As investors look to use gold as a hedge against inflation, JP Morgan has been the first tri-party collateral manager to accept physical gold as collateral to satisfy securities lending and repo obligations with counterparties.
“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, JP Morgan Worldwide Securities Services. “By combining our collateral management and vaulting capabilities, we provide clients with greater flexibility in how they mobilise collateral.”
The automated use of gold in collateral management is introduced under JP Morgan’s Worldwide Securities Services global collateral engine initiative. This initiative 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.
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