JPMorgan, faced with growing demand for over-the-counter derivatives processing, is launching a solution designed to help financial institutions handle higher volumes, lower position breaks and reduce credit risk.

JPMorgan, which currently services more than $70 billion in derivatives collateral, is offering the new automated reconciliation technology globally. This technology, which is designed to work in conjunction with TriOptima’s triResolve automated position reconciliation service, increases the efficiency and risk management of trading records.

“The trading volumes of OTC Derivatives are expanding exponentially and our clients need better and better tools to provide security against exposures,” said Kelly Mathieson, global head of JPMorgan’s collateral management business. “Accuracy and transparency are crucial to the derivatives marketplace,” she said, adding, “Investment professionals can no longer afford the risks associated with manual processing.”

The amount of collateral in circulation in the marketplace is estimated to be well over $2.1 trillion, according to industry estimates. The amount is expected to increase significantly, as institutional investors continue to use collateral coverage to help reduce the credit risk of dealing with counterparties, Mathieson added.

“Trade life cycle management has proven particularly challenging to the OTC derivatives community, as most firms may not have the infrastructure or expertise to address the need themselves,” said Colm Gaughran, global product head for JPMorgan DCM. “The growth in OTC derivatives usage, combined with the ever growing number of participants and instrument types, is creating a strong demand for an automated reconciliation tool. By integrating TriOptima’s automated triResolve service, we can now offer a scaleable reconciliation solution that significantly enhances the dispute resolution process.”