Investment banking big JPMorgan Chase needs to assist flip airline and resort loyalty factors into an asset class akin to shares or corn futures.
The financial institution is working with Affinity Capital Exchange (ACE) to let corporations flip rewards packages right into a standardised, exchangeable foreign money to be traded by fund managers and used as collateral to boost capital, in keeping with an announcement on Thursday. Through the partnership, huge loyalty packages might be transformed into items, or “reserve points,” offered to traders like hedge funds or banks on the ACE market, and later traded on the identical venue.
“We’re essentially creating an asset class,” Andreas Pierroutsakos, a managing director at JPMorgan, mentioned in an interview. Traditionally, corporations promote factors on to banks. “But there are many other investors that want access,” he mentioned. “This is opening the door for that.”
Frequent-flyer packages generate billions in income for the biggest airways by agreements during which carriers promote their factors to banks which award them to credit-card prospects.