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JPMorgan to review broker-dealer relationship amid pending Dodd-Frank rules

As a result of new Dodd-Frank rules proposed by U.S. regulators, JPMorgan Chase has begun screening the business models and financial strength of its broker-dealer clients.

Several new rules, which have only been proposed but have not yet taken effect, mandate that banks require consumers of “uncleared” swaps products to front margin funds and other financials depending on the direction of the market, CNBC News reports.

Swaps are considered uncleared if they are not traded through a central, nationally recognized clearing house.

JPMorgan’s analysis is aimed at identifying clients that would have a hard time meeting the new margin requirements due to a lack of liquidity and capital, according to CNBC News.

Some clients may discover that the bank will cut back ties with them unless they can meet these new capital requirements, though the bank may choose to cut ties with other clients completely.

The bank has lobbied Washington to ease up on some of the swaps regulations, saying that implementing the requirements without review would hinder economic growth. The Obama administration and regulatory authorities, however, have been hesitant to address the calls for review, CNBC News reports.

Similar reviews are expected to be undertaken by other large swap-dealing banks, including Bank of America, Citigroup, Goldman Sachs and Morgan Stanley.

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