The growth path of mobile trading has been anything but meteoric, but a combination of greater awareness and necessity is finally bringing the channel towards the mainstream. In this supported article, Colin Lambert takes a look at the issues and talks to first mover JP Morgan about the evolution of mobile trading.
A knee-jerk reaction back in March when the impact of the COVID-19 pandemic first really struck home and market volatility leapt, was that this was a seminal event for mobile trading. Most institutions had taken the precaution of opening their alternate sales and trading desks to separate their staff, but this was another level – dealers could not go into the office, no matter where it was. Aside from the few that already had home dealing desks installed, therefore, only two channels remained viable for the vast majority – voice trading via the phone or turning to those devices that are such a huge part of our everyday lives – mobiles.
The reality has been a little different as institutions undertook a huge logistical effort and rushed to install desktops in home offices for as many of their staff as they could. This meant that the commute to the office was considerably shorter, and that the functionality and services needed by dealers was once again back at their fingertips.
That is not the whole story, however, for while the use of mobile devices was already increasing in FX markets, amidst the rush to establish a “new normal” it has won over more firms and individuals, especially as a means of maintaining oversight of markets and trading activities. To put the longer term growth into perspective, JP Morgan was a first mover in providing trading functionality on mobile devices, launching the service more than a decade ago. This means that the 40% growth in notional volumes it has seen over the past two years has not only been from a high base, it is also amidst greater competition.
Similarly, year-on-year, the first half of 2020 saw a 45% increase in volume of transactions and March, perhaps unsurprisingly, saw a new high water market for notional value traded on the bank’s Execute on Mobile channel. The surge in activity was driven by what was also a new high in external client logins, as Richard James, head of macro markets execution at JP Morgan, reveals, about 30% of the bank’s user base were actively transacting over the channel with the balance accessing market information and analytics.
“The functionality most accessed was the price charts,” James says. “Clients were really drilling in to the price action and analysing markets using the charting – they are able to view live and historical rates across a time horizon of one minute to three months and also switch between different chart types. The multi-asset class nature of Execute on Mobile also really helped as by rotating the screen clients were able to compare markets side-by-side across Rates, FX and commodities.
“It was also noticeable that clients were using the price charts to help manage their orders, to a much greater degree than previously,” he continues. “When you’re trading, a delayed price feed simply doesn’t cut it, you need real time information, so we saw a lot of clients looking at the price action and then going back to their orders to manage them accordingly.”
Having the full suite of orders available for Execute on Mobile is undoubtedly an advantage as the college of users expands, the application supports basic limits orders but also the full suite of JP Morgan’s algo execution strategies, including loops and the Aqua POV/VWAP styles. Clients are also now able to select their liquidity sources if they wish, allowing them to optimise liquidity pools based upon what they feel are their best channels.
Users can also leave orders in forwards on the app, as well as in base and precious metals as part of the extensive commodities product range supported. The bank also went live with limit orders for Rates products, something James says has been particularly popular in Asia, and is working on rolling our contingent order types in Rates to reinforce that growth.
The launch of Rates means clients can select their notional in for example, US Treasuries, enter their DV01 and their limit price and submit it for execution.
Even though many firms have started growing the numbers of staff allowed back to the office, mobile usage also seems to have stayed at consistent levels, for once not displaying the seasonality that James says has been identifiable over the years. “Often in the summer months there is a seasonal increase in the use of mobile, at least for maintaining contact with the market if not necessarily trading,” he explains. “This year it has been steadier at higher levels, which suggests that clients are making our mobile app an integral part of their technology stack.”
What Makes a Good Mobile App?
The upheaval caused by the pandemic has undoubtedly helped to put the mobile proposition firmly in front of clients, but for many there is one requirement above all others that needs satisfying before they switch on – the experience has to be as close as it can be to the desktop. “Having a comprehensive mobile app that is linked directly to the desktop provides flexibility,” says James. “There’s actually a very strong correlation between the two, they’re symbiotic and we have tried very hard to ensure the experience is similar no matter what the channel.”
The starting point for building such a strong mobile app that can replicate and link back to the desktop, is quite simple – resources, both financial and intellectual. “The amount of work behind the scenes to develop and maintain a mobile app should not be under-estimated,” observes James. “The workflow has to be both familiar and easy to navigate in the slightly different format and clients have to be comfortable with the level of controls that are in place.
“Furthermore, the mobile app has to have the products that clients will use,” he continues. “There’s plenty you can put on the app, but how much of it really gets used? Our experience during the height of the COVID crisis was that trading wise, customers used the mobile mostly for orders, which is intuitive because at that time most people were mostly trying to ensure they maintained their basic operations such as hedging.”
Away from periods of upheaval, however, the differentiator for Execute on Mobile remains the breadth of product and the access to risk management tools, not least the suite of algos. Clients can enable the ‘quick trade’ function in both FX and commodities to enable one-tap execution and then launch ‘immediate or cancel’ orders from that screen. Protection in the form of price limits and time outs on one-tap trading also help avoid falling victim to mobile latency issues. The trade blotters available allow users to see their own trades or to have a group view, meaning the client oversight function can, through the right permissioning, have full firm-wide visibility of their activities.
The development of control functionality is probably the unsung hero of mobile’s development as a trading channel, although in reality it was always going to be an important part of any success. A decade ago, in spite of people being more than willing to conduct personal transactions via mobile the argument always thrown up surrounded security of both the device and the content. Five years ago JP Morgan pioneered the use of facial recognition technology on its mobile app and has followed up with touch ID security.
It has also launched Control Centre, a self-service administrative tool that allows clients to manage access to various functions, including mobile apps, across their organisation. “As workforces were dispersed the need for adequate control and supervision became very important,” says James. “Again, we view Control Centre as a solution that works across all channels, not just mobile, but, for instance, clients appreciated the ability to easily and immediately grant specific staff with access to mobile.”
Control Centre offers clients the ability to establish exactly what markets a trader can and cannot access and by what channel. In the COVID crisis this has proved invaluable as it is a simple process to permission staff for mobile trading; give them view only with access to trading blotters but not execution tools; or access to content through the viewing of prices and commentary only. This is backed up with the ability to place limits on trading, thus helping to eliminate fat-finger errors for example.
“If the last six months have taught us anything it is the need to react quickly to client demands and to be flexible, we think Execute on Mobile delivers”
The function also provides a comprehensive suite of reports to help clients maintain surveillance of activities, and users are able whitelist IP addresses. JP Morgan’s Notifications function has also been designed to work across all channels and as such alerts can be delivered to the client’s oversight function.
For all the inevitable focus on trading and controls, however, by far the biggest user base of mobile channels is those seeking information and analytics. JP Morgan offers real time trade commentary and vols grids as part of its Market Monitor function, something that has proven very popular with clients. “There aren’t many places you can go to get a real-time overview of markets in the way you can through our mobile app,” James says. “This has become a vitally important aspect of the service because you do have quite a lot of traders who have been sitting in isolation and they need information and ideas and the ability to play with the data, mainly charts, to generate their own ideas.”
The Value Proposition
With an increasing number of market participants confident in the functionality, controls and security, the opportunities for the mobile channel would appear to be exponential. Interestingly James reinforces anecdotal evidence from the broader industry that tablet usage is not rising at this stage, however.
In some ways this is unsurprisingly because people are very focused on the trading and market information, which is more easily accessed through smaller devices, but as client demand for analytics grows, especially if it is in the real-time TCA space, then the tablet could come into its own. Paradoxically, the more the mobile experience can be related to the desktop, the greater a differentiator this could become and if that is to happen the tablet is likely to play a larger role.
“We want our clients to have access to as many of our services as possible on a demand basis”
For now though the focus is very much on phones and how they provide people with the tools to maintain, manage and monitor their business activities. Delivering mobile services to clients is most certainly not just about putting tradable prices in front of them. In the current environment trading and compliance controls have become even more important, therefore alongside access, content and trading, a good mobile offering also needs to deliver for the oversight and control function at the client.
The JP Morgan experience in mobile is instructive given the bank’s heritage there and it signals the need to get the right balance because usability and functionality. Traders want quick and reliable access to markets (and their level of contentment will also be closely aligned with the access to good liquidity), while the oversight function wants the comfort of visibility.
At the end of the day, the mobile channel is just that – another channel through which to conduct business – and that perhaps is the secret to success. By having mobile and web applications that are inter-linked, a client can have constant access to markets. This is important in times of stress with a dispersed workforce, but the value proposition also holds up when and if life returns to “normal” and people are running to meetings or commuting to the office.
“We want our clients to have access to as many of our services as possible on a demand basis,” James concludes. “Our mobile offering is already very comprehensive, but over the coming period we will continue to add more products and services that our clients require – be it in Rates, commodities or FX, including, for example, options.
“The true secret to a successful mobile offering is, we believe, making it just another channel or point of contact between us and our clients,” he adds. “It’s not easy to achieve, but if the last six months have taught us anything it is the need to react quickly to client demands and to be flexible, we think Execute on Mobile delivers.”