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JP Morgan Puts Derivatives Reg Costs at US$1bn

By Christopher Whittall
Published February 26, 2014 IFR

The new global regulatory framework for derivatives will cost JP Morgan around US$1bn in revenues per year, shaving 5% off its overall markets revenues by 2016.

The figures published in investor presentations yesterday give one of the clearest indications yet of the impact of central clearing, electronic trading, reporting and initial margin rules, which are set to change the face of the derivatives industry.

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JPMorgan's Masters Joins Regulator Advisory Committee

By Douwe Miedema
Published February 6, 2014 Reuters

Blythe Masters, who heads JPMorgan's commodity business, has joined a committee advising the U.S. derivatives regulator, the agency said on Thursday, a move that comes as Masters' bank is shedding part of its physical commodity operations.

The Commodity Futures Trading Commission (CFTC) on Thursday voted on the new composition of its Global Markets Advisory Committee, a group of market participants that meets regularly to discuss a broad range of issues.

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Swaps-Clearing D-Day Set to Trim Dealer Profits: Credit Markets

By Matthew Leising and Silla Brush
Published March 11, 2013 Bloomberg

The $639 trillion over-the-counter derivatives market begins the largest transformation in its 30- year history today with rules intended to contain another financial crisis, trimming profits for Wall Street banks.

Companies from JPMorgan Chase & Co. (JPM) to BlackRock Inc. are now required under the 2010 Dodd-Frank Act to have most of their privately negotiated swaps trades backed by a clearinghouse that’s capitalized by the world’s largest banks. That means dealers and their customers have to post upfront collateral to absorb losses if a firm defaults and settle daily losses.

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Banks to Cash In as U.S. Derivatives Reforms Go Live

By Douwe Miedema
Published March 7, 2013 Reuters

Banks have been complaining bitterly about new laws to sort out their industry, even though they were blamed for playing a part in the credit meltdown. But this time round, new U.S. rules look set to help them.

Starting on Monday, hedge funds and other large investors must guide their trading in derivatives through traffic control centers known as clearinghouses.

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Rates Specialists Face Regulatory Headwinds

By Matt Turner
Published March 5, 2013 Dow Jones

The US bank held its annual investor day in New York last Tuesday, at which Mike Cavanagh and Daniel Pinto, co-chief executives of the corporate and investment bank, spoke about the future of the division.

On page 27 of their 45-page presentation, the duo sought to quantify the financial impact of incoming market structure regulations on the business. They said that as a result of new rules on post-trade transparency, mandatory clearing, new margin rules, and trading on swap-execution facilities, JP Morgan could expect a $1bn to $2bn hit to revenues per year, with the fixed-income, currencies and commodities trading business bearing the brunt.

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LCH.Clearnet Taps Ex-J.P.Morgan Executive Amid U.S. Push

By Katy Burne
Published February 27, 2013 Dow Jones

LCH.Clearnet Group Ltd. announced Wednesday it has hired a chief executive at its new U.S. subsidiary as it gets closer to launching a U.S. derivatives clearinghouse to rival the likes of CME Group Inc. (CME).

David Weisbrod, the new U.S. CEO, recently served as vice chairman of risk management at J.P. Morgan Chase & Co. (JPM). He previously was on the board of clearing specialist Depository Trust & Clearing Corp. and is a current member of the board of directors at foreign-exchange settlement provider CLS Group Holdings AG. 

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JPM Report Unveils VaR Errors

By Helen Bartholomew
Published January 16, 2013 International Financing Review

A series of operational errors in the Value-at-Risk model used to calculate potential losses at JPMorgan’s Chief Investment Office helped to mask losses stemming from the infamous US$100bn credit bet, according to a report of the Management Task Force, published today alongside the bank’s fourth quarter results.

The synthetic credit portfolio, which consisted of illiquid off-the-run credit default swap index trades, cost the bank in excess of US$6bn after the positions were revealed in May last year. The debacle claimed the jobs of a number of senior employees including the division’s credit head, Bruno Iksil, dubbed the “London Whale” and former CIO head Ina Drew.

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JPMorgan Seen Facing U.S., U.K. Actions on Whale Trades

By Dawn Kopecki, Lindsay Fortado, and Jesse Hamilton
Published January 14, 2013 Bloomberg

JPMorgan Chase & Co. (JPM) is set to face new actions from U.S. and U.K. bank regulators as early as today for botched trades that cost the company more than $6.2 billion last year, according to two people familiar with the matter.

The U.S. Office of the Comptroller of the Currency and Federal Reserve, which have been investigating the loss, may release some of their findings today, three people familiar with the matter said. The U.K.’s Financial Services Authority, which has also been informally looking into whether traders intentionally mismarked some of their positions and tried to cover up their losses, may open an official investigation, according to one of the people.

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Cash Fall Puts Equity Derivatives in the Driving Seat

By Tim Cave
Published January 14, 2013 The Trade

Although most banks have yet to report their full 2012 figures, analysts predict strong relative performance from the products last year.

According to research by capital markets consultancy Coalition, equity derivatives, including convertibles, leap-frogged cash equities to become the biggest source of equities revenues for the first time in the first nine months of last year (see chart). They accounted for 31%, or $8.06bn, of total equities revenues across the 10 largest banks. This compared with 28% in the same period the previous year. Cash equities accounted for 30%, or $7.8bn, during the same period, down from 36% the previous year.

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Banks Rethink In-House Trading Technology

By Philip Stafford
Published January 9, 2013 Financial Times

Faced with rising compliance costs, more trading venues and torpid markets, banks are reassessing one of their biggest fixed costs – the technology they use to trade.

This week JPMorgan began a rollout of a new single platform that will consolidate all their 30 existing platforms into one, a move that highlights a more profound change taking place.

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