The Office of the Comptroller of the Currency (OCC), the regulator of national banks, says that, as of December 31, 2018 the bank held $2,212,311,000,000 ($2.2 trillion) in equity derivatives.This is 65.5 percent of bank trading in the derivatives market. You remember derivatives from the Great Recession?
According to the OCC, JPMorgan Chase lost $644 million on its equity positions in the fourth quarter of 2018.
Not only is JPMorgan Chase Bank NA engaging in risky stock derivative trades, but according to the OCC just 31 percent of these trades are centrally cleared. The other 69 percent are what are called over-the-counter or OTC derivative trades, meaning they are “bilateral,” or secret contracts between JPMorgan Chase and a counterparty with little daylight available to Federal regulators. That also would suggest that they are highly illiquid.
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