Jimmi Shah: Hi, my name is Jimmi Shah. I run Neovest, which is a wholly owned subsidiary of J.P. Morgan. I'm joined here today by my colleague Neil Hyman, who runs PricingDirect. Can you tell us a little bit about yourself? PricingDirect?

Neil Hyman: Yeah, sure. So I've been with J.P. Morgan about four years. I'm a managing director here, as well as the CEO and President of PricingDirect. PricingDirect is a financial data company that specializes in evaluated pricing. We serve roughly 3000 customers across the globe, mainly providing fixed income, cash and derivatives evaluated pricing for many markets both across the world, and we service a number of different clients providing over 50 asset classes globally.

Jimmi Shah: Wow, that's amazing. And then Neovest. Neovest is an order and execution management platform. Same thing, we're a software provider for institutional clients. We're global in nature. They can manage your books and records, et cetera.

Neil, and we caught up briefly on this, but we're in a unique position and we have unique businesses that we run and look after within J.P. Morgan, one's a software company, one's a data company. Why do you think J.P. Morgan actually invests in these companies? Why is it part of J.P. Morgan? What's the value to our client base?

Neil Hyman: So I think we're in a unique position because I think J.P. Morgan, like other banks on the Street, realized years ago that there were other products that they could leverage, other things that they could do outside of their core competencies and markets and trading. And they realized that we sit on vast amounts of data that we either use ourselves, use on client's behalf, but then have the opportunity to then... the light bulb went off, I think years ago, that we could start to commercialize that. And the PricingDirect business was actually founded about 20 years ago and really started out as more of a client accommodation type service. And I think what happened ultimately, we figured out that we could actually start to provide this in a meaningful way. And that business was born over the years and it's grown substantially really over the last 20 years.

Jimmi Shah: And do you guys partner with other areas of the franchise? What's the correlation there?

Neil Hyman: It's funny you mentioned that. So one of the unique propositions of PricingDirect is our connection with J.P. Morgan because as a firm, we are number one, number two, or number three in many areas across fixed income. And that positioning allows us to really have a unique perspective and get unique valuated content for our partners and our clients. So it's really a unique thing relative to our competitors in having that proximity to J.P. Morgan's trading desk, we get live market color, we leverage the greater franchise that is J.P. Morgan.

Jimmi Shah: Yeah, that's interesting. So you bring up the data point of it, which is you get that perspective, you get the uniqueness of the data, which is a value add. Ours is slightly different on the Neovest side, but still the greater good for the client. So we are a software provider and you are a data provider. J.P. Morgan provides custody, prime services, clearing, execution and research services to its clients. And with that, we're uniquely positioned to be a comprehensive solution for our mutual clients. Even though we have our own unique client relationships, our mutual clients can benefit from a comprehensive set of end-to-end solutions enabling our clients to really focus on their core strengths, which is raising and managing capital.

Neil Hyman: So you've had numerous roles at J.P. Morgan. I think you've been here 13 something years and stepped into the CEO role of Neovest. It's a very different role for it to be a CEO for a small company sitting inside a bank. What's that like for you and how did your journey to that evolve?

Jimmi Shah: Yeah, that's a great question. I've had four or five very different roles at J.P. Morgan, and that's the beauty of what I call the franchise as well, the mobility opportunity. So I've done strategy inside J.P. Morgan, product management inside J.P. Morgan, new product development where we launched new initiatives within J.P. Morgan. Then last four or five years, been with Neovest itself. It's interesting, the way I would frame Neovest and running that FinTech company within J.P. Morgan is, I would say it's a FinTech on training wheels. The one thing I do not have to worry about is capital, right? J.P. Morgan has the capital, they invest the capital, but everything else is the same, right? You have to worry about client value. What's the creation you're going to have? What's the stability you're going to have? So everything else is there, the one big piece that I don't have to worry about is capital, which is very helpful from that perspective. You ran a FinTech company, right?

Neil Hyman: I did. I started a software company too long ago to tell the audience, but saw it was very different. I spent the earlier part of my career largely in technology and Wall Street. And that ultimately led to the starting of a software company that really, I always had this entrepreneurial propensity when I was younger. And I think all of the roles that I've had since then have really fell into that kind of niche to some degree. And I think both roles that I've had before J.P. Morgan as well as the one here was, I think PricingDirect a business here, there was a view that this business had another gear in it, and so we wanted try to do something with that.

And it's interesting because the PricingDirect business runs like a financial data company. It has all the resources, a mothership, so to speak, but it still has that entrepreneurial kind of feel to it that allows us to do the things that we need to do, and we get the investment from there. So it's been very interesting.

When you look back, I guess, again, you've done a lot of things here. How's your role evolved within Neovest at all in the four years that you've been running it?

Jimmi Shah: I think just my role itself has evolved. As I mentioned, within J.P. Morgan, I've had five different roles. But within Neovest itself, platforms are becoming more and more important to our client base. Platforms are becoming more and more important from an industry perspective as electronification happens. So my whole objective at Neovest was very similar to yours. It was bought by J.P. Morgan back in 2005. It's how do we kickstart it and accelerate it to be industry leading, just like our goal is across every asset class. So it was really turning around, coming up with that strategy. And we realized actually earlier this year that we needed to complete the offering. We were one piece of the buy-side platform story, so we ended up acquiring another asset called LayerOne. Now it's all rebranded as Neovest itself so we can become a true end-end investment platform. And that was all because J.P. Morgan believed in investment, they believe in the platform story and they think it adds value. So we're now working on integration and it's a fun journey. The platform play is serious.

Neil Hyman: Yeah, that's great. So talk a little bit about, I guess, the acquisition and what that experience was for you. You have a smaller company that you're now integrating with your small team. What are some of the challenges you face there?

Jimmi Shah: It's interesting, right? I would say it's fun. The first thing that you always have to integrate is the people. So it's how do you culturally integrate the people, make sure that it's seen as cordial. And Neovest certainly does that, but J.P. Morgan generally does that. It's the thing that I love about J.P. Morgan is the people and the collaboration.

So first thing we did was the element of people integration. Now we're coming out with a client strategy, making sure we're thinking about the acquisition from a client perspective. What's the best seamless experience that they can have? So we have a whole strategy that we've laid out that we're going to execute on. And then the third piece that's really important is controls, right? We are a big believer in client data, big believer in control. But it's a fun journey. You've seen that and you've witnessed that.

 So what's new in your world, right, in the PricingDirect side? What are you guys focused on?

Neil Hyman: As I mentioned before, we have this long, storied history and fixed income, both in cash and derivatives. We cover nearly almost every asset class really known to the industry. One of the things that we've really started to look at and seen evolve in the last year or so is private capital markets, private assets, alternative assets. We're seeing a lot more investment, particularly in that space. I find that there is a lot of white space for us in this particular market. So things like private credit, private structured credit, private placements. We built out our business. We started our private placements business four years ago, that has probably tripled by now. And then later this year, we're going to start to focus on something that's really unique for PricingDirect, which is private equity.

So we're really trying to complete that circle, getting into... That business is a $10 trillion market. And then there's a lot of white space and not a of players out there for that particular valuation service. And we feel like we are really very, very uniquely positioned to do that, both with the expertise that we have in valuations, but then also in concert with a company called Omni that J.P. Morgan purchased last year. And they are an investment analytics business that focuses on the private capital markets, particularly VCs and private equities.

Jimmi Shah: Private equity. That's the direction the industry's going. That's a product gap that you've identified. How do you start? What goes through your head? Do you hire a team of people that focus on that? How do you run that business?

Neil Hyman: It's a good question. I think that we look at, there are a lot of, I guess, nuances and subtleties of those individual businesses, but at its core, we have a really skilled team of evaluators who all have financial engineering backgrounds and been in the business. The PricingDirect team itself has a very high, I would say, tenure just overall where the management team, I would say the shortest tenure of anyone on the management team that's in a product role is probably 10 to 15 years.

Jimmi Shah: Wow.

Neil Hyman: Some people have been [inaudible 00:10:07] twenty-something years. So I think that we leverage that. We have people within the organization also across J.P. Morgan. Where we need expertise that we may not have, we do that.

I think lastly, when we come to the execution, then it's really more focused on maybe getting some industry experts that would come in. But by and large, we have a basis for the methodology. We've been doing this really a long time. I don't want to say that, it's a little, sounds a little cavalier, but you'd evaluate one asset, you can evaluate another. So we do get to leverage the existing expertise that we have. And a lot of these things are offshoots of things that we already do. And so we've started to get more involved in those things. We build out the methodology, consult with clients, et cetera, until we get it right. And we get to leverage data across that we get from J.P. Morgan.

Jimmi Shah: So if we go back onto the J.P. Morgan perspective, you've been here how long?

Neil Hyman: Four years.

Jimmi Shah: Four years?

Neil Hyman: Yeah.

Jimmi Shah: What's your best memory of J.P. Morgan? I know I'm kind of throwing you on the spot here. Well, what do you love about J.P. Morgan?

Neil Hyman: So I think the culture. I've been in a number of investment banks over the years, and I'm not going to mention all of them, but I think the culture at J.P. Morgan is one that's exceptional. And I think that really starts at the top.

How about you? I mean the acquisition, other things that you..

Jimmi Shah: Yeah, I would say at a more macro level, there's a couple things that I love about J.P. Morgan, right? Number one, the mobility, right? I've done four or five very different roles just within J.P. Morgan itself. So that's been fantastic. Number two is just, like you said, the people. Deal with smart people like yourself. You learn something new all the time by just interacting with individuals. But it's just more than the people because you're can have people that are jerks, but we don't have that. It's a collaboration piece that goes along with it. We work quite closely and well together. No one's out to get you. It's collaborative in nature. We try to solve problems. Some of them are easier, some of them are harder. You don't always agree, but we get there and move forward, which I love.

One of my, I guess, funniest or most exciting things was we launched J.P. Morgan Markets back in January 2013. My career here has always been the digital and strategy in electronic space. So as part of an initial team of three that launched J.P. Morgan Markets back in January 2013, we were talking about the whole investment lifecycle and the focus there, et cetera. And it's evolved quite a bit over the last 10 years or so.

But a few years after starting, we were doing investor day, and I was at the booth presenting, and Jamie comes up and he's like, "Oh, this is fantastic. I want to learn more about it." So there was a meeting set up with three of us that went to his office and demoed J.P. Morgan Markets, and I was showing one of the capabilities to him, and he knew his stuff. He's pointing, connecting the dots. I'm like, geez, this guy knows about SWIFT messaging and he's running a 300,000-person company. So I'm demoing it and then jokingly, he's like, "Oh, and what does this happen?" I was like, "Oh, there's a maker, checker process. Jamie, when you go in and you enter in your settlement instructions, me as your boss will go in and approve them." And he just looks up and he smiles and smirks, because I was his boss. I'm like, "Or the other way around." It was quite comical. So that was an amazing experience for me just being there, asking all these questions, knowing how he operates. It was quite interesting.

Neil Hyman: So Jimmi, as your career evolved, is this really what you had envisioned when you were younger?

Jimmi Shah: Not at all. Right? So your career takes so many different waves and directions. At one point wanted to be a portfolio manager. That didn't happen. 2008 happened. So my career pivoted in a different direction. So now what I stopped doing is trying to figure out what role I'm going to have, and it's more about what attributes do I want to get? So that's what I've been focusing now the last 10 years of my career, it's like, okay, what attributes do I want to gain if... and then I try to fill those, right? And if I want to learn about finance or running a business or whatever it may be, because yeah, I have never hit on whatever exactly I thought I was going to do. So it's very different. What about yourself?

Neil Hyman: I thought I was going to be a doctor when I was younger, and I think that changed a little bit later on and started out as a computer science major and was really into technology initially. Started out programming and coding and then that shifted somewhat. And then I got really engrossed by the financial services industry, started at an investment bank early on in my career, got very enamored by Wall Street and finance, and at one point decided I think I want to be an investment banker. So went back to school, got my MBA, came out of the MBA, then said, "You know what? I don't want to be a banker." So I wound up doing other things and really still pursuing the technology path, which ultimately, as I mentioned earlier, led to the software.

Jimmi Shah: Yeah, started a company.

Neil Hyman: And then that just changed and evolved.

Tell us about how electronification of markets affects Neovest.

Jimmi Shah: Yeah, that's a great question. So look, I think some asset classes are very electronic, so equities, futures, FX, some of these are already electronic, and some of them are in that journey to becoming more electronic, like credit, for example. So it's not a matter of if asset classes are going to be electronic, it's a matter of when. And that really impacts Neovest from multiple factors. But the first thing is the volume that goes through the platform. What we've noticed specifically through our platform is clients, as they use algorithms, what happens is the volume ticket, the volumes go up, but the ticket sizes go down in nature. So there's just a lot more flow of data through our platform.

Our platform has gone up 3X in volume over the last couple of years, so it's gone up, and I only expect that trend to continue going up. So as a result, stability, extremely important, throughput, extremely important. So not only are we thinking about products and building out new product capabilities, which is the fun stuff, it's making sure the platform's resilient, stable, there for the client. That's a big part of how we operate our business and run our business. So yeah, that's a great question. What about for you guys? Do you guys have electronification impacting your business at all and the data side of things?

Neil Hyman: So evaluated pricing has largely been a end of day type sort of business. We provide our volume, but our volumes are very significant. So we, for example, in 2023, we delivered probably 4 billion data points to our clients across 3000 or so clients across the globe. So the more ticks you have, it certainly puts pressure on our businesses overall. But we're not directly trading, so electronification doesn't really, it's not a direct impact really, but it is more indirect and I think just generally puts a little bit more pressure on us to deliver. We've seen a trend probably in the last year or so for more snaps, we need to provide more intraday feeds to our customers. When the ETF business really started to explode, there was really more demand for intraday calculations, intraday net asset value calculations and data there. So we see a lot of that really taking shape in terms of the amount of data that's required, and also timeliness. We have a very narrow window at the end of the day for our customers to calculate their net asset values. That window is shrinking every day.

Jimmi Shah: And that's going to only just continue to change, right? With the regulatory changes coming up and this T+1 settlement, there's going to just be more pressure to use technology and solutions like that to drive value from a client's perspective.

Neil Hyman: And we still do it. Our evaluated pricing still is driven by humans. So at the end of the day, a human is the one that what the price of that security needs to be, and the volumes that we're dealing with are tremendous. So we start to, over the last probably two or three years, have started to integrate, and everybody else on the planet machine, learning and AI capabilities within the group. So back in 2019, we introduced really, I think the Street's first model for municipals, right? We value probably a million municipal bond securities every day. We really could not do that if it were not for machine learning and artificial intelligence. We've done other things like that.

What kind of role does that play in Neovest? Or how do you see that evolving for you?

Jimmi Shah: I almost think there's always an evolution of adoption for technologies, both for adoption and the use of it. J.P. Morgan certainly is evolved quite well and they have various use cases where AI/ML is used quite often, like in PricingDirect as well. Neovest, you think about the crawl, walk, run analogy, we're probably in the walking phase. Our goal is how we can learn more about the platform and get proactive awareness when something goes wrong on our platform. But I think AI/ML is a game changer. We are going to adapt. Neovest is on that journey itself. But I've started using AI/ML just on a day-to-day basis for myself. So J.P. Morgan has this, I don't know if it's called a ChatGPT or JPM GPT, but it has its own version. I use that all the time internally, and I see these types of things being a digital assistant to help you. So I think it's crucial to learn, adapt, use it, figure out a way to use it and change how you behave because I think it's going to be a generational change with the AI/ML.

Neil Hyman: Yeah, I think in our business, it really, if you look at the last two or three years, these are become transformational technologies, and it's really, I think changed the landscape for talent as well. The pricing business historically had been the landscape for financial engineers and people with quantitative backgrounds. And we hired from mostly math degrees, et cetera, people who really wanted to get into the ins and outs of valuing instruments. And now today, if you don't have Python skills or if you don't have any sort of data analysis or machine learning or data science background, that's become really a big part of the job.

Aside from, I guess, AI/ML, which obviously is on everybody's mind, is there anything that you see that's sort of transformational that's having impact above that?

Jimmi Shah: There's a few things. So we have cloud is one. And what I would say is AI/ML is once you have all the data, you can actually take that to the next level. It's first forming that data and that foundation. So cloud APIs are two big things that Neovest is very focused on. So we're moving our platform to the cloud where our whole thesis of our business strategy is being an open platform. So you can use all of our components, you can use one of our components, some of our components, and we'll integrate with third parties, or we'll integrate with you, client, with your own solutions. Because the best of breed solution for a client, it varies. You go talk to 10 clients, they'll have 10 different answers because they always think one of their items or one of their technology pieces is the alpha generation piece. So we're quite focused on APIs, focused on cloud. That's going to be the foundation of creating that data repository that's going to allow us to do AI/ML.

So I still do think AI/ML is the generational change. So when we had internet and phones, even computers, I think AI/ML is going to change the way our kids and their kids operate in the future. So it's just embracing that, right?

Neil Hyman: How have you personally adapted to the hedge fund world that you service? Obviously it's a very demanding community.

Jimmi Shah: Yeah.

Neil Hyman: How have you adjusted to that?

Jimmi Shah: I think there's two things that we really try to do. Obviously, stability of the platform, number one. The thing has to be up. You can't be what I call the livelihood or the table stakes of a buy-side ecosystem, and then it not be up. So stability really matters. The second thing I do, and we all try to do in Neovest, is just be very transparent with the client. We are all in it together. We want the same outcome. We don't want the platform to have issue. We want you to make money as a client. We want you to be able to add value to your own clients at the end perspective, from a hedge fund perspective. So if we have an issue or if we can't do a capability, we're quite transparent with the client, and I think the honesty goes a long way. I would rather be upfront and honest. So that's been an interesting journey.

Neil Hyman: So if I flew out to Utah and was eavesdropping on your team, what would I hear about?

Jimmi Shah: So we love our morning donuts. So definitely you get some specialty donuts that we get at least twice a week. But aside from that, there's really two things that you would hear. One is whenever we're solving something, we always ask the question, what's the problem we're solving and who is it for? So you will always hear that, whether it's from the product side of things, engineering, the client service team, it's always what's the problem and for who and why? So that's one thing.

The second thing is you'll hear probably what sounds like a lot of challenging of each other, because it is. We are quite open. It's not hierarchical at all, right? If I say something or someone else says something on the team, it's not a we are going to do that. We challenge each other and say, "Okay, why are we trying to do that? What's the rationale behind it?" And that just creates a healthy environment. At some point though, we need to get to a conclusion and we might disagree, but we have to commit and move forward. So you'll probably hear a lot of whiteboarding challenging and asking, "What are you really trying to solve? And what's the problem you're trying to solve?"

What about yourself? So I come in, sit with you guys for a week, how's your team interacting? What am I going to learn?

Neil Hyman: So it's a very eclectic mix of people. I think you're going to hear anything from Python coding to treasuries, where they were trading that day, to what the commercial real estate market looks like. How does that affect commercial mortgage backed securities? What is the default rate on collateral loan obligations? So there's a lot of things going on. There's a lot of pride of ownership within the PricingDirect team.

Jimmi Shah: That's great.

Neil Hyman: So as I mentioned before there, the tenure of the team is fairly long. A lot of people have been around for a really long time. So there's, I would say really a culture of supportiveness and helping each other solve problems. And it's really something almost different really every day. And so responding to market challenges and working with the trading desks and that sort of thing. So I think there's a lot going on because there's always this buzz, I think really on the floor. It's a fun place to work. I think we also try to, not to take ourselves too seriously, I think you got to have a sense of humor.

So we lead sizable organizations. We have people that follow what we do. What motivates you really? And what's the kind of example that... How do you show up every day?

Jimmi Shah: I guess really there's two things, right? There's the whole thing about learning. I love learning new things. Just taking something that's totally outside my realm. When I joined Neovest, I was in this space, but I didn't really know about technology platforms. So it's always about just learning, getting new intel, getting new information, applying how it works in the industry and clients.

And then the second thing is just adding value. I was joking around with friends before, I could work in a widget factory, but if we're adding value and we're optimizing things, I would love it. It's not one specific characteristic that drives me, it's just that you learn a lot, you add a lot value. I think those are the two high level things that really motivate me, drive me, and make me keep coming into work and love it.