A strong balance sheet, comprehensive indemnification packages and a highly flexible program structure - these are just some of the advantages offered by J.P. Morgan's securities lending program.
J.P. Morgan’s securities lending program offers its clients unique advantages derived from the financial strength, trading and markets presence, and extensive global footprint of the firm’s overall resources. The program is built on sound fundamentals, including extensive risk management processes and controls, superior credit expertise, broad market presence, tight operational controls and conservative investment practices.
J.P. Morgan’s securities lending program is unique in several respects from our competition, including:
• Fortress Balance Sheet: J.P. Morgan is the most financially secure institution in the industry with $2.1 trillion in assets, and stockholder equity of $173.8 billion as of September 30, 2010. Our capital strength is significantly larger, by multiples, than many of our competitors, which reinforces our ability to support ongoing investments in securities lending, and more importantly, fully honour the indemnification pledges made to lending clients.
• One of the most Comprehensive Indemnification Packages in the Industry: Covers borrower default, overnight market risk, fails on the return of loaned securities and entitlements to securities on loan.
• Highly Flexible Program Structure: Clients can design a program that fits their needs and requirements. J.P. Morgan’s securities lending program employs compliance monitoring for adherence to client-specified program structure and cash collateral investment guidelines.
• Customized Separate Accounts: Clients can utilize their own separate account for the reinvestment of the cash collateral. Investment guidelines are developed in conjunction with the client in order to meet their specific risk/return objective. However, J.P. Morgan provides full support for clients that wish to invest their own cash collateral.
• Size and Nature of Available Inventory for Lending: J.P. Morgan has significant lendable assets in inventory, representing a prime source of supply for broker/dealers seeking to borrow securities. The size of our lendable base and our expertise in managing cash collateral enhance J.P. Morgan’s ability to maximize distribution of securities to a broad borrower base and provide attractive returns to our clients.
• Borrower Selection and Review: Each of the borrowers in our program undergoes a rigorous selection process. Creditworthiness is reviewed on a continuous basis by the credit analysis professionals in the Broker-Dealer Division. J.P. Morgan’s extensive banking relationships with borrowers mandate that it engages in frequent, ongoing dialogue with each firm’s management to understand their transactions and assess risk.
• Maximum Distribution of Loans: Clients can benefit from high utilization rates through loan opportunities via Equilend and via our bonds borrowed and term loan structures.
• Consistent Revenue Generation for Our Clients: We consistently generate substantial lending revenue for clients while ensuring compliance with client program guidelines and adherence to stringent risk management measures.
• Relationship Management and Service: Dedicated specialist securities lending relationship managers constantly provide clients with insight and technical expertise to assist clients in structuring their lending activities and deliver performance reviews showing how revenues were derived and associated risk levels. Exceptional service levels ensure seamless integration of client’s investment process and operations.
• Online Reporting: Comprehensive reporting on all lending-related activity is available through J.P. Morgan ACCESS Views Portfolio Reporting.
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