JPMorgan plans to exit the business of settling U.S. government securities for most dealers by the end of 2017, including some transactions in a key corner of the $1.6tril repurchase-agreement market.
Bloomberg News reports that the departure from the business of facilitating settlement of such trades with 30 dealers and broker-dealers, a fraction of the bank’s hundreds of clients, comes as the company focuses on more profitable areas like prime brokerage and custody services.
JPMorgan’s shift means that Bank of New York Mellon will be the only remaining institution handling these back-office type activities in a niche of the repo market known as general-collateral finance, where dealers turn for financing.
“We are exiting the government-securities settlement service that we provide to dealers, including the settlement of GCF repo,” said Michael Albanese, managing director in investor services at JPMorgan in New York, in an interview. “This area is not core to our growth strategy. But we will continue to settle Treasuries in the context of the other business that we support.”
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