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> Are you saying JPM going down means there is no alternate provider and everyone defaults in 12 hours Yes. Look up how tri-party repos work [1] and then look up the Fed’s commentary on their fragility. One of the three legs is either JPMorgan or BoNY. These are short-term but critical loans. If one of those two fails or goes offline, which practically means failure since others can’t verify the other two legs’ liquidity, large swathes of the rates, credit, futures, regular repo and stock loan markets go offline which quite literally will lead to, maybe not Exxon, but the likes GE having payments failures. You can’t “hot swap” JPMorgan to BoNY after the contract has been initiated. It would be like saying it doesn’t matter if your brokerage fails, just call someone else. Sure, for your next trade that’s fine, but in the meantime the failed broker has your assets. > Better hope that information doesn’t become public or else they will be prime targets for coercion, bribes, nation state level manipulation, etc. Friend is a senior IT guy at BoNY. They are regularly in touch with the Fed and FBI. It’s a known vulnerability, and there is constant scholarship and policy work on nationalising or reforming the tri-party repo market. But it’s never failed, and it’s profitable work for the two champions, so for now there are higher priorities for legislators. Also, there are loads of these centralised pressure points in our system. In every modern financial system. Cede & Co., the Fedwire system, ADP, et cetera. [1] https://info.bnymellon.com/rs/651-GHF-471/images/BNY_Tripart... |