JP Morgan's QIS balance hits US$100bn
JP Morgan has reached US$100bn of client exposures on its “QIS” platform, a milestone that underlines how banks are tapping growing investor demand for off-the-shelf products that replicate complex trading strategies once the preserve of hedge funds and other sophisticated investors.
The US bank, which is one of the largest players in quantitative investment strategies, said it had reached US$100bn following average annual growth of 15% on its QIS platform over the past four years. JP Morgan launched QIS indices 20 years ago and now offers a range of strategies across different asset classes, including zero-day stock options and emerging market foreign exchange trading.
“As first movers in the space, we have been committed to continually innovating our QIS offering to meet the needs of our evolving client base,” Arnaud Jobert, co-head of global strategic indices at JP Morgan, said in a statement.
“We are now uniquely and strategically positioned to grow further, as QIS becomes a more commoditised component of the investment toolkit and we witness the emergence of new QIS users with bespoke risk requirements, such as hedge funds,” Jobert said.
Hedge funds have piled into QIS products in recent years, using them as a quick and cheap way to implement trading strategies that would ordinarily require specialist traders and infrastructure. In one notable example, bankers say hedge funds have bought huge volumes of QIS products linked to dispersion – in which investors bet on stocks heading in different directions – bringing this classic equity arbitrage to a much wider audience.
“Historically one of the largest client segments of our business, retail and insurance, continues to be a strong focus area,” said Ludovic Peiron, global head of equity derivatives sales at JP Morgan. “We have also seen a growing focus [among institutional clients] on enhanced equity beta and delta one solutions and an uptick in asset owners adopting QIS and partnering with us in strategic asset allocation.”