JP Morgan replaces AIG on Currenex

Concerns over the future of AIG, one of the world's largest insurance companies, prompted banks to stop trading with the company at the start of this week in a bid to limit exposures, following the collapse of Lehman Brothers on Sunday, September 14.

"We are going to go live tonight with a sub-set of clients to make sure JP Morgan is comfortable with the flow and then ramp that up," said a senior Currenex official.

The official added the company has been looking to enhance credit on Currenex for some time. "This is not something that had to be thought up and put in immediately. We had been planning it for some time - we just had to implement it quicker than we thought," the official said.

The official added that volumes from direct relationship trading through Currenex had been impressive in recent days.

Although the news is good for Currenex, JP Morgan is also a board member on rival platform FXall, which runs anonymous trading platform Accelor, raising questions over conflicts of interest.

However, Phil Weisberg, chief executive at FXall in New York, said the platform has a long-standing relationship with JP Morgan and he did not expect this to present an issue.

"We give our clients a choice, so they are able to pick any combination of prime brokers without having to rely on a single one. That's why this week we were able to operate very smoothly, without any major disruptions to our systems," he said.

"The industry as a whole is going to be focused intently on how to improve the credit-clearing mechanism. The processes are going to evolve to a point where it will become best practice to use more than one prime broker," he added.

Bloomberg Tradebook FX did not respond to queries regarding a replacement for AIG as a central clearer on its platform. JP Morgan declined to comment.