JP Morgan Chase to consolidate trading platforms

Moving from five to two platforms expected to halve the cost of trades

JPMorgan Chase is to consolidate its trading platforms in a $500m (£308m) project.

Jes Staley, chief executive at the financial services firm's investment bank, told investors that by 2014, the bank will have just two platforms.

In a presentation on 15 February, Staley said the move will save the bank $300m a year. Up to 3,000 employees could be made redundant or moved to other roles.

The bank currently has five platforms, half as many as it did two years ago.

Staley said the it had already reduced the cost of a single trade from 75 cents down to 10 cents. This will drop again to 5 cents with further consolidation.

"Having a leading technology platform in the trading and operational space is going to be critical in dealing with the regulatory waves that are coming our way," Staley said.

Details of who would develop the new platforms were not revealed.

Giles Nelson, deputy CTO of Progress Software, said advances in banking technology mean that such consolidation is now more feasible than ever.

"Ten years ago, the data would have been more disparate. There would have been less standardisation and the enterprise integration technology which did exist then was used less," he said.

"We're in a better position to start some of this standardisation and reduce the number [of trading systems]."

Nelson warned, though, that IT innovation can suffer when banking systems are streamlined with too much rigidity.

"When someone has a great idea for how they can do bond pricing better there are going to be a lot more hoops to jump through, either to use one of the existing trading platforms or to buy in some technology to satisfy that need. By the time they get through the internal hoops, perhaps the opportunity in the market will have gone. They will have gone from a leader to a follower. You've got to keep an eye on that," he said.