Blythe Masters

Blythe Masters (born 22 March 1969) is a British former executive at JPMorgan Chase.[1] She is the former CEO of Digital Asset Holdings,[2] a financial technology firm developing distributed ledger technology for wholesale financial services.[3] Masters is widely credited as the creator of the credit default swap as a financial instrument. She is also Chairman of the Governing Board of the Linux Foundation’s open source Hyperledger Project, member of the International Advisory Board of Santander Group, and Advisory Board Member of the US Chamber of Digital Commerce.

Blythe Masters
Blythe Masters speaking in 2015
Born
Blythe Sally Jess Levett

(1969-03-22) 22 March 1969
Oxford, United Kingdom
EducationThe King's School, Canterbury
Alma materTrinity College, Cambridge
OccupationFormer CEO Digital Asset Holdings, LLC
Former executive at J.P. Morgan
Known forEntrepreneur in financial services
RelativesGordon Levett (father)

Biography

Education

Born in Oxford, Masters was raised in the south-east of England. She attended The King's School in Canterbury.[4] She graduated in 1991 from Trinity College, Cambridge with a B.A. in economics.[5]

Professional career

Masters joined the bank JP Morgan Chase in 1991 after completing a number of internships there while still a student dating back to 1987. Responsible for credit derivative products at J.P. Morgan, Masters became a managing director at 28, the youngest woman to achieve that status in the firm's history.[6] She is widely credited with creating the modern credit default swap, a derivative used to manage credit exposure to underlying reference entities.[7] In 1994, J.P. Morgan had extended a $4.8 billion credit line to Exxon, which faced the threat of $5 billion in punitive damages for the Exxon Valdez oil spill. A team of J.P. Morgan bankers led by Masters then purchased credit protection against the credit line to the European Bank of Reconstruction and Development to cut the capital which J.P. Morgan was required to hold against Exxon's default, thus reducing its own risk. J.P. Morgan later bundled together packages of such exposures and offered them to market as BISTRO, for Broad Index Secured Trust Offering,[8] and these new financial instruments were quickly adopted by other banking institutions.[7]

When derivatives played a role in the 2008 financial crisis, having been applied by other firms to sub-prime mortgages, Gillian Tett's book, Fool's Gold: How the Bold Dreams of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe, documented how the original intent and features of credit derivatives had been distorted.[9] Nonetheless, Masters was described by the UK newspaper The Guardian as "the woman who invented financial weapons of mass destruction". The paper later apologised for failing to give Masters an adequate opportunity to respond to their characterisation.[4] She had told the newspaper: "I do believe CDS [credit default swaps] have been miscast, much as poor workmen tend to blame their tools." Masters explained to The Economist, "Tools that transfer risk can also increase systemic risk if major counterparties fail to manage their exposures properly."[10] In April 2010 she told the Economic and Monetary Affairs Committee of the European Parliament that "there are definitely lessons that have to be learnt. I for one feel that I have learnt from that experience and there are things I may like to have seen done differently". She stated support for reforms which increase transparency and reduce the risk of contagion among financial firms.[11]

From 2001 to 2004, Masters served as the bank's head of Global Credit Portfolio and Credit Policy and Strategy. From 2004 to 2007, she was Chief Financial Officer of J.P. Morgan's Investment Bank. In 2007 she was named head of Global Commodities.[5] By 2014, J.P. Morgan had the largest revenues of any investment bank in commodities, according to United Kingdom analytics firm Coalition.[12] That same year, J.P. Morgan announced the sale of its physical commodities business for $3.5bn in the face of increased regulatory scrutiny brought on by a Federal Energy Regulatory Commission investigation into the bank’s alleged manipulation of energy markets in California and Michigan.[13] J.P. Morgan paid $410 million to settle the investigation without admitting wrongdoing. J.P. Morgan defended Masters, stating that "We strongly dispute that Blythe Masters or any employee lied or acted inappropriately in this matter". Masters left J.P. Morgan once she had completed the sale for the bank.[14]

Masters was the Chair of the Securities Industry and Financial Markets Association from 2008 to 2010 and also of the Global Financial Markets Association from 2012 to 2014, trade associations whose missions include promoting public trust and confidence in financial markets.[5] She has frequently represented the industry in Washington D.C. on matters including the design of carbon markets to contain global warming, curbs on large commodities trading positions and the financial regulatory overhaul.[6]

From March 2015 to December 2018, Masters is the CEO of Digital Asset Holdings. Digital Asset is a startup that uses distributed ledger technology to reduce cost, risk and capital requirements in wholesale financial services.[15][16]

In December 2015, it was posited in the media that the new Barclays CEO Jes Staley had approached Masters about running the bank’s investment banking division, however Masters indicated she was fully committed to her current role at Digital Asset Holdings.[17] From 2015 to 2016 she was the Chair of the Board of Santander Consumer Holdings Inc. (NYSE: SC), a full-service, technology-driven consumer finance company.

Digital Asset

Masters was named the CEO of Digital Asset Holdings in March 2015, a company that builds secure and distributed processing tools to speed up settlement, reduce costs and enhance security and transparency in regulated industries. The startup has raised more than $100 million in multiple rounds of funding from fifteen of the world's largest technology and financial firms, such as Citibank, Goldman Sachs, JPMorgan, Deutsche Boerse, DTCC, CME, IBM and Accenture. The company is developing enterprise distributed ledger systems for the ASX, DTCC and others.[18] In December 2017, ASX officially announced it would upgrade its post-trade settlement system to a blockchain platform designed by Digital Asset Holdings.[19]

In December 2018, Masters announced that she was stepping down as CEO, but will remain a board member, strategic advisor and a shareholder. [20]

Personal life

Masters is Co-Chair of the Board of the Global Fund for Women, a member of the Board of The Breast Cancer Research Foundation and the former Chair of the Board of the Greater NY Affiliate of the breast cancer charity, Susan G. Komen for the Cure.[5] She is an amateur equestrian.[21]

References
  1. "Blythe S. Masters". Businessweek.com.
  2. "Blythe Masters steps down". Reuters. 18 December 2018.
  3. Michael J. Casey (11 March 2015). "Ex-J.P. Morgan CDS Pioneer Blythe Masters To Head Bitcoin-Related Startup". The Wall Street Journal.
  4. David Teather (20 September 2008). "The woman who built financial 'weapon of mass destruction' | Business". The Guardian. London. Retrieved 19 May 2010.
  5. "Blythe Masters". LinkedIn.
  6. Dan Fitzpatrick (9 October 2010). "J.P. Morgan Commodities Chief Takes the Heat". The Wall Street Journal.
  7. John Lanchester (1 June 2009). "Outsmarted: High finance vs. human nature". The New Yorker.
  8. Alex Chambers (1 May 2006). "How the structured credit revolution started". Euromoney.
  9. Fool's Gold: How the Bold Dreams of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe, by Gillian Tett: ISBN 978-1-4165-9857-2, Spear's Book Awards Financial Book of the Year 2009.
  10. "Credit derivatives: The great untangling". The Economist. 6 November 2008.
  11. "Derivatives: To understand risks better, transparency should be increased". European Parliament. 28 April 2010.
  12. David Sheppard (20 March 2014). "JPMorgan named top commodities bank, day after selling physical business". Reuters.
  13. Andy Hoffman and Hugh Son (19 March 2014). "JPMorgan Agrees to Sell Commodities Unit for $3.5 Billion". Bloomberg.
  14. GillianTett (3 April 2014). "The female face of the crisis quits the spotlight". The Financial Times.
  15. Matthew Leising and Edward Robinson (31 August 2015). "Blythe Masters tells banks the blockchain changes everything". Bloomberg.
  16. Tom Braithwaite and Ben McLannahan (10 March 2015). "Masters joins cryptocurrency start-up". Financial Times.
  17. Michael Erman and Steve Slater (2 December 2015). "Exclusive: Barclays' boss wants Blythe Masters to run investment bank - source". Reuters.
  18. Robert Hackett (18 February 2016). "Meet the ex-JPMorgan Blockchain Trail-Blazer Shaking Up Wall Street". Fortune.
  19. "Australia's ASX delays blockchain transition by 6 months". Reuters. 4 September 2018. Retrieved 27 May 2019.
  20. Rooney, Kate (19 December 2018). "Blythe Masters, Wall Street's best-known blockchain cheerleader, resigns from Digital Asset Holdings". CNBC. Retrieved 19 November 2019.
  21. "Blythe Masters – 2004 40 Under 40 – Crain's New York Business Rising Stars". Crains New York.
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