News

JPMorgan Weighs Leaner Trading Units as Rules Hit Profitability

By Michael J. Moore, Ambereen Choudhury, and Elisa Martinuzzi
February 18, 2015, Bloomberg

Even JPMorgan Chase & Co., a Wall Street winner since the financial crisis and now the world’s biggest investment bank, is considering shrinking some trading businesses because new rules make them less profitable.

The firm is reviewing the size of capital-intensive units such as interest-rates trading, prime brokerage and its so-called delta-one equities desk, according to Daniel Pinto, chief executive officer of JPMorgan’s corporate and investment bank. Pinto isn’t necessarily looking to exit any businesses or make significant job cuts, he said in an interview.

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Dodd-Frank Swap Data Fails to Catch JPMorgan Whale, O’Malia Says

By Silla Brush
Published March 19, 2013 Bloomberg

Dodd-Frank Act derivatives rules are failing to give regulators a full picture of the swaps market and wouldn’t help them detect a loss similar to JPMorgan Chase & Co.’s London Whale trades, according to Commodity Futures Trading Commission member Scott O’Malia.

Swap-trade data the agency has been receiving since the end of last year from repositories including the Depository Trust and Clearing Corp. is inadequate to identify large positions and have overwhelmed government computer systems, O’Malia said in a speech prepared for a Securities Industry and Financial Markets Association conference in Phoenix.

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Big Banks Hide Risk Transforming Collateral for Traders

By Bradley Keoun
Published September 11, 2012 Bloomberg

JPMorgan Chase & Co. (JPM) and Bank of America Corp. are helping clients find an extra $2.6 trillion to back derivatives trades amid signs that a shortage of quality collateral will erode efforts to safeguard the financial system.

Starting next year, new rules designed to prevent another meltdown will force traders to post U.S. Treasury bonds or other top-rated holdings to guarantee more of their bets. The change takes effect as the $10.8 trillion market for Treasuries is already stretched thin by banks rebuilding balance sheets and investors seeking safety, leaving fewer bonds available to backstop the $648 trillion derivatives market.

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We Need Much Simpler Rules to Rein in the Banks

By Nicholas Brady
Published August 26, 2012 Financial Times

Congress, lobbyists and editorial writers have been engaged in an intense debate over how to provide effective governance for the US banking system in the wake of the 2008 financial crisis and, more recently, JPMorgan Chase’s billion-dollar derivatives losses. It is a complex subject and, not surprisingly, the language has been at times as opaque as the derivatives themselves – and the inability of the public to understand the system is contributing to a decline in trust and confidence. I believe the real solution lies in formulating a simpler, not a more complex, set of regulations.

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JPMorgan Bank to Hold Collateral After Futures Firms' Losses

By Matthew Leising
Published August 14, 2012 Bloomberg

JPMorgan Chase & Co. (JPM) will allow customers to house excess swaps and futures collateral in a separate bank account as it seeks to reassure investors after losses at MF Global Holdings Ltd. (MFGLQ) and Peregrine Financial Group Inc.

The new service will allow clients to automatically aggregate excess margin at JPMorgan Chase Bank N.A., the firm’s insured deposit-taking unit, Emily Portney, head of agency clearing, collateral and execution at the New York-based bank, said in a telephone interview.

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Capital Can’t Be the Only Line of Defense

By Neal S. Wolin
Published July 16 2012 New York Times DealBook

The recent trading losses at JPMorgan Chase have highlighted a bright spot of bipartisan consensus on financial reform: strong capital requirements are essential for preventing future financial crises. This was one of the central — and simplest — lessons of the 2008 financial crisis, one the Obama administration took to heart from the beginning.

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J.P. Morgan Unit Shifts Operations

By Gregory Zuckerman and Dan Fitzpatrick
Published June 24, 2012 Wall Street Journal

J.P. Morgan Chase & Co. will improve risk management of the unit that racked up more than $2 billion of trading losses, while avoiding big bets on derivative and private-equity investments.

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US SEC Chief Offers Regulatory Guide to JPMorgan

By Sarah N. Lynch and Dave Clarke
Published June 18 2012 Reuters

U.S. Securities and Exchange Commission Chairman Mary Schapiro will sketch a regulatory roadmap to JPMorgan Chase & Co's recent huge trading loss, but will stop short of discussing the specifics of her agency's investigation with lawmakers on Tuesday.

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JPMorgan’s Jamie Dimon to testify before Congress, but Wall Street shrugs it off

By Max Abelson
Published June 11 2012 Washington Post

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon plans to testify before Congress this week about his firm’s $2 billion trading loss. His Wall Street colleagues don’t understand why. “Occasional losses are inevitable,” said Blackstone Group LP’s Stephen A. Schwarzman, 65, CEO of the largest private- equity firm. “Publicly excoriating JPMorgan serves no purpose except to reduce people’s confidence in the financial system.”


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Questions to Ask Mr. Dimon

By Andrew Ross Sorkin
Published June 04 2012 Dealbook/New York Times

Jamie Dimon’s trip to Capitol Hill next week to explain his bank’s multibillion-dollar trading debacle could quickly devolve into Washington Gotcha Theater.

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After JPMorgan Loss, U.S. Regulator Ponders Tighter Volcker Rule

By Silla Brush
Published May 31 2012 Bloomberg

The main U.S. derivatives regulator will discuss whether to tighten exemptions to a proposed ban on proprietary trading after JPMorgan Chase & Co. (JPM) announced at least $2 billion in credit-derivatives trading losses.

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At Hearing, Regulators Discuss JPMorgan Investigation

By Ben Protess
Published May 22 2012 New York Times

Federal regulators shed new light on their investigations into JPMorgan Chase’s multimillion-dollar loss, telling Congress that they were examining potential wrongdoing and weighing whether the bank’s trading debacle would reshape rules for Wall Street.

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Trading Misstep For Bank Opens Door to New Rules

By Victoria McGrane and Jamila Trindle
Published May 21 2012 Wall Street Journal

For advocates of stronger regulation of the financial sector, J.P. Morgan Chase & Co.'s trading loss has quickly become Exhibit A. On Monday, a top regulator used the loss to argue for tougher derivatives rules, while an Obama administration official said it would help shape overdue regulations aimed at stopping banks from making risky bets with their own money.

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Their Learnable Moment

Editorial
Published May 21 2012 New York Times

On Tuesday, the Senate Banking Committee is holding a hearing on reforming derivatives — not a topic one would expect to draw a lot of energy or attention. But in the wake of JPMorgan Chase’s stunning trading loss, now reportedly at $3 billion and counting, committee members need to push the regulators testifying — and each other — to explain why, four years after the financial meltdown, speculative trading in these risky instruments has not been reined in.

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Reinstating an Old Rule Is Not a Cure for Crisis

By Andrew Ross Sorkin
Published May 21 2012 New York Times

Call it the Glass-Steagall myth. Since JPMorgan Chase announced its surprise $2 billion, and growing, trading loss there have been renewed calls from economists, pundits and politicians to reinstate the Glass-Steagall Act, a Depression-era law that prevented commercial banks from participating in investment banking activities.

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Time to Tighten the Net on CDS?

By Farah Khalique
Published May 21 2012 Financial News

On May 11, when JP Morgan announced that a position in its chief investment office had caused a multibillion-dollar trading loss, it kicked off a media and regulatory examination that swiftly pointed to a credit default swap trade gone wrong.

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White House Steps Up Push to Toughen Rules on Banks

By Carol E. Lee and Damian Paletta
Published May 16 2012 Wall Street Journal

In the wake of losses at J.P. Morgan Chase & Co., the White House is seeking to ensure a tough interpretation of a regulation designed to prevent banks from making bets with their own money, according to people familiar with the matter.

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Pay Clawbacks Raise Knotty Issues

By Suzanne Kapner and Aaron Lucchetti
Published May 16 2012 Wall Street Journal

Wall Street is getting its first high-profile opportunity to prove it is serious about recovering pay from executives whose blunders waste shareholder treasure.

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FBI Probes JPMorgan, Shareholders Back Dimon

By David Henry
Published May 15 2012 Bloomberg

The FBI has opened an inquiry into the multibillion-dollar trading losses at JPMorgan Chase, stepping up pressure on the bank after key U.S. agencies said they were looking into high-risk trades that first drew regulators' attention last month.

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Dodd-Frank Swaps Legislation Delayed After JPMorgan Trade Losses

By Silla Brush
Published May 15 2012 Bloomberg

U.S. House lawmakers, acting after JPMorgan Chase & Co. (JPM) announced $2 billion in derivatives trading losses, delayed a committee vote on legislation easing Dodd- Frank Act swaps rules.

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