JPMorgan Grafts IM to Algorithms

NEW YORK—JPMorgan has grafted instant messaging (IM) technologies to its algorithmic execution services to offer clients the AlgoAlert real-time IM updating function.

Launched last week, AlgoAlert provides end users with an IM capability for transmitting charts and updates of algorithmic trading performance and conditions, including halts and oversized orders, say JPMorgan officials. AlgoAlert messages can be sent via many e-mail and IM systems, including AOL’s AIM service, the Bloomberg Professional messaging system, and the Google Talk IM offering.

AlgoAlert does not require clients to install new software and it will work with JPMorgan’s suite of algorithmic trading products, including the recently released Aqua and Arid algorithms for finding "dark pools" of liquidity (DWT, Sept. 18). The service can also be used with the Trading Algorithm Optimizer (TAO) tool for selecting portfolios of algorithms and executing strategies, and works with execution management and order management systems such as Neovest execution management system (DWT, Nov. 7).

JPMorgan officials did not want to go the "connect and forget," low-touch route for algorithmic execution, says David Conner, head of electronic sales for Electronic Client Solutions (ECS) at JPMorgan. AlgoAlert is intended to provide "a proactive human support element to trading electronically," Conner says.

To link its algorithmic engine for trading stocks to IM, "we combined our high-speed, market data feeds with an entitlement engine that stores customers’ preferences as to what types of messages they would like to be alerted to," Conner says. The firm also uses the Rendezvous and JMS-based messaging buses from Tibco Software in conjunction with the Java programming language.

AlgoAlert was developed via the "Java environment with open source libraries including Jabber," Conner says. Jabber is a set of streaming XML protocols and technologies that can be used to build IM systems based on open source technologies. "We are just harnessing the existing infrastructure of both e-mail systems and IM environments such as Google Talk and AIM," he adds.

The firm is also using other open source options for the charts sent via AlgoAlert. "Using the JFree Chart open source library combined with our proprietary TickDB infrastructure, a JPMorgan AlgoAlert user will be able to view customized charts that display multiple data elements including price performance, order details, and market data over the duration of the order up to that point," Conner says.

In bringing the two technologies together, JPMorgan may be in keeping with the industry’s no-nonsense embrace of IM. For instance, Moors and Cabot, a retail and wholesale brokerage based in Boston, accepts approximately 40 percent of its order flow via FIX and the IM system, IMtrader from Pivot Solutions, because clients preferred to use IM to communicate their trading needs (DWT, Dec. 5, 2005). In addition, the broker-dealer Norse Securities, based in Oslo, Norway, implemented IMlogic for IM compliance and security (DWT, Jan 16.)

In the financial sector, the early adopters exploited IM for legitimate business uses, and that is still the case, says Matt Anderson, an analyst for the Radicati Group, a consulting firm in Palo Alto, Calif. While the industry was initially resistant to IM, it has become a useful component for many financial firms. "One thing that we found somewhat surprising is that most companies that have employees who regularly use IM—whether it is sanctioned or unsanctioned by the organization—are using it primarily for business reasons, rather than personal reasons," Anderson says.