JP Morgan to accept gold as collateral for sec lending and repo obligations

Feb 07, 2011 by Charles Gubert

JP Morgan has become the only tri-party collateral manager to accept physical gold as collateral to satisfy securities lending and repo obligations with counterparties.

This comes as clients increasingly look to use gold as a hedge against inflation and to post as collateral.

“The ability to finance and leverage the broadest range of asset classes is important to our clients. Many clients are holding gold on their balance sheets as an inflation hedge and are looking to make these assets work for them as collateral,” said John Rivett, collateral management executive at JP Morgan Worldwide Securities Services.

“By combining our collateral management and vaulting capabilities, we provide clients with greater flexibility in how they mobilise collateral,” he added.

The automated use of gold in collateral management was introduced under JP Morgan’s Worldwide Securities Services’ global collateral engine initiative. This enables clients to mobilise collateral inventories across multiple geographies and trading activities regardless of the underlying obligation, to extract maximum value and manage risk.

The firm expects to accept additional precious metals and commodities as collateral later in the year.


Securities Financing

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