20 October 2017
visit www.response.ncr.com

JPMorgan seeks patent for Tri-Party repo auto substitution facility

20 May 2010  |  3566 views  |  0 Source: JPMorgan

J.P. Morgan today announced Auto Substitution, new functionality that will enhance the operating model of the U.S. Tri-Party Repo market in support of the recommendations issued recently by the Payments Risk Committee-sponsored Tri Party Repo Infrastructure Task Force. Auto Substitution addresses the primary component of Recommendation 1 of the Task Force - implement operational enhancements to achieve the practical elimination of intraday credit by the clearing banks. It also presents the opportunity to reduce the sizeable credit risks historically associated with the $2 trillion Tri-Party Repo market, while allowing dealers to retain access to securities required for intra-day trading.

J.P. Morgan's investment in Auto Substitution reflects its commitment to increasing the stability and reliability of Tri-Party Repos as an essential financing vehicle. Auto Substitution minimizes the use of cash as collateral and reduces unsecured depositor risk as investors are able to remain collateralized by eligible securities intra-day, as well as overnight. Through the substitution process, dealers and investors can maintain true term exposure to the counterparty with which they have contracted, reducing the need for the daily unwind without affecting market liquidity.

J.P. Morgan's patent-pending Auto Substitution functionality will allow the release of assets held in tri-party repo loans by substituting those assets with other eligible securities. To meet delivery instructions, Auto Substitution will employ continual scanning technology to search the loans for assets that meet the delivery criteria and will replace them with eligible securities or cash. Auto Substitution also reduces the investor's depositor risk to the clearing bank, while requiring little change to the current processes dealers use to execute securities trades.

"Auto Substitution breaks new ground in reducing systemic risk for the U.S. Tri-Party Repo market," states Kelly Mathieson, global business executive for J.P. Morgan's Clearance & Collateral Management business. "It represents a paradigm shift—the new options for both dealers and investors significantly enhance their ability to manage their collateral and mitigate risk more effectively." J.P. Morgan has successfully completed development and testing of Auto Substitution functionality.

Auto Substitution is the latest in a series of innovative new products and services being introduced as part of J.P. Morgan's Global Collateral Engine initiative, a multiyear strategic investment program to deliver fully global, enterprise-wide collateral management.

Collateral management is a vital risk management tool for institutions seeking to generate additional value from their portfolios while effectively managing their credit risk. A pioneer and market leader in global collateral management, J.P. Morgan was recently named the best tri-party service provider in Asia Pacific by The Asset Magazine. The 2010 Global Custodian Tri-Party Repo Survey distinguished J.P. Morgan from other providers, noting that "J.P. Morgan still has the broadest reach". In fact, J.P. Morgan was the only institution to qualify in all three regions and globally, gaining Commended ratings across the board.

Comments: (0)

Comment on this story (membership required)

Related company news


Related company information

JPMorgan Chase

Related blogs

Create a blog about this story (membership required)
visit www.capgemini.comvisit www.niceactimize.com

Top topics

Most viewed Most shared
Ripple looks to drive bank adoption with $300m XRP rebate programmeRipple looks to drive bank adoption with $...
16005 views comments | 12 tweets | 4 linkedin
satelliteGates Foundation backs Ripple collaboratio...
8236 views comments | 13 tweets | 10 linkedin
HSBC partners Bud for open banking trialHSBC partners Bud for open banking trial
7330 views comments | 20 tweets | 25 linkedin
IBM uses blockchain to improve cross-border payments processingIBM uses blockchain to improve cross-borde...
7240 views comments | 9 tweets | 17 linkedin
Sibos 2017: API or the highwaySibos 2017: API or the highway
6522 views comments | 10 tweets | 21 linkedin

Featured job

Competitive base, double ote, benefits
London, UK

Find your next job