U.S. equity volumes have remained choppy in 2023 — but the market’s top trading and execution teams were there to negotiate the ebbs and flows for their clients.
“We continued to see a convergence back towards pre-pandemic levels of activity following the elevated volatility seen in 2020 and 2021,” says Christopher Berthe, co-head of cash equity trading at JPMorgan Chase, adding that U.S. equity volumes this year are down 15% in cash notional terms.
“However, that is not a uniform statement throughout the year, where year-over-year volume has been particularly tough in the first quarter with market volumes down 27% year over year,” Berthe said. “We have seen a gradual improvement throughout the year and Q3 volumes were slightly up versus the prior year. Still, overall lower volumes versus the prior year have been a challenge, both for us and for our clients, after having experienced two consecutive years of very elevated liquidity.”
As ever, liquidity remained a main focus for clients, said Berthe. “When liquidity is lower, like it has been this year, then it is harder to execute the same sized trades without having more market impact,” he said. “We also have to navigate the ever-changing marketplace, which includes assessing the effectiveness of new venues and how we use them in our algorithms, and deciding how much of our own capital we can supply to clients via block and risk pricing.”
Respondents to Institutional Investor’s 2023 All-America Trading and Execution survey agree that the firm has navigated the lower-liquidity environment well: They have elevated JPMorgan Chase to the No. 1 spot in this year’s lead ranking from second place in 2022.
BofA securities improved two spots to take second in this year’s overall ranking. Morgan Stanley and Goldman Sachs placed third and fourth, respectively. In a repeat performance, Jefferies rounded out the top five.
In high-touch sales trading, Goldman Sachs was first while Jefferies earned the pole position in electronic trading. Morgan Stanley topped portfolio/program trading, and JPMorgan placed No. 1 in Delta One/ETF.
Brokers were also rated across 20 attributes as well as seven industry categories: basic materials; capital goods and industrials; consumer, energy; financial institutions; health care; and technology, media and telecommunications trading and execution. JPMorgan, BofA Securities, and Morgan Stanley were recognized for two each, while Keefe, Bruyette & Woods was recognized for one.
There were more client requests for risk and capital to help with liquidity needs given the reduced market volumes, according to J.P. Morgan’s Berthe who lauded the firm’s single stock trading team, which “stood out in their facilitation of this activity with more challenging tape.”
JPMorgan reported meaningful growth in the institutional segment volumes in the algorithmic space. “Part of this growth is due to the investment that we have made in these areas, but the current market conditions certainly emphasize the importance of access to liquidity, both algorithmically and via the risk desk,”Berthe noted.
Berthe credited JPMorgan’s firm-wide culture coupled with its trading approach for its rise in the rankings. “We have a very client-centric organization and trading approach which, combined with a strong focus on quantitative tools and automation to enhance trading capabilities, hedging and servicing capabilities, has led us to have a highly competitive franchise,” he concluded.
