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Re-Engineering J.P. Morgan

Why High-Performance Computing Can Be A Bear

Why High-Performance Computing Can Be A Bear

J.P. Morgan FIELD REPORT

February 7, 2012
By Tom Steinert-Threlkeld

 J.P. Morgan had a product up its sleeve for its broker-dealers on August 4.

That was the date it put the servicing of more than one million accounts onto a new broker-dealer platform, known as Morgan Communications or MORCOM. The online system  was to serve both retail and institutional brokers.

The Web 2.0 initiative is part of one of four main thrusts of a half-billion-dollar Strategic Reengineering Program that, in effect, got its start with the May 2008 completion of the acquisition of Bear Stearns, the collapsed Wall Street investment bank.

This is how the acquisition of Bear in a fire sale at the height of the credit crisis led to a re-engineering of the technical operations of J.P. Morgan, the investment banking business of JPMorgan Chase, the nation’s second-largest banking firm.

Bear Stearns had a retail broker workstation that served its correspondents’ clearance business as well as brokers that served high net worth individuals. J.P. Morgan had spent a couple years and $100 million enhancing that workstation and Web platform to make it available to Chase’s retail brokers, as well.

The trick up its sleeve had better be an ace, for J.P. Morgan. The launch was coming at the height of the U.S. Congress’ debate on the national debt and budget deficit. Greece was running out of cash, stoking fears of a breakdown in Europe’s efforts to stave off a debt crisis that would ripple through the continent.

Then, after markets closed on Friday August 5, Standard & Poor’s lowered its credit rating on long-term debt of the United States to 'AA+' from 'AAA.'

In the first full week of operation of this Private Client Work Station Strategy, the Dow Jones Industrial Average moved at least 400 points on four consecutive days, for the first time in history.

“The preparation behind the early August migration began three years ago,” said Joe Triarsi, global head of Broker-Dealer Services at J.P. Morgan.  “With a number of dress rehearsals, extensive integration and performance testing, we were able to successfully transfer client accounts on time without disruption.” 

The new system for serving its clients held up. “Talk about intestinal fortitude and a confidence you can deliver things,’’ said Peter Cherasia, Global Head of Markets Strategies for J.P. Morgan, a former Bear technologist now responsible for Markets Strategies which incorporates front office technology, e-commerce, quantitative analytics and strategic investments.  “We delivered.”

 

FOUR PILLARS, 24 STREAMS

The broker-dealer platform is just one of 24 work streams in the four-pillar strategic re-engineering program (SRP) that has been in the works at J.P. Morgan in the past two-and-a-half years.

The bottoms-up and top-down review compared all existing systems side-by-side and included functional, architectural and business reviews.

The four pillars include:

Derivatives Trading Platform Program: A rationalization of core trading platforms.

DOWNLOAD full-color PDF of FIELD REPORT here