The FINANCIAL — J.P. Morgan Treasury Services on April 19 announced that it has developed a solution to facilitate a new currency clearing service for its Indonesian bank clients using Hong Kong's cross-border payment-versus-payment (PvP) settlement system.
By having access to this system, J.P. Morgan's clients are able to better mitigate foreign exchange settlement risk and increase operational efficiency.
The PvP infrastructure established by Bank Indonesia and the Hong Kong Monetary Authority links the real time gross settlement (RTGS) systems in both economies to provide simultaneous delivery of Indonesian Rupiah and U.S. Dollar currencies within the Asia business day. This innovative infrastructure represents a new clearing standard between these two currencies. J.P. Morgan also provides clearing services using PvP settlement in Malaysia.
By leveraging J.P. Morgan's global payment network and leading position in U.S. Dollar clearing, financial institutions also can benefit from optimised liquidity, faster payments and high standards of service delivery.
J.P. Morgan was a key participant in the working group of commercial banks brought together by Bank Indonesia to identify a solution to mitigate settlement risk for foreign exchange transactions between Indonesian Rupiahs and U.S. Dollars and to increase efficiency in the inter-bank market for both currencies. J.P. Morgan was in a unique position to deliver thought leadership and share its experience as a major provider of clearing services to the banking industry in Malaysia since the inception of the PvP settlement services in 2006.
"Beyond the role banks normally play in payment clearing and foreign exchange settlement, we are committed to fostering innovation in the industry and are proud to be part of this initiative led by Bank Indonesia and supported by the Hong Kong Monetary Authority. Our client banks in Indonesia value our successful experience with PvP settlement in Malaysia, where we continue to see a high demand for these services and future developments in this area," said Raof Latiff, managing director and Asia head of Treasury Services clearing and foreign exchange at J.P. Morgan.
"J.P. Morgan Treasury Services is actively engaged in promoting best practices and supporting initiatives aiming to reduce risk and enhance efficiency at an industry level. We are pleased to be able to offer a wider range of cash management services to our clients in Malaysia and Indonesia to meet their most advanced clearing needs," added Simon Jones, managing director and regional Treasury Services executive – Asia Pacific at J.P. Morgan.
J.P. Morgan is the world's largest U.S. Dollar clearing and commercial bank. J.P. Morgan Treasury Services leverages the services and products of the bank's Worldwide Securities Services division, as well as its Investment Bank, Asset Management and Private Bank lines of business to provide its clients with integrated banking solutions.