(Reuters) - JP Morgan Chase & Co will stop settling US government securities transactions for most dealers by the end of next year as it streamlines its business, the bank said on Friday.
The change would leave BNY Mellon Corp as the only clearing bank for such transactions between dealers and investors.
In the first six months of 2016, an average of US$504bn of US Treasuries changed hands per day, down slightly from an daily average US$507bn for the year-ago period, according to data from the Securities Industry and Financial Markets Association.
The US$1.6trn tri-party repo market, involving broker-dealers, investors and clearing banks, is a key source of short-term borrowing for Wall Street firms which pledge US Treasuries and other securities as collateral to fund their trades.
“After a careful review, we have determined that it is a non-core service, particularly as we simplify our business and continue to prioritize strategic growth opportunities,” a JP Morgan spokesperson said in an email.
JP Morgan will end its government securities settlement services by the end of 2017, the spokesperson said.
BNY Mellon responded in a statement that it was committed to settlements business.
The change would affect the settlement of so-called general collateral finance repos for 30 dealers and broker-dealers, Bloomberg first reported on Friday, citing Michael Albanese, the Wall Street bank’s managing director of investor services.
Reporting by Jonathan Spicer and Richard Leong; Additional reporting by Gertrude Chavez-Dreyfuss
