JP Morgan goes live on T-Zero

JP Morgan went live on T-Zero’s post-trade processing platform for credit derivatives on Monday. It is the first dealer to join the platform since Goldman Sachs initially used the technology after its trade with KBC Alternative Investment Management on September 30.

With pressure from the Federal Reserve Bank of New York and the UK’s Financial Services Authority mounting on credit derivatives dealers to tackle the build-up of credit derivatives confirmations, T-Zero’s so-called “agnostic” processing technology allows users to ease this backlog.

While the volume of notional credit derivatives trades have grown at a breakneck speed – the International Swaps and Dealers Association said outstanding notionals grow by 48% to $12.43 trillion in the first half of 2005 – the industry has failed to cope with the rising burden of trade confirmations, notably assignment trades involving hedge fund counterparties.

“T-Zero allows users to affirm trades as and when they do them. It deals with the details that could delay things further down the chain, such as reference obligations or splits between the number of funds,” said Guy America, JP Morgan’s head of European credit trading. “It facilitates the confirmation of novation trades as it provides a central platform for three parties to agree terms with ease,” he added.

Mark Beeston, president of T-Zero, said the firm had a "healthy pipeline" of dealers due to sign up to the service in the next month to six weeks. He expected at least four more dealers to join by the end of the month, but he refused to name them.