J.P. Morgan may be testing a new way of relocating its trading teams: using crowd-sourced traders.
If you’re a Wall Street trading guru, and you’re sitting in the office on weekends, and you don’t know why, chances are it’s because you are not the desk manager of a J.P. Morgan financial product team.
According to a report from The New York Times, JPMorgan has opened a “composite trading pit” (comparing it to Wall Street’s Bear Stearns trading pit where part of the traders’ job was scouting for stocks before they went public).
The pits use offshore crowd-sourced traders to crowdsource shares for transactions involving a small number of investors. Once customers sign up, they are redirected to J.P. Morgan’s proprietary software, and given a selection of their choosing among thousands of potential shares of stock, real estate, and bonds.
“It makes perfect sense” that banks are starting to use crowd-sourced technology to handle these large-scale transactions, Jim Connolly, a managing director at consulting firm Greenwich Associates, told the New York Times. “If you’re going to lose them to another firm, it may as well be cheaper and easier.”
J.P. Morgan employees have been training crowdsourcing software to handle stock trades since last October, without fanfare, the Wall Street Journal reported, citing an internal J.P. Morgan email it had obtained.
Experts have been testing the software’s security measures since 2014, but J.P. Morgan told the New York Times it is just now trying it out.
The crowd-sourced trade comes after J.P. Morgan struck a deal with Zynga to buy its mobile games division for $1.8 billion in 2014. The deal was designed to expand J.P. Morgan’s reach in the growing social games market, where J.P. Morgan now claims to be the third-largest social game publisher in the U.S.