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I Am A Self-Directed Trader About To Broker With JP Morgan's Institutional Side
A little confused about all this. I am a self-directed retail trader and I need institutional level access for some of the trades I'd like to make, and wanted to clear through JPM Securities using the Trading Technologies platform.
I was told I am going to be talking to GIO (Global Investment Opportunities) and be given DMA to execute my trades directly. I believe GIO is part of the Private Bank side of the firm, so I don't know if I'm going to be given the same access as say hedge funds when they broker with JPM. Maybe the route I'm going through GIO (but self-directed, cutting out the middle man and being given DMA) still clears through JPM Securities?
Do all institutions that make trades through the IB side of the firm (S&T perhaps) clear through JPM Securities? Even if so, I wonder what I'm missing out on by doing this through the Private Bank side of the firm.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,386
Thanks Received: 10,207
I'm not sure what your asking. In the futures space you have clearing houses & clearing members. For example CME Clearing is a clearing house. JP Morgan Securities LLC is an FCM. Using them as your FCM does not give you any 'clearing' benefit versus using any other FCM. Then there is execution which is normally dependent upon your execution platform. Some execution platforms are broker specific (and hence your FCM may give you an execution solution not available to other FCMs) while other platforms are generic. Trading Technologies is a top (the top professional?) front end that is broker agnostic. You can use it with many brokers, and the broker you use does not effect your access. (Note that this wasn't the case with TT's older XTrader system. How well that performed was very dependent upon your setup. And yes FCMs did have different quality levels of setup). Also worth noting that Trading Technologies (new or old) is not DMA unless DMA means something different to you. So JPM may offer you different fee structures, lending opportunities etc, but the execution through TT will be the same as anybody else using TT. (which is probably better than many other front ends, depending what you are doing).
A prime broker is one stop shop for hedge funds. Not sure of the full list of products they would offer but it would include equities, bonds, futures, currencies, would have access to most/all exchanges, access to lending facilities, and probably access to Over The Counter and non-cleared markets as well. So a prime broker would probably be an FCM as well.
So if your a hedge fund you could use either. The prime broker would offer more services but if all you were doing is trading futures then you probably wouldn't need the extra services.
@MollieP what is a dma? also at what point would you need institutional access to make certain trade?
@SMCJB what is the difference between trading technologies and a bloomberg terminal? i thought hedge funds used the bloomberg terminal to place their trades?
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,386
Thanks Received: 10,207
DMA is "Direct Market Access". It occurs when you connect your execution software directly to the exchange matching engine (normally via API) with nothing else in between. Hence there are no safety checks in anyway. Traditional access (eg TT, Bloomberg etc) you are connecting through their infrastructure and that infrastructure has all sorts of safety and credit checks built into the software. DMA also tends to be expensive because you now have your own private data feed while the traditional software vendors have one feed and use that feed for all customers. Finally DMA normally requires exchange certification.
Bloomberg is considered the best 'all-in-one" trading terminal. It has news, historical data, pricing models and trading capability built into one. If you don't need the news, historical data and or pricing models then Bloomberg is not only probably overkill for you, but there are much better charting and trading execution software available. If you want the ability to chart absolutely anything (they have a lot of proprietary data as well) then Bloomberg has few competitors. Bloomberg costs $2000+/month.
Trading Technologies is considered the best 'professional level' trading software and does very little other than enable you to trade. (They do have charts but they are poor). TT invented (and patented) the Market Depth ("MD")/Depth of Market ("DOM") trading ladder that so many people use. If your trading odd lots you do not need something like TT but if your trading 1000s of lots across multiple markets, across multiple accounts, potentially for multiple clients, then it rocks. Doing something like that in Bloomberg would be very difficult. TT costs between $500 and $1500/month depending on your version.
So the platform is responsible for the routing (including any smart order routing features) and speed of execution, the executing broker by itself (again, excluding platform) has nothing to do with it?
I am not too sure how important DMA is anyway, but I thought maybe I can get DMA with TT. For the fast algo side trading on the options side I think it may be important to have DMA with SOR.
Yep, I'm basically looking for the wide access and upstairs trading desk (for closing massive option positions) that being with a prime broker and having 'prime services' gives you, without all the additional bells and whistles. Probably very tough to get but the guy that I'm in contact with keeps trying to get it for me. Problem is, he's on the Private Banking side of the firm and I think he has no idea how to get me what I want. I assume prime services/prime broker relationships are conduced through the Investment Bank side of the firm not the Investment Management side? Probably in S&T I'd think..
I think there still are some safety checks with DMA though. It's 'Sponsored Access' or 'Direct Strategy Access' where things are taken to another level. It is technically a form of DMA though as I understand it.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,386
Thanks Received: 10,207
This quickly becoming very technical. The way to think about this is that the exchange gives you a port at a location (Aurora IL for CME, Chicago IL for ICE, New Jersey I believe for most of the equities exchanges) and how quickly you communicate with that port dictates how fast you are. If we talk about CME specifically. If your running an automated trading system that is colocated at Aurora and you have DMA then that is about as fast as you can get. If your running a trading system on TT that is not much far behind. TT's algo engines are colocated at Aurora as well but their infrastructure will normally be slower than a DMA client. Now imagine you live in LA and your algo trading with somebody like Tradestation on your home computer. The data leaves Aurora, travels to NJ (where Tradestations data servers are) and then goes to you in LA. Your system then wants to send an order. That order goes from LA to Florida (where Tradestation performs a credit check) and then goes to Aurura. Things like 'smart order routing' are more equities (and equity option) specific and not something I know as much about (compared with futtres).
Really fast DMA can change orders thousands of times per second. Something like TT is probably capable of doing it several hundreds of times per second. Tradestation on a desktop in LA... who knows!
Don't know but would agree. Investment Management will be private client and their fund business.
DMA access will have whatever controls that have been programmed into it. Could be everything. Could be nothing. As a rule the point of DMA is speed, hence as a rule I don't believe there are a lot of non-essential code as that would slow it down to much. Non-DMA software like TT has credit modules that your broker can access and set limits. They have communal data gateways. While still fast, every one of these additional steps creates software latency. Lessor software even has throttling limits built into the software. (In most cases the exchange itself has throttling limits that will slow you down if you go crazy.)
