PMorgan replaces KCG with Virtu Fin as market maker

Replacing KCG Holdings Inc, JPMorgan Chase & Co has hired Virtu Financial Inc for taking care of its stock on New York Stock Exchange (NYSE). The appointment of Virtu Financial as market maker for JPMorgan Chase is effective from Wednesday (6 January 2015). 

Generally specialized firms in stock market operations as designated market makers oversee the trading of the NYSE-listed companies. Market makers handle the opening auctions of the stocks every morning before the session. Many stocks went haywire within minutes of opening the trading session amid the market turmoil on 24 August 2015. 

Bloomberg reports that JPMorgan Chase's shares were also highly volatile in August crash. JPMorgan's stock fell 21 percent before it recouped most of the loss. JPMorgan Chase was not satisfied with the way KCG handled the stock on that particular day of 24 August 2015. 

The appointment of Virtu Financial Inc as market maker for JPMorgan Chase was confirmed by a trader notice sent out from the New York Stock Exchange. It's learnt that KCG Holdings was fired from the market maker responsibility for JPMorgan for its disappointing performance on 24 August 2015. According to the people in the know, human market makers took initiatives on 24 August to manually opening up many stocks owing to high volatility across the markets. 

Regardless of any specific news, several stocks fell steeply more than others. KKR & Co shares fell over 50 percent. General Electric and JP Morgan too dropped by over 20 percent before recovering the most of the losses, as reported by The Wall Street Journal (WSJ). Analysts blame it on extraordinary swings on decisions by floor-based designated market makers. 

After the appointment news, Virtu Financial Inc shares rose one percent on the Wall Street. Andrew Smith, a spokesperson at Virtu and Sara Cohen, a spokeswoman at NYSE, declined to comment on the latest development. Brian Marchinoy, a spokesman for JPMorgan Chase was also not available for a comment. 

The market makers failed to restore the order to trading amid high volatility. The role of some floor-based designated market makers was the responsible for those extraordinary swings, according to a report published by MarketWatch.

The new market maker for JPMorgan Chase is Virtu Financial Inc, which is one of the largest high-frequency trading firms in the world. However, the latest decision of JPMorgan Chase didn't impact other business relationships with KCG. JPMorgan has business association with KCG in electronic trading. 

Real Time Analytics