company by revenue. By 2014, Pinto, who started his career as an FX trader in Buenos Aires at a predecessor firm of JPMorgan’s, had become sole head of the bank’s Wall Street operations. Last month, a global survey of currency users ranked the bank at No. 1 in FX. Despite JPMorgan’s lofty perch, the memory of previous missteps still stings in the minds of Pinto and Hudson—lodged deep in the ancient, reptilian-era center of the brain responsible for loss aversion—who are determined to prevent complacency from settling in.
“The fear is we’ll wake up one day and we’ll be like we were in 2003 in FX, not embracing change, focusing on the things we’re good at instead of the things we’re not good at,” Hudson says. “We used to want things to stay the same because we’re leaders in most spaces. That’s just completely naive because someone who has nothing to lose will do whatever they can to build market share. So our job is to continually be that person and disrupt ourselves.”
As for the pace of that change, JPMorgan would rather be too fast than too slow, according to Pinto. “I’d rather make the mistake of accelerating the change than by waiting too long,” he says in an interview. “We’re not going to try to squeeze the last drop from the success of the past, compromising the future.”
In person, Hudson looks the part of an anti-trader: horn-rimmed glasses, fuzzy beard, and his hair in an outgrown Caesar, like an architect or a liberal arts adjunct professor. He speaks the dispassionate language of Silicon Valley, dropping references to The Innovator’s Dilemma, Clayton Christensen’s seminal book on why corporations rise and fall, and Jeff Bezos’s annual letter (he’s read the latest one 20 times). His London home is, of course, wired so that he can run every function from his phone.
He splits his job into three segments: making sure the tools used by JPMorgan’s trading personnel are up to snuff in an age when expectations are set by Uber Technologies Inc. and Amazon.com Inc.; doing the same with client-facing products; and making those moonshots.
When it comes to big, radical ideas, Hudson asks his staff every Monday morning: If you had $100 million and WeWork space, how would you take on JPMorgan or lessen its grip on clients? In practice they become hackers, testing JPMorgan’s business model for weaknesses. But instead of exploiting them, they build a solution, and if it catches on with clients, it gets embedded in the organization. (This isn’t Alphabet Inc.; nobody’s trying to cure death or create fuel from seawater.)
Their first project, one that’s being built now and may go online later this year, is a trading platform for asset managers and regional banks, institutional clients who are suffering as investors flock to low-fee index funds and regulatory costs squeeze margins. (A chunk of the $50 million Hudson requested is going toward this effort; the bank won’t disclose exactly how much.) Hudson holds up a paper printout that distills the activities of both types of companies into a dozen or so categories. Only a handful, such as gathering assets, is something these companies truly need to do, leaving the rest—things like executing trades and back-office settlements—better handled by someone like JPMorgan.
“An asset manager or regional bank can call us up and say, ‘Buy us €100 million of government bonds,’ ” Hudson says. “We’ll find the best price on the market, which may or may not be from JPMorgan, and buy it on their behalf, so now they don’t need traders. We’ll charge them a commission, do their best execution reporting, provide that as a service.” In other words, the pitch is: Fire your traders, stay in business.