So who is the counterparty helping JPMorgan unwind its large credit derivative trade?  The criterion is extremely complex.  The firm has to be large enough and diversified to take on a large amount of the trade which exceeded $100 Bill.  It also has to be conversant in these types of derivative trades so as to not telegraph to the market what JPMorgan’s specific intentions – or the cost of performing these transactions would be exorbitant. The firm that helped the bank unwind more than $20 billion of its credit derivative trades, according to Bloomberg News, is the $4.3 billion flagship fund of  BlueMountain Capital Management LLC.  The firm is run by Andrew Feldstein, a former JPMorgan executive who helped create the firm's credit-derivatives market.  He profited by exploiting price distortions caused by the outsized bets and then aiding the bank in unwinding the trades as it sought to cap the loss, according to 4 people with knowledge of the strategy who asked not to be identified because the matter is private. Mr. Feldstein’s fund bet against the JPMorgan initial trading strategy and profited alongside Boaz Weinstein, the Saba Capital Management LP founder who gained media attention for recommending the trade at a February hedge-fund conference in New York.  But what set BlueMountain apart is the size and complexity of its trading strategies.  With complex trades that can sometimes have more than 100 separate pieces, that strategy also has helped make BlueMountain one of Wall Street’s biggest clients. By June 2008, BlueMountain was Goldman Sachs Group’s 4th-largest counterparty in the credit-derivatives market, with $590 billion of outstanding contracts, bigger than that of banking giants Barclays Plc and Credit Suisse Group AG, according to a 2010 report by the Financial Crisis Inquiry Commission, a U.S. panel that investigated the credit seizure.  This sheer size of BlueMountain combined with his knowledge of the credit derivative market and his familiarly with JPMorgan made him the perfect firm for JPMorgan to offload its position. "Feldstein is a former JPMorgan exec and likely has a good relationship with senior management," said Adrian Miller of GMP Securities.  "Since transacting these trades with as little market knowledge as possible is the key to not creating big price fluctuations, who better to go to than a trusted prior colleague?" Within the past few weeks, BlueMountain, which oversees $9.2 billion across all of its funds, has been buying default protection on IG9, a position that would offset the bets JPMorgan already has, and then selling it to the bank. The transactions, first reported by Bloomberg News on June 20, are among trades that may have helped reduce the bank’s exposure to the index by more than half, according to estimates from market participants familiar with trading activity. In the end, Mr. Feldstein’s profit from betting against JPMorgan combined with his firm’s profits from helping it unwind its trades will dwarf that of the other firms that gained far more media attention.  "Andrew Feldstein is one of the most creative and sophisticated investors in fixed income," said Sarah Quinlan, founder of hedge-fund advisory firm QAM in New York and a former BlueMountain investor. “It is not surprising that JPMorgan would reach out to him to assist in the unraveling of this complicated and very public situation.” For further details, go to [Bloomberg, 7/3/12].