Clearance & Collateral Management

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Collateral Management for Derivatives

Innovative and fully integrated suite of services to optimize use of collateral and manage risk

Bilateral in nature, over-the-counter (OTC) derivatives trading results in counterparty credit exposure. The exchange of collateral, as defined in the Credit Support Annex (CSA) to the ISDA Master Agreement, mitigates this risk. J.P. Morgan offers an end to end OTC derivatives collateral management solution for institutions that lack the relevant infrastructure or expertise to implement or manage an effective derivatives collateral management program in-house.

J.P. Morgan was the first to offer a full end-to-end collateral management solution for OTC derivatives. Leveraging our expertise in managing risk and exposure, clients can access a more robust, scalable and cost-effective means of managing collateral and credit risk than many in-house alternatives would allow—permitting them to focus on core activities

Key benefits include:

CSA management to ensure client exposure is adequately collateralized with eligible assets
Margin management, including issuing margin calls to relevant counterparties when the client is exposed and thresholds have been breached, and validation and action on counterparty margin calls
Close partnership with clients and their counterparties to help identify and communicate the source of margin call discrepancies and facilitate resolution
Rehypothecation of collateral assets (cash and securities) to significantly lower collateral funding costs
Cash reinvestment options, in line with the terms of the CSA, to reduce reinvestment risk
Automated OTC portfolio reconciliation, essential to the effective management of risk and central to the resolution of disputes between clients and counterparties
Efficient implementation with low cost of entry (vs. developing an internal solution or deploying vendor software)
Scalable solution that adapts to changes in trading or operational needs, future-proofed with ongoing investment and development

As a market leader, J.P. Morgan actively participates in the ISDA collateral and Collateral Framework groups to ensure our collateral management solutions anticipate future needs regardless of changes in regulations or market structure.

For more information, please contact the representative in your region.