JPMorgan Serves as T-Zero Prime Broker

NEW YORK-T-Zero, an electronic platform for credit derivatives affirmations, went live last week with a prime brokerage interface, and JPMorgan was one of the first clients to process a trade with T-Zero, according to officials from both companies.

Ilex Asset Management made its first trades via T-Zero using JPMorgan as the derivatives prime broker. The new offering from T-Zero is an "extension of our affirmation platform," says Mark Beeston, president of T-Zero.

Clients can get same-day trade affirmation for credit derivatives and have the trade details fed straight down to the Depository Trust and Clearing Corp. (DTCC) on behalf of the client. This allows trade details to be confirmed minutes after the trade, which will then automatically match with the dealer trade that has been submitted.

JPMorgan has been using the T-Zero platform since it launched at the end of 2005 for direct client trades with its execution desk, says James Rogers, vice president and global product head of credit derivative prime brokerage at JPMorgan. "When Ilex asked us to be their prime broker, they were keen to continue using T-Zero," Rogers says. "We worked with T-Zero, Ilex, and Ilex's other brokers to make sure that the process is well understood and that the booking process works smoothly."

JPMorgan has "had a lot of input into the tools that we've actually traded for the market, as have a number of other brokers" like Merrill Lynch, Beeston says.

"The new functionality for prime brokerage means that the prime broker is selected, via the user-friendly Web-based interface, when agreeing the trade on T-Zero," Rogers says. "T-Zero then automatically sends the agreed trade through to the prime broker and JPMorgan Derivatives prime brokerage automatically picks up this trade and straight through processes it to the trade booking systems-meaning trade details are also in the DTCC within minutes. … Throughout the process, there is full visibility of the status to all parties involved as well, so it's easy to see exactly where a trade is at any time," he says. Automating this process is a "great step forward."

Merrill Lynch has also used T-Zero's new service, Beeston says, and three other prime brokers are in the process of coming on to the prime brokerage service, he says.

On the executing broker side, T-Zero has six dealers that are live and another six coming onto the platform shortly, he says. Officials at Merrill Lynch confirm that they trade via T-Zero.

"We see prime brokerage continuing to grow into 2007 and it's an essential part of our product offering," Beeston says.

Chloe Albanesius