Rival traders have once again started to shout about JPMorgan having an unfair advantage in the TRAC-X credit derivative index products. This time rivals are claiming it was able to quote prices for the updated high-yield credit derivatives index before other firms because of its status as co-founder of the index. Tom Benison, head of credit derivatives marketing for North America at JPMorgan in New York, denied the firm quoted prices ahead of the official start of trading on the index.
The gripe is centered around JPMorgan setting the coupon on the index. The firm published an approximate coupon beforehand, but it did not finalize the actual coupon until the first day of trading. Although traders could estimate a spread, it would be impossible to quote prices on the funded instrument without knowing the exact coupon, explained traders.
Rivals admitted that this is a relatively minor matter and would not normally warrant so much attention. JPMorgan and Morgan Stanley, however, are under the spot light because of other accusations about TRAC-X's independence, which led them to hand over the management and administration of the index to Dow Jones.
