Investment Operations

JP Morgan Clears First Repo Trade under DTCC’s Expanded Sponsored Service

DTCC's Murray Pozmanter

J.P. Morgan completes first cleared repo transaction under the newly approved Category 2 Sponsoring Member classification

The Depository Trust & Clearing Corporation (DTCC) confirmed that J.P. Morgan has completed the first cleared repo transaction under the new Category 2 Sponsoring Member classification. The milestone comes immediately following the recent Securities and Exchange Commission (SEC) approval for DTCC subsidiary Fixed Income Clearing Corporation (FICC) to expand its Sponsored Service.

According to DTCC, through the expanded Sponsored Service, a broader category of market participants can participate in the service as sponsors, including Dealers, non-US Banks and Prime Brokers (all referred to as Category 2 Sponsoring Members). The expansion also changed how the service can be used, with sponsors now able to let their clients trade with counterparties other than themselves, providing sponsored members with the same execution flexibility they have in the bi-lateral market today.

“J.P. Morgan is a leader in providing innovative solutions to our clients.” said Brian Connell, J.P. Morgan Managing Director, Fixed Income Financing. “We were excited to participate in the original Sponsored Repo program and we believe the expansion of the program will continue to streamline dealer balance sheets and further enhance repo market liquidity.”

In addition to J.P. Morgan, there are now over a dozen Category 2 Sponsoring Members approved, or in the process of approval, to leverage the new service.

Murray Pozmanter, DTCC Managing Director and Head of Clearing Agency Services, said the early interest is an indication of the impact the expanded service will have on the treasury market. “The increased participation, particularly from the buyside, will yield significant benefits in reducing systemic risk and creating market capacity,” Pozmanter said.