Euroclear Bank and DTCC form derivatives partnership
Published on May 19, 2008.
European central securities depository Euroclear Bank has linked its DerivManager OTC derivatives service with the Trade Information Warehouse, an OTC derivatives processing facility provided by the US’s Depository Trust and Clearing Corporation (DTCC).
The Trade Information Warehouse is an offering of DTCC’s Deriv/SERV unit, which provides automated matching and clearing services for OTC derivatives trades.
DerivManager aims to minimise counterparty disputes involving trade valuation and optimise collateral usage to cover exposures arising from all types of OTC derivatives contracts.
Thanks to the link, clients of Euroclear, Deriv/SERV and the Trade Information Warehouse will be able to transmit relevant credit derivatives trade data automatically from the Warehouse’s trade database to DerivManager. This will allow them to compare and manage exposures with trading counterparties.
DerivManager is based on the Deriv/SERV Warehouse’s trade data, and on valuation data supplied by Euroclear Bank clients for all types of derivatives trades. The service 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 and gives clients the option to outsource the management of collateral needed to fulfill obligations determined by DerivManager to Euroclear Bank.
“There is a significant need for greater transparency, interoperability, flexibility and automation in managing bilateral OTC derivatives trade processing and exposure management,” said Matthew Flanigan, first vice president, Merrill Lynch global markets and investment banking services and a member of the Operations Management Group, in a statement. “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.”
