J.P. Morgan launches Asia offshore clearing service

J.P. Morgan has launched a new offshore clearing service in Asia, which will enable transactions to be cleared within the trading and clearing times that apply to the local currency.

The service will enable clients to keep liquidity in the region, clear in multiple regional infrastructures, concentrate their accounts and benefit from same-day finality, the bank said.

"Rising intra-regional payment flows is a noticeable trend in the markets. These flows are growing much faster than the payment flows between the US and Asia and between Europe and Asia,” says Simon Jones, managing director and regional product executive for J.P. Morgan's Treasury Services, Asia-Pacific.

“Clients increasingly want to be able to efficiently clear dollar payments within the Asia time zone. We are facilitating real time settlement in Asia of US dollars and then linking that back to the final clearing in the US; this gives clients finality of payments in the region and also links them into US market liquidity," Jones adds.

Despite global liquidity fears, market participants in Asia point to an excess of cash in the region; 10 years after the financial crisis of 1997, central banks excluding Japan have accumulated around $3 trillion of reserves. And the liquidity growth trend is the same for corporates, they say.

The new clearing service enables client banks to access a larger regional banking network for inter-Asia payments, as well as all formal US dollar settlement systems. In addition to faster turnaround and greater efficiency in liquidity management, they will benefit from better account consolidation and cash concentration, centralised credit management and simplified funding arrangements.

"We are making significant investments into clearing systems in Asia, in order to enable our customers to move payments from paper-based checks to electronic transactions,” says Jones. “This is both for receivables as well as for payments. We have made enhancements in clearing systems in China, and the new electronic low value systems that we have in Hong Kong and Singapore are now being introduced into India. Malaysia has also seen significant changes in the clearing infrastructure and a move to become more electronic."

J.P. Morgan has also unveiled plans to expand and enhance its global service capabilities with an investment of over $1 billion in its cash management and treasury liquidity capabilities. This includes the launch of a single global platform to enable greater transparency and the expansion of its international payments offering.

With more than 50,000 clients and a presence in 36 countries, J.P. Morgan Treasury Services provides payment, collection, liquidity and investment management, trade finance and commercial card services to corporations, financial services institutions, middle market companies, small businesses, governments and municipalities.