EUROCLEAR LINKS OTC DERIVATIVES SERVICE WITH DTCC TRADE INFORMATION WAREHOUSE

Posted May 19, 2008

BRUSSELS – Euroclear Bank has launched a link between its DerivManager OTC derivatives service and the Depository Trust & Clearing Corporation’s (DTCC) Trade Information Warehouse, a service offering of DTCC’s Deriv/SERV unit that currently covers over-the-counter (OTC) credit derivatives contracts. DerivManager aims to minimize counterparty disputes involving trade valuation and optimize collateral usage to cover exposures arising from all types of OTC derivatives contracts.

“There is a significant need for greater transparency, interoperability, flexibility and automation in managing bilateral OTC derivatives trade processing and exposure management,” says Matthew Flanigan, First Vice President, Merrill Lynch Global Markets and Investment Banking Services and a member of the Operations Management Group (OMG), a senior industry leadership group comprised of OTC derivatives operations professionals. “The combined efforts of Euroclear Bank and DTCC to remove uncertainty and reduce risks in these domains help to alleviate concerns in the market and within regulatory circles, while safeguarding the environment for growth.”

With the launch of the DerivManager link, Euroclear Bank clients that are also customers of DTCC’s Deriv/SERV and the Trade Information Warehouse may elect to transmit relevant credit derivatives trade data automatically from the Warehouse’s trade database to DerivManager in order to compare and manage exposures with their trading counterparties. Based on the Deriv/SERV Warehouse’s trade data, and on valuation data supplied by Euroclear Bank clients for all types of derivatives trades, DerivManager identifies and reports on a daily basis any exposure discrepancies between counterparties to these trades. DerivManager also provides clients with aggregated views of all their derivatives trade exposures, facilitating the allocation of collateral to cover these exposures. Also, DerivManager clients may outsource the management of collateral needed to fulfill obligations determined by DerivManager to Euroclear Bank, Europe’s leading tri-party collateral management agent.

“Euroclear and DTCC share a common goal: to provide a safe, efficient processing environment for the global OTC derivatives market,” says Pierre Yves Goemans, Managing Director, Product Management, Euroclear. “By linking DerivManager with the DTCC’s Trade Information Warehouse used by Deriv/SERV clients, we are helping our mutual customers manage rising trade volumes while reducing post-trade risks.”