J.P. Morgan offers greater protection for collateral
15 August 2012 New York
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J.P. Morgan has extended its collateral management product to enhance the security and control that its clients have over excess collateral in response to the billion dollar trading losses that it announced in Q2 2012.
The bank made billion-dollar losses on bad trades that came to light in its financial results. The losses led to more calls for regulators to reign in Wall Street and banks worldwide.
In July, it revealed a Q2 2012 net income of $5 billion, but there were “several significant items that affected the quarter’s results—some positively; some negatively”.
These included losses of $4.4 billion on CIO's synthetic credit portfolio, as well as $1 billion worth of securities gains in CIO.
Speaking at the time, Jamie Dimon, chairman and CEO of J.P. Morgan Chase, said: "We have already completely overhauled CIO management and enhanced the governance standards within CIO. We believe these events to be isolated to CIO, but have taken the opportunity to apply lessons learned across the firm. The board of directors is independently overseeing and guiding the company's review, including any additional corrective actions. While our review continues, it is important to note that no client was impacted."
J.P. Morgan’s additional collateral service will support its clients’ listed derivative and OTC cleared activity, “allowing them to maintain excess collateral in a depository institution, J.P. Morgan Chase Bank NA, separate from their clearing broker, and have on-demand reporting and access to their account,” said J.P. Morgan in a statement.
The bank said that the service will also allow clients to centralise the movement of collateral “as needed” to meet margin requirements across any clearing broker. This will reduce the time that is needed to reconcile accounts, giving clients greater operational efficiency.
“In addition to greater transparency and operational efficiency, this product enhancement is also designed to provide clients with increased confidence in how their collateral is managed,” said Emily Portney, head of agency clearing, collateral and execution (ACCE) at J.P. Morgan. “That peace of mind is important given recent events.”
ACCE is a part of J.P. Morgan’s corporate investment bank (CIB) and it includes teams from its worldwide securities services and investment bank businesses.
ACCE provides agency clearing, collateral management and execution for CIB clients. The business brings existing capabilities under one roof “in order to provide a holistic, end-to-end solution to J.P. Morgan clients across both the buy side and sell side,” said J.P Morgan.
The bank integrated the teams responsible for brokering client derivatives and securities trades with those that look after the back office aspects of those trades at the end of June.
Portney, who was already the global head of futures and options within J.P. Morgan’s investment bank, leads the consolidated teams in an expanded role that also has her overseeing clearing and collateral management.
The bank made billion-dollar losses on bad trades that came to light in its financial results. The losses led to more calls for regulators to reign in Wall Street and banks worldwide.
In July, it revealed a Q2 2012 net income of $5 billion, but there were “several significant items that affected the quarter’s results—some positively; some negatively”.
These included losses of $4.4 billion on CIO's synthetic credit portfolio, as well as $1 billion worth of securities gains in CIO.
Speaking at the time, Jamie Dimon, chairman and CEO of J.P. Morgan Chase, said: "We have already completely overhauled CIO management and enhanced the governance standards within CIO. We believe these events to be isolated to CIO, but have taken the opportunity to apply lessons learned across the firm. The board of directors is independently overseeing and guiding the company's review, including any additional corrective actions. While our review continues, it is important to note that no client was impacted."
J.P. Morgan’s additional collateral service will support its clients’ listed derivative and OTC cleared activity, “allowing them to maintain excess collateral in a depository institution, J.P. Morgan Chase Bank NA, separate from their clearing broker, and have on-demand reporting and access to their account,” said J.P. Morgan in a statement.
The bank said that the service will also allow clients to centralise the movement of collateral “as needed” to meet margin requirements across any clearing broker. This will reduce the time that is needed to reconcile accounts, giving clients greater operational efficiency.
“In addition to greater transparency and operational efficiency, this product enhancement is also designed to provide clients with increased confidence in how their collateral is managed,” said Emily Portney, head of agency clearing, collateral and execution (ACCE) at J.P. Morgan. “That peace of mind is important given recent events.”
ACCE is a part of J.P. Morgan’s corporate investment bank (CIB) and it includes teams from its worldwide securities services and investment bank businesses.
ACCE provides agency clearing, collateral management and execution for CIB clients. The business brings existing capabilities under one roof “in order to provide a holistic, end-to-end solution to J.P. Morgan clients across both the buy side and sell side,” said J.P Morgan.
The bank integrated the teams responsible for brokering client derivatives and securities trades with those that look after the back office aspects of those trades at the end of June.
Portney, who was already the global head of futures and options within J.P. Morgan’s investment bank, leads the consolidated teams in an expanded role that also has her overseeing clearing and collateral management.
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