US investment bank JPMorgan has launched its new OTC derivative collateral management service, CommanD.
The bank claims CommanD is the first one-stop service of its kind and has been designed to help financial institutions manage the complexities of using collateral against OTC derivatives trades. The service is based on SunGard's Adaptiv Collateral technology.
JPMorgan says CommanD moves beyond the traditional custodial elements of a collateral management system by covering many of the post-trade functions, including OTC derivatives valuation, credit support annex management, reconciliations, collateral custody and liquidity management.
Murray Brown, head of derivatives collateral management for JPMorgan Worldwide Securities Services, says the system will provide clients with a cost effective alternative to in-house collateral management programmes.
"Collateral is well understood as a means of reducing credit exposure, but for many financial institutions managing collateral is costly and proves a drain on resources," says Brown. "JPMorgan CommanD was developed as an agency solution to help clients more effectively handle the collateral process as they continue to grow their OTC derivatives book."
Figures from The International Swaps and Derivatives Association show that collateral in circulation has risen by an average rate of 43% each year since 2000.