Reaching 99 per cent plus compliance from active tri-party repo clients for three-way trade is something of which J.P. Morgan’s Worldwide Securities Services is quite proud.
For months, the tri-party repo team worked daily with dealers and cash investors in order to familiarise them with the new tools and procedures, ultimately ensuring a smooth transition to mandates handed down by the Task Force, a private sector group sponsored by the New York Federal Reserve Bank. J.P. Morgan has been an active participant from the beginning and co-chairs the Operational Arrangements Working Group.
Still, there was a need to convince participants of the wisdom of getting paperwork and practice in early to run through the different processes, according to Jason Paltrowitz, Americas market executive for banks and broker dealers, speaking on the sidelines of the RMA conference in Naples.
Though the deadline for three-way trade confirmation had been communicated by the Task Force well in advance, since dealers and investors had to make final preparations, the last few days before the October 3 cutover date were incredibly busy, according to J.P. Morgan.
The firm has now passed the implementation period, contracts are signed and clients are confirming trades daily. Now, preparations are being made for the remaining Task Force milestones in 2011 and 2012.
"We are proud to have met all our dates and have done so without imposing new costs on our clients. We will continue to do everything that we need to do to be on time or even ahead of time, and to support our clients throughout upcoming transition and are looking forward to moving beyond Federal Task Force Reforms to further innovate in the tri-party repo space, ” Paltrowitz adds.
As regulations continue to evolve and derivatives are cleared through central counterparties (CCPs), J.P. Morgan will leverage the investments it’s already made in technology and infrastructure for use with the emerging market models.
According to Paltrowitz, J.P. Morgan has the ability to support a variety of different deal structures, the flexibility to segregate accounts, and the capability to dynamically allocate collateral throughout the trading day.
