As more clients look to use gold as a hedge against inflation and to post as collateral, J.P. Morgan has said it will now accept physical gold to satisfy securities lending and repo obligations with counterparties the only tri-party collateral manager to do so.
The ability to finance and leverage the broadest range of asset classes is important to our clients, says John Rivett, collateral management executive for J.P. Morgan Worldwide Securities Services. Many clients are holding gold on their balance sheets as an inflation hedge and are looking to make these assets work for them as collateral. By combining our collateral management and vaulting capabilities, we provide clients with greater flexibility in how they mobilize collateral.
The automated use of gold in collateral management is introduced under J.P. Morgans Worldwide Securities Services global collateral engine initiative. This initiative enables clients to mobilize collateral inventories across multiple geographies and trading activities, regardless of the underlying obligation, to extract maximum value and manage risk, J.P. Morgan says.
The firm expects to accept additional precious metals and commodities as collateral later in the year.