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 The French bank made the requests to JP Morgan Chase and Co, Bank
of America Merrill Lynch and Citi in July and August, according to
sources who asked not to be named because talks are confidential.
Four sources with banks and trading houses in Europe and the United
States said JP Morgan decided against accepting the request but
other sources said talks were still going on.
"Discussions are ongoing and the process is moving forward in a
constructive way," a source close to negotiations said.
BNP Paribas, JPMorgan, BAML and Citi declined to comment.
BNP's request to other banks is legally permissible.
 However, experts say banks may be reluctant to clear for BNP Paribas
because they could be opening themselves up to risk or the
perception of risk which could hurt their reputations. One said BNP
Paribas may be reluctant to give up as much info as the other bank
needs to be comfortable processing transactions, for fear of losing
clients.
A New York banking regulator suspended the French bank from clearing
transactions in energy trade finance for the whole of 2015 as part
of a punishment for violating U.S. sanctions against Sudan, Cuba and
Iran. The suspension also included financial penalties of nearly $9
billion.
"Without getting help with the clearing, BNP will simply not be able
to operate its energy trade finance division," a source at a trading
company which works with BNP said.
The energy trade finance business accounted for as much as 5 percent
of BNP's revenues in 2006 but was scaled back after the 2008
financial crisis and then again after the U.S. probe. It now only
represents 1 percent of overall revenues although still accounts for
hundreds of jobs.
U.S. dollar typically transactions pass through one of two major
clearing systems in New York where large volumes of the main
currency for global commodity trades are readily available.
Despite the suspension imposed by the New York regulator, the terms
of the punishment left the door open for the French bank to pay
others to do the job.
The suspension of dollar clearing was on business lines that were
the central points of wrongdoing, according to the New York
Department of Financial Services.
 Any bank temporarily taking on clearing on behalf of BNP would be
able to charge a high rate for the service and they might also gain
new clients if switching back to the French bank in 2016 proved
complicated or otherwise less desirable, sources familiar with talks
said.
Major global banks such as BNP hold dollar accounts with the two
main U.S. payment systems - CHIPS and FedWire - so that foreign
companies can make or receive payments to or from suppliers in
dollars or do transactions with American clients.
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BNP mainly clears dollars on behalf of its own clients, and not on
behalf of other banks. CHIPS is owned by 23 large commercial banks
and supervised by the U.S. central bank, the Federal Reserve.
FedWire is operated by the Fed.
REDUCED ROLE
Commodities exporters, importers and trading houses all rely on bank
funding to manage capital intensive international trade flows in
areas such as oil, metals or coal.
BNP Paribas has been the leader in energy trade finance for decades
and trading houses such as Glencore, Trafigura and Mercuria have
long relied on the French lender for up to 40 to 50 percent of their
credits lines. But that business has been scaled back. BNP
Paribas, along with other banks, has pulled back from some lending
businesses which are seen by regulators as more risky and therefore
require banks to hold more capital in case they encounter problems.
Sources at those trading houses said BNP was currently providing
around 10-15 percent of their credit lines as banks from the United
States to Europe and Australia - such as Citi, and ABN Amro -
expanded in trade finance.
Spokespeople for Glencore, Trafigura and Mercuria declined to
comment.
In Europe, dozens of senior managers and BNP's front office staff in
energy trade finance left the bank between 2011-2013, according to
insiders and trading sources. BNP declined to comment on staffing.
Earlier this year BNP exited its role of coordinating mandated lead
arranger on Glencore’s $1.275 billion facility. It has stopped new
lending to trader Trafigura and is cutting trade finance lending in
Africa, according to trading sources. Glencore and Trafigura
declined to comment.
(Additional reporting by Maya Nikolayeva and writing by Dmitry
Zhdannikov; editing by Anna Willard)
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