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Economy
In reply to the discussion: STOCK MARKET WATCH -- Tuesday, 22 May 2012 [View all]Demeter
(85,373 posts)48. Rivals Go to Lunch on J.P. Morgan's Losses
http://online.wsj.com/article/SB10001424052702304791704577418683576750086.html?mod=googlenews_wsj
The trading blunders that have cost J.P. Morgan Chase & Co. at least $2 billion are shaping up as a boon for some of the bank's biggest rivals.
A group of about a dozen banks, including Goldman Sachs Group Inc. and Bank of America Corp., have scored profits that collectively could total $500 million to $1 billion on trades that sometimes pit them directly against J.P. Morgan's Chief Investment Office, according to traders and people close to the matter.
The banks made money in various ways. Some sought to trade directly with the J.P. Morgan unit and Bruno Iksil, the trader whose large bets earned him the nickname "the London whale." These banks built positions for either themselves or for clients in the insurance-like products called credit default swaps that J.P. Morgan spent much of this year selling. The banks' expectation was that the swaps would rise in value, earning a profit.
Others acted as intermediaries between their clients and the J.P. Morgan unit, according to traders and people close to the matter. Some of these banks purchased positions from J.P. Morgan intending to sell them to clients but weren't able to, according to traders and people familiar with the matter. These banks ended up with a serendipitous windfall when the swaps rose in value, leaving J.P. Morgan's trades with losses...
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The trading blunders that have cost J.P. Morgan Chase & Co. at least $2 billion are shaping up as a boon for some of the bank's biggest rivals.
A group of about a dozen banks, including Goldman Sachs Group Inc. and Bank of America Corp., have scored profits that collectively could total $500 million to $1 billion on trades that sometimes pit them directly against J.P. Morgan's Chief Investment Office, according to traders and people close to the matter.
The banks made money in various ways. Some sought to trade directly with the J.P. Morgan unit and Bruno Iksil, the trader whose large bets earned him the nickname "the London whale." These banks built positions for either themselves or for clients in the insurance-like products called credit default swaps that J.P. Morgan spent much of this year selling. The banks' expectation was that the swaps would rise in value, earning a profit.
Others acted as intermediaries between their clients and the J.P. Morgan unit, according to traders and people close to the matter. Some of these banks purchased positions from J.P. Morgan intending to sell them to clients but weren't able to, according to traders and people familiar with the matter. These banks ended up with a serendipitous windfall when the swaps rose in value, leaving J.P. Morgan's trades with losses...
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