DTCC TO SUPPORT COUNTERPARTY SWAPS SOLUTIONS THROUGH INFORMATION
WAREHOUSE
Posted January 12, 2009
Through its Deriv/SERV subsidiary, DTCC is currently working with ICE
Trust/The Clearing Corporation, CME/Citadel, LIFFE/LCH, and Eurex to
facilitate their efforts to provide CCP services and trade guarantees
for CDS.
“From the outset of our involvement in the OTC derivatives market in
2003, DTCC has been committed to bringing automation, certainty and
reduced risk to trading in CDS and other derivatives instruments,” says
Peter Axilrod, Managing Director, Business Development and Deriv/SERV,
DTCC. “By utilizing the Warehouse’s post-trade processing infrastructure
rather than investing valuable resources to build their own, CCPs can
achieve the objectives of CCP clearing — that is, to mitigate and
mutualize counterparty risk and increase market liquidity — at the
lowest cost and the greatest efficiency to their CCP members. Our
support of CCP providers will give the industry standard centralized
asset servicing across both cleared and bilateral trades.”
CCPs that use the full suite of Warehouse services will not need to
build and offer certain services on their own, thereby reducing the cost
of their CCP services to their clearing members and facilitating
consistent centralized processing for both cleared and bilateral
transactions.
Deriv/SERV’s discussions and systems testing with the four proposed CCPs
are at varying stages of advancement, and the proposed CCPs are
considering varying degrees of linkages with the Warehouse.
The Warehouse can expedite the start-up of any CCP by carrying out bulk
novations of existing trades originally contracted on a bilateral basis.
The Warehouse’s record-keeping and bulk transfer capabilities will
enable it to transfer open interest between CCPs — and allow market
participants to switch from one clearer to another — thereby
facilitating the existence of multiple CCPs.