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JP Morgan Launches Broker Dealer Fee Lock Solution

For depositary receipt issuance & cancellation

JP Morgan’s Depositary Receipts (DR) group has launched Issuance & Cancellation (I&C) Lock, a new solution that allows broker dealer clients to purchase a contract that establishes a future rate for DR issuance and cancellation activity.

Reportedly, by purchasing an I&C Lock, broker dealers will have the right, but not the obligation, to execute issuance and cancellation transactions in the future at a predetermined rate. The bank has said that this will provide flexibility for meeting their DR investment and trading strategy objectives. Moreover, the I&C Lock contracts are issued and maintained by JP Morgan’s DR execution desk.

James Proctor, global head of DR execution desk at JP Morgan, said: “As broker dealers gain greater control of their costs by moving DR fees from a variable to fixed cost structure, they will have incentive to trade more, which leads to greater liquidity in the marketplace.”