Advertise On EU-Digest

Anual Advertising Rates

12/19/16

The head of the No. 1 investment bank in the world explains why Brexit, Trump, and everything else have been great for trading - by Matt Turner

A bunch of events in 2016 had the potential to send the market into a tailspin.

From the Brexit decision in June to the election of Donald Trump in November and the Italian vote against constitutional changes in December, there have been unexpected election results and breaks with the status quo.

And while these events spurred trading activity, they did not roil the market in the way that many had predicted. In recent weeks, the US stock market has regularly topped record highs, for example.

According to Daniel Pinto, the CEO of JPMorgan's giant investment bank, the events all triggered what has been called "good volatility." That is to say that trading has been continuous, trading volumes have been healthy, and markets have been liquid.

That kind of trading is "our business" and a "positive thing," Pinto said. Here's the relevant passage from the interview, which you can read in full here:

Turner: Brexit, the election of Trump, the Italian referendum maybe, they all seem to be breaks from the status quo. Everything is new. There's a new party in government in the US. The UK is leaving the EU. Who knows what is going to happen in Italy. The market suddenly has to make sense of a lot more new information. Does that create more volume going forward?

Pinto: Probably. The important thing is that the market functions rather than the events or nonevents. The important thing is that at the time an event happens, the market should continue providing liquidity. When asset managers or clients need to reposition their books, in whatever direction, the market liquidity is there at a certain price. Higher volumes and more volatility in a continuous market, where it doesn't gap, is a good thing. That's our business. That is a positive thing. The last two or three events were positive events because there was volatility in a market that was functioning.

Read more: The head of the No. 1 investment bank in the world explains why Brexit, Trump, and everything else have been great for trading

No comments: