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JPMorgan Trader Accused Of "Breaking" CDS Index Market With Massive Prop Position

Tyler Durden's picture


Earlier today we listened with bemused fascination as Blythe Masters explained to CNBC how JPMorgan's trading business is "about assisting clients in executing, managing, their risks and ensuring access to capital so they can make the kind of large long-term investments that are needed in the long run to expand the supply of commodities." You know - provide liquidity. Like the High Freaks. We were even ready to believe it, especially when Blythe conveniently added that JPM has a "matched book" meaning no net prop exposure, since the opposite would indicate breach of the Volcker Rule. ...And then we read this: "A JPMorgan Chase & Co. trader of derivatives linked to the financial health of corporations has amassed positions so large that he’s driving price moves in the multi-trillion dollar market, according to traders outside the firm." Say what? A JPMorgan trader has a prop (not flow, not client, not non-discretionary) position so big it is moving the entire market? And we are talking hundreds of billions of CDS notional. But... that would mean everything Blythe said is one big lie... It would also mean that JPMorgan is blatantly and without any regard for legislation, ignoring the Volcker rule, which arrived in the aftermath of Merrill Lynch doing precisely this with various CDO and credit indexes, and "moving the market" only to blow itself up and cost taxpayers billions when the bets all LTCMed. But wait, it gets better: "In some cases, [the trader] is believed to have “broken” the index -- Wall Street lingo for the market dysfunction that occurs when a price gap opens up between the index and its underlying constituents." So JPMorgan is now privately accused of "breaking" the CDS Index market, courtesy of its second to none economy of scale and fear no reprisal for any and all actions, and in the process causing untold losses to, you guessed it, its clients, but when it comes to allegations of massive manipulation in the precious metals market, why Blythe will tell you it is all about "assisting clients in executing, managing, their risks." Which client would that be - Lehman, or MFGlobal? Perhaps it is time for a follow up interview, Ms Masters to clarify some of these outstanding points?

From Bloomberg:

The trader is London-based Bruno Iksil, according to five counterparts at hedge funds and rival banks who requested anonymity because they’re not authorized to discuss the transactions. He specializes in credit-derivative indexes, an off-exchange market that during the past decade has overtaken corporate bonds to become the biggest forum for investors betting on the likelihood of company defaults.


Investors complain that Iksil’s trades may be distorting prices, affecting bondholders who use the instruments to hedge hundreds of billions of dollars of fixed-income holdings. Analysts and economists also use the indexes to help gauge interest rates that companies must pay for new credit.


Though Iksil reveals little to other traders about his own positions, they say they’ve taken the opposite side of transactions and that his orders are the biggest they’ve encountered. Two hedge-fund traders said they have seen unusually large price swings when they were told by dealers that Iksil was in the market.

So how long until Bruno Iksil, and his massive one way bet, becomes the next Glenn Hadden, or the next Howie Hubler, or the next Boaz Weinsten? And how long until US taxpayer have to bail him out, either with direct rescue money, or with commingled deposits used to plug trading losses? Because MFGlobal was just an appetizer as to how JPM operates with "segregated" money.

Repeating the punchline again, because it bears repeating.

In some cases, Iksil is believed to have “broken” the index -- Wall Street lingo for the market dysfunction that occurs when a price gap opens up between the index and its underlying constituents, the people said. The persistence of price dislocations has frustrated some hedge funds that were betting on the gap to close over time, the people said.

And that, for those confused, is how JPMorgan operates: they lie about everything, fully aware they have perpetual immunity because they are more powerful than the Fed (just recall Jamie Dimon's symbolic spitting in the face of Ben Bernanke), they are a tri-party repo dealer thus in the center of the entire shadow banking system, and have the biggest single-bank derivative exposure in the world, at $70 trillion as of December 31.

JPMorgan is modern finance.

And because of they they can and will get away with everything, lying on prime time TV most certainly included.

Yet while JPMorgan may manipulate the gold, silver, or any other market, for its or the Fed's agenda, there is a silver lining: it allows everyone to buy physical assets at artificially deflated paper spot prices. And for that, JPM should be thanked. Because until the grand reset takes place, JPMorgan will never be held accountable for any of its actions in the current status quo regime. Period.


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Fri, 04/06/2012 - 01:01 | 2321336 ebworthen
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1.  "Where's the money?"

2.  "How do you get it back?"

Questeions for the century for sure.

Thu, 04/05/2012 - 22:08 | 2321153 Max Fischer
Max Fischer's picture



Isn't JP Morgan fighting Yen Libor manipulation allegations, too?

Max Fischer, Civis Mundi

Thu, 04/05/2012 - 22:13 | 2321163 loveyajimbo
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And the amazing Ms. Shapiro and Mr. Gensler sit and watch and wait for a phone call from Mr. Dimon to tell them exactly what and what not to do...

Thu, 04/05/2012 - 22:34 | 2321194 Atomizer
Atomizer's picture

The illusion of power in creating fake GDP/Stimulus recovery programs out of monopoly money has bestowed a toll on MMT global recovery Ph.D. dickweeds. Just sit back and watch epic failure.

Thu, 04/05/2012 - 22:16 | 2321164 El
El's picture

And then we have...

CFTC Orders JPMorgan Chase Bank, N.A. to Pay a $20 Million Civil Monetary Penalty to Settle CFTC Charges of Unlawfully Handling Customer Segregated Funds


I must have missed this yesterday...

Thu, 04/05/2012 - 22:27 | 2321181 Jim in MN
Jim in MN's picture

JPM missed it too; the penalty is too small to be visible.

Thu, 04/05/2012 - 22:29 | 2321174 palmereldritch
palmereldritch's picture

I don't know about Good Friday but it's been a great Thursday for stories here.

Awesome coverage Tyler.  Keep holding their feet to the fire!

Thu, 04/05/2012 - 22:25 | 2321177 Jim in MN
Jim in MN's picture


Lifetime ban on any TBTF employees working for the government.

Lifetime ban on any of their lawyers or said lawyers' firms working for the government.

Close all NYC offices of the Federal Reserve and Treasury Department.  Maybe open a Cleveland office for the staffs forced relocation.

No contact of any kind allowed between TBTF and Feds on pain of jail time.

That is just a start.  Break up the circle jerk.  At least make it inconvenient.

Thu, 04/05/2012 - 23:39 | 2321266 r00t61
r00t61's picture

Depending upon government to enforce those rules...good luck.

Fri, 04/06/2012 - 02:22 | 2321404 putaipan
putaipan's picture

no retired military with bank accounts over 300000$

Thu, 04/05/2012 - 22:30 | 2321187 Blagio
Blagio's picture


Wake me up when the SEC and CFTC start filing criminal charges against JPM.

Thu, 04/05/2012 - 23:17 | 2321242 Dingleberry
Dingleberry's picture're correct. If they are charged (and that is a longshot in and of itself), they will pay a pittance to settle civil charges out of court. Can anyone imagine if a TBTF banker actually went to jail? ZH would explode!!!

Thu, 04/05/2012 - 22:30 | 2321188 Seize Mars
Seize Mars's picture

Blythe, Blythe, Blythe. You lying fucking rat.


Thu, 04/05/2012 - 22:55 | 2321214 streetcrawler
streetcrawler's picture

I'm pretty ignorant, but is there any reason other than pure greed that when these bullshit CDS things blow up, the government doesn't just bail out the clients of the banks and let the banksters fight out amongst themselves as to who is liable for the trillions of fake assets they owe each other?

Thu, 04/05/2012 - 22:58 | 2321217 HowardBeale
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Am I the only one that is wishing a suicide bomber would walk into the main headquarters, take the elevator to the appropriate floor, and end "them"? 

It is time for all those who have nothing left to lose to man up and start taking some of these criminals out--unless our "justice" department decides to suddenly reinstate the rule of law and, thus, indict, try, and hang them for treason. And while your at it Holder--what an appropriate name: like in "holding pattern; i.e., making no progress toward the destination as the means of sustenance (fuel) burns away--hang your self you fucking socipath.

Thu, 04/05/2012 - 23:02 | 2321219 Yousif
Yousif's picture

"But... that would mean everything Blythe said is one big lie... It would also mean that JPMorgan is blatantly and without any regard for legislation,"

If I got a penny every time I hear or read this statement, I'd have enough imaginary credit (fiat) to buy all the gold in Fort Knox!

Banks finance government, hence, banks own governments.

The government will not prosecute banks.  If you're pinning all your hopes on the "legal" system, well, refer to the quote above.  It's not just the bankers that are serial liars.

The "justice" and "legal" systems are just convoluted frameworks used by the international criminal syndicate to stifle competition.  This is not conspiracy theory, this unfortunate reality is crystalizing.  The question is when will we, as a species, be able to accept it and, more importantly, decide to collectively deal with it.

The international criminal syndicate will not use its own concoction (the "legal" system) to prosecute itself.  Period.

Thu, 04/05/2012 - 23:01 | 2321226 JW n FL
Fri, 04/06/2012 - 07:35 | 2321590 Sathington Willougby
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Don't waste your time on the third one.  It's pseudo-science conjecture designed to tool one worlders.

Thu, 04/05/2012 - 23:10 | 2321232 ziggy59
ziggy59's picture

They lie? Of course they lie.. They lie under oath. Of course they will lie on crap nothing but crap.

Thu, 04/05/2012 - 23:40 | 2321270 Goldilocks
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  • In former times, a concubine was a woman who lived with and had a sexual relationship with a man of higher social rank without being married to him.
  • A woman who cohabits with an important man [syn: {courtesan}, {doxy}, {odalisque}, {paramour}]
  • 1297, from L. concubina (fem.), from concumbere "to lie with," from com- "with" + cubare "to lie down." Recognized by law among polygamous peoples as "a secondary wife."
Thu, 04/05/2012 - 23:24 | 2321246 BlackholeDivestment
BlackholeDivestment's picture ...oh Bruno! ...oh Bruh ...Ruh ...Uno! You and Blythe Masters piece of humble pie is sealed in your belly. The $ mark ...wait for it ....wait for it ...OK ...of the beast (lol), now in your hand, defines your judgment day has past and your physical (lol) return reward is aaah coming in short (lol) order. No Passover or Resurrection for you. Your own Antichrist lack of mercy is beating the ''resign'' and run away way way out of town drum. It's ''The Easter Bunny Hop to the Jungle'' get out of town, cuz from here on out it's always going to be ''time to get jumped ...bitchezz'', for you.

Who will you invite to your houses for the Holy Days? ...the one's that bring forth your monitary child sacrifice, filling their pockets with the mark of the beast too? ...the same people that hold life in contempt and would invite you scumbags to their whore house of Babylon? doubt. Ask yourself, ''can you ever trust your cooks again after they find out about you? Lol.

Fri, 04/06/2012 - 02:32 | 2321412 putaipan
putaipan's picture


reminds me of my best halloween....went as the passion of the mel mel- bunny ears and basket, kilt. half blue and white face...emphasis on the white face, purple robe/crown of thorns. flowing black mel mel the basket- easter grass. jumbo clear egg filled with hagisth/corned beef substitute. bello0wing at the top of my lungs all night.............


Thu, 04/05/2012 - 23:33 | 2321261 Atomizer
Atomizer's picture

MF GLOBAL is a time bomb ticking away. Yet, we need all lemmings to get back into the investment game or we will Fuck over every investment you hold with us. Ignore the idol threats and muppet stream media (MSM) soundbites. The government thieves are painted into a corner.

Thu, 04/05/2012 - 23:51 | 2321275 ekm
ekm's picture

They are painted in a corner but not out of breath yet. The frequency of interventions since MFGlobal has been breathtaking by itself.

- MFG - Nov 2011

- LTRO - talk up every week

- BAC went 100% higher from Dec 2011 into March 2012

- Talk the market  up every week- keep the market up

- Greek default - not over yet - talk the market up

- MFG not over yet - talk the market up - keep the market up

- Marketwatch openly invites people into the casino - market goes up

- JPM corners the CDS market - Today - market goes up

- Brian Sack resigns - market goes up - Apr 2012

From Nov 2011 til Apr 2012, about 17 weeks (no intent to count exactly), all these have happened in plain sunshine.

(I apologize for using the word "market" since there isn't any. I'll take suggestions to replace that word until central planning recedes).

Something is about to happen. Not dead yet......not yet.

Thu, 04/05/2012 - 23:51 | 2321282 QEsucks
QEsucks's picture

To 11/24/09 and beyond, I salute you. It's tough being scared when your parents are scared shitless, my young friends.


Fri, 04/06/2012 - 00:05 | 2321298 ekm
ekm's picture

Ooooh. It feels like Nov 2011.....It feels like Nov 2011 when it was about to collapse and they came up with.........................ECB - Fed Swaps.

I have the same feeling.....................

Fri, 04/06/2012 - 00:05 | 2321299 Zgangsta
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US Coast Guard sinks Japanese vessel.  Declaration of war emminent?

Fri, 04/06/2012 - 03:58 | 2321475 Non Passaran
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Eat shit imminently, eminence!

Fri, 04/06/2012 - 00:10 | 2321306 slewie the pi-rat
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i see clonie has linked up another nyt article...

i hate banksters

but not b/c of the fuking nyTimes

Fri, 04/06/2012 - 00:22 | 2321314 goldfish1
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"I'm lying and there ain't a damn thing anybody's going to do about it. - "


Fri, 04/06/2012 - 00:24 | 2321317 Dre4dwolf
Dre4dwolf's picture

JP Morgan has more control over the economy and markets than the Federal Reserve does.

JP Morgan is operating outside the law, the law is for commoners and slaves and stupid central bankers that still believe they matter....

Nothing Bernanke does can curtail JP Morgan, JP Morgan is outside his control....


JP Morgan is doing all this to laugh and spit in the face of the Federal Reserve a sort of "fuck off your worthless and you are no longer relevant"

JP Morgan controls the spice, whoever controls the flow of the spice, controls the universe..............

The Fed has lost its power........... JP morgan won the game of monopoly and everyone else is sitting around asking "wtf are we gona play now?"

Fri, 04/06/2012 - 01:02 | 2321337 mt paul
mt paul's picture

 are muppets 

 afraid of gold..

Fri, 04/06/2012 - 01:16 | 2321353 Kina
Kina's picture

Wonder if I put Blythe's pussy on a fish hook I would catch a vampire squid?

Fri, 04/06/2012 - 01:35 | 2321372 Ted Baker
Ted Baker's picture


Fri, 04/06/2012 - 01:58 | 2321375 LarryDavis
LarryDavis's picture

Im going to explain finance to all of you peasants (as I often do with little thanks I might add) who don't really seem to grasp the behavioral side. Upon registering offshore, I take some cash and park it at the Fed who then loans me significantly more money basically an exponential expansion. I rent some office space in manhattan and renovate the offices to resemble something Louis XIV would be able to relate to and feel comfortable pretending to be busy in while masturbating or ordering an expensive but average lunch/prostitute. In my comfy spread, I hire a bunch of yesman alpha male monkey dipshits with penchants for hookers, blow, generally expensive shit/suits some with PhDs from good schools and wealthy families (so they can ask their friends, politicians and family for advice and inside information). Next, I hire 3-5 gorgeous girls aged 25-29 (pereferably ex-models just old enough to not be out drinking and getting laid every night so they can still look good and answer the phone telling people I'm busy) admins to greet lowlife investors from middle east and europe. I then buy a shitload of computer monitors and instruct my minions to start making bets (long apple, long apple, apple calls, CDS, maybe some high yielding euro debt, etc.). After the machine starts rolling, i hire a Swedish design team who have an expansive command of fonts, graphic design, and overcharging (after all investors pay for the goddamn prospectus and reports whenever these jerkoffs get around to sending them) to explain what goes on at my fund/investment bank a very nebulous cum generic expository style without even a real meaning to parse (phrases like our outlook remains cautious, we are looking for the S&P to trade at 13 times earnings, we are looking for a strong quarter). Next comes commercials with an upper middle class white guy retiring and looking dignified with his aging counterpart by a yacht or motorcycle (never seen a fag or hispanic). If all goes well, I invite the CEOs right into my office and tell them I'm thinking of investing (I was buying drinks for my prime broker and he mentioned the company). The CEO keeps me apprised of all his machinations (outlook, earnings, etc.). After few quarters where my analysts go on tv talking about "research" and have the hosts slurp their nuts for making great calls (when I told them how that quarter and next quarter would be), I ingratiate myself to market makers by buying and selling tons of shares and racking up some comissions for them even buying them vacations/drugs/girls under the table. I basically pay their rent with some bullshit breakeven trades but when Facebook IPO time comes around they are sure to allocate me a ton of fucking shares which I buy and sell in nanoseconds realizing a windfall profit totally unavailable to the public. Before you know it, I am talking to Mandy and when the mic is turned off commenting on how good her australian pussy must smell after some binge drinking. That is finance. 

Fri, 04/06/2012 - 02:37 | 2321415 BlackholeDivestment
BlackholeDivestment's picture

...LMAO, post of the year. Should be made into an off Broadway video short Fight Club scene. Have a Norton and Pit look alike narrated scene of that whole picture you painted LD. Lol.

Fri, 04/06/2012 - 10:36 | 2322065 Jim in MN
Jim in MN's picture

And the ratio of psychopaths in the trade is what...80%?  I mean, the whole thing is something only a borderline psychopath would even want to do, let alone be able to do.

Another interesting question--the attitude toward rules/authorities.  Would it be better to have some that worked, or none at all and just let the thing crash and burn?  Or is everyone too high and/or psychopathic to even ask that question?

Fri, 04/06/2012 - 10:55 | 2322130 RallyRoundTheFamily
RallyRoundTheFamily's picture

That would make one fine book.

Sat, 04/07/2012 - 08:24 | 2324290 falak pema
falak pema's picture

does Dr Doom attend your cocktail parties?

Fri, 04/06/2012 - 02:43 | 2321420 Grimbert
Grimbert's picture

Which one's her?


Fri, 04/06/2012 - 03:40 | 2321461 smartknowledgeu
smartknowledgeu's picture

"A JPMorgan Chase & Co. trader of derivatives...has amassed positions so large that he’s driving price moves in the multi-trillion dollar market"  Another area JPM traders have amassed positions so large that they regularly drive DOWN price moves in a multi billion dollar market is the silver futures market. For example, they were likely the primary player that recently dumped 637MM ozs of fake paper silver ozs representing more than USD $19.7B of fake non-existent silver in the futures market in one hour to drive the price of silver down this past week. Or the many other times over the past year they've likely unloaded similar amounts of fake non-existent paper silver via HFT trading programs in very short periods of time to trigger stop-losses, black boxes and create waterfall declines in price. JPM is the primary dealer in fake financial derivative products, deceit, theft, immorality and everyone of the 7 Deadly Sins.




Fri, 04/06/2012 - 08:19 | 2321625 css1971
css1971's picture

As Tyler points out, when someone sells something at 70% off and you just happen to want that something, you hum and haw, complain it has blemishes, the colour isn't quite right, when was it last tested? Can they deliver for free? Then you back up the pickup truck and take everything they have left.


Fri, 04/06/2012 - 03:43 | 2321464 dust to dust
dust to dust's picture

 Based out of LONDON, ENGLAND, no wonder EUROPE is imploding. Good riddance to the EURO.

Fri, 04/06/2012 - 04:22 | 2321487 dust to dust
dust to dust's picture

Is Ms. Masters English?  Exposed.

Fri, 04/06/2012 - 04:41 | 2321495 dust to dust
dust to dust's picture

 Thank you, MR. Kim.

Fri, 04/06/2012 - 05:44 | 2321525 vp499
vp499's picture

He s down around 400m on the trades.. And they were puking shorts, not new positions

Fri, 04/06/2012 - 06:59 | 2321558 The Alarmist
The Alarmist's picture

I'm sure the positions are hedged, so JPM will be OK ... What's the big deal?

Fri, 04/06/2012 - 07:23 | 2321582 TooBearish
TooBearish's picture

Nuke the TBTFs from orbit- limit assets size to 500B GLOBALLY-PROHIBIT POLITICAL CONTRIBUTIONS- its the only way to be sure....

Fri, 04/06/2012 - 08:03 | 2321612 Olympia
Olympia's picture

The greatest private fraud of human history.
Who are the great fraudsters who are becoming the murderers of the human kind? How does the economy "illness" threaten Democracy and the freedom of people?
By knowing what happened in indebted Greece, where loan sharks created “bubbles” and the current inhuman debt, one can understand the inhuman plan in total ...understand where this plan started just to bring all states at the same end ...understand how this type of plans are established...


Fri, 04/06/2012 - 09:26 | 2321852 Apocalicious
Apocalicious's picture

No, no. He's just "hedging."

Fri, 04/06/2012 - 17:44 | 2323387 resurger
resurger's picture

their end getting near

Fri, 04/06/2012 - 23:12 | 2324002 Mo Bius
Mo Bius's picture

And let us not forget the REAL shenanigans with MFGobal courtesy of Rockefeller's "Morgue" laid out in unadultered clarity here:  

The message, of course, is that "we do whatever we want. We own everything." And this is the problem, that as a culture we've allowed the inheritance of fortunes so vast that they dwarf the resources of nations, and in fact are used to bankrupt nations, produce vaccines that are poison, develop subliminal and electronic mind-numbing capabilities, spray the air with chemtrails laced with nano elements, and develop micro nuclear devices like those used to fell the WTC on nineeleven. The Rockefellers are like unto gods, and surely they view themsrlves as such - just look at the behavior I just mentioned.

   The cure is simple. We take it from them. We no longer allow the transfer or inheritance of accumulated wealth. This ends the continuation of a cabal. But it will probably not be easy to wrest anything from people who own the whole system. It would be something like the NRA member's slogan "...from my cold,dead hands."


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