J.P. Morgan has completed the transition to three-way trade confirmation as proposed by the Tri-Party Repo Market Infrastructure Reform Task Force.
By value, 99% of all tri-party repos booked daily through J.P. Morgan are now confirmed by both counterparties, the firm says. Three-way trade confirmation increases market transparency for cash investors.
This follows the announcement in September that the firm had implemented three-way trade matching and moved the daily unwind time to 3:30 p.m., other task force requirements.
J.P. Morgan accepts trade instructions via its proprietary tools, including Repo Access and a trade matching engine, as well as SWIFT and other third-party vendor services.
“We continue to devote a significant amount of time, talent and investment to developing the tools and resources to help our clients adjust to market changes,” says Kelly Mathieson, Worldwide Securities Services global custody and clearance executive at J.P. Morgan. The firm says it will continue working to improve the tri-party infrastructure through 2012.
In tri-party repo, a clearing agent or custodian (J.P. Morgan and BNY Mellon in the US) acts as an intermediary between two parties in a repo trade. By 2008, when the tri-party business peaked, J.P. Morgan and BNY Mellon were responsible for underwriting individual counterparty credit risks ranging from $100 billion to $400 billion every trading day. Global Custodian featured the US tri-party repo infrastructure, and the weaknesses in the system, in its Summer Plus 2010 issue.
BNY Mellon and J.P. Morgan have been working in the past two years to overhaul the tri-party repo infrastructure in the US in line with the task forces proposal.
(CG)