DTCC TO ESTABLISH WAREHOUSE TRUST COMPANY FOR CREDIT DERIVATIVES

Posted June 1, 2009

NEW YORK – The Depository Trust & Clearing Corporation (DTCC) has filed applications to establish a limited purpose trust company that will house the functions of DTCC’s Trade Information Warehouse for credit derivatives. The Warehouse serves as a central repository for over-the-counter credit derivatives, containing the bulk of all credit derivatives traded worldwide.

The new company, to be called The Warehouse Trust Company LLC, has filed applications for membership in the Federal Reserve system and with the New York State Banking Department (NYSBD) to form a limited purpose trust company and will become a wholly-owned subsidiary of DTCC Deriv/SERV LLC, which operates DTCC’s automated services for OTC derivatives. It is expected that in the new company, the Trade Information Warehouse for credit derivatives will become subject to a collaborative global regulatory scheme involving interested regulators in Europe as well as the US. The new trust company will also establish a subsidiary in Europe to facilitate the offering of regulated Warehouse services in Europe.

“In filing this application to create The Warehouse Trust Company, DTCC is responding to the expressed intentions from regulators globally to bring added risk protection and regulatory oversight to the credit derivatives market,” says Donald F. Donahue, Chairman and CEO of DTCC. “Our goal, as the operator of the only global trade repository for credit default swaps (CDS), is to align our infrastructure in a manner that is consistent with concerns of regulators and market participants and will allow us to continue, and possibly expand, the vital role we play in bringing greater certainty, transparency and reduced risk in the post-trade of OTC derivatives and the servicing of these instruments throughout their life-cycle.”

As a market-neutral utility, DTCC has been working with all proposed central counterparty (CCP) solution providers as the market moves towards complying with global regulators’ calls for a process to guarantee the completion of trades in the CDS market.

“We are committed to providing equal access to all CCP providers, so they can leverage our trade repository in delivering their own services more cost-efficiently,” says Peter Axilrod, Managing Director, Business Development and DTCC Deriv/SERV, at DTCC. “Linking to the Warehouse’s central infrastructure will not only accelerate implementation of CCP processing for OTC derivatives, but will also allow these service providers to focus their development more clearly on margining and risk management without any extraneous operational concerns.”