J.P. Morgan Says 'Brexit' Hasn't Led to Trading or Liquidity Problems
June 24 2016 - 12:30PM
Dow Jones News
Like banks around the world, J.P. Morgan Chase & Co. was
scrambling through the night to deal with frantic trading and
panicky markets. So far, though, the surge hasn't led to trading or
liquidity problems at the biggest U.S. bank by assets.
At some points, the bank had more than 1,000 tickets per second
on its spot foreign-exchange electronic execution platform. And
J.P. Morgan traded more than four times its typical amount—north of
$60 billion—on its foreign-exchange platform in Asia.
"There were no issues" during the night, said Daniel Pinto,
chief executive of J.P. Morgan's corporate and investment bank and
head of Europe, Middle East and Africa. "At no point did we have to
stop provisioning liquidity to clients."
The bank expects to do three times a typical day's volume in
global FX, which will be a record for that business, said Troy
Rohrbaugh, J.P. Morgan's head of rates and FX, in an interview from
London. "We adjusted for volatility and liquidity, but we didn't
cut back."
Liquidity in markets has been a concern for banks and regulators
of late, with many saying it has become more constrained. "So
therefore you have to assume that some of the market moves we saw
last night and this morning are probably magnified by the lower
liquidity," Mr. Pinto said.
Given markets' wrong view that the U.K. "Brexit" vote would keep
the country in the European Union, many investors may be caught on
the losing side of trades. Yet Mr. Pinto said that so far all
margin calls required have been met.
J.P. Morgan was on high alert through the night. On the FX team,
J.P. Morgan's Asia desk was at full capacity, and it had 50% of its
traders working through the night in London (with coffee and Red
Bull) and New York (with pizza).
Mr. Pinto said some of J.P. Morgan's top executives had a call
at 5 a.m. New York time and that he had been in touch with chief
James Dimon several times through the night.
The bank had been preparing for some time for either outcome in
the vote. J.P. Morgan ran stress tests in all its markets, focusing
on markets and fund flows, in preparation for the decision. It
continued running those tests Friday to try and see what may or may
not be an issue going forward.
Like other financial firms, J.P. Morgan is still assessing what
the Brexit votes means both for its customers and itself. The bank
employees around 16,000 people in the U.K. "No doubt London will be
an important financial center for the whole world," he said, adding
that there isn't full clarity on what banks can do related to
certain entities and client-facing activities.
He added for banking products, deposits, capital markets and
other matters, there is a wait-and-see period depending on the
agreement between Europe and the U.K. regarding legal entity
structures. "It is way, way, way too early to start thinking about
how many jobs will go from where to where," because there is still
expected to be uncertainty for some time, Mr. Pinto said. He added
that while banks have modeled all kinds of scenarios, they need
clarity from governments before decisions can be taken.
Mr. Pinto said the bank has several branches of its current
entities across Europe and other infrastructure already in place,
but the main operation is in the U.K. "If that needs to be changed
or not time will tell," he said.
Write to Emily Glazer at emily.glazer@wsj.com
(END) Dow Jones Newswires
June 24, 2016 12:15 ET (16:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
JP Morgan Chase (NYSE:JPM)
Historical Stock Chart
From Aug 2024 to Sep 2024
JP Morgan Chase (NYSE:JPM)
Historical Stock Chart
From Sep 2023 to Sep 2024