JP Morgan is planning to launch a new asset tracking service, known as "Collateral Central", to allow customers to track and optimise all of their available "collateral" – irrespective of their holdings at other banks and custodians.
JPMorgan’s move comes as rival banks and operators of market infrastructure are turning towards collateral management.
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The new service initiative is a part of chief executive Jamie Dimon’s attempts to increase profits.
JPMorgan anticipated in a February 2013 investor presentation that it could initially reap US$300 million- US$500 million in revenues from the collateral management business.
JPMorgan’s head of collateral management, Kelly Mathieson, said: "Current collateral offerings "show collateral obligations with counterparties but they are limited to those transactions that are using the collateral held in custody at the institutions.
"We’ll not only show you the totality of the assets you have across your custodians and counterparties, but we’ll also begin to qualify them in terms of their economic value as collateral."
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By GlobalDataHolding more high-quality capital and offset risk by posting more collateral, or insurance, for trading has become crucial for financial organisations due to approaching regulatory reforms, including Basel III and the Dodd-Frank Act in the US.
This step is planned to bring together a collateral pool of about US$60 trillion for investors to access.
Collateral-related businesses have become one area of growth for Wall Street banks after some traditional moneymakers disappeared.
Tabb Group consultancy, Alex Tabb said: "Whoever has the technology and the most relationships is probably going to win but, in the end, cost is going to be a major feature of this."
