SELL SIDE

Credit Suisse to outsource post-trade derivatives ops to FIS utility

Capital costs and increasing workflows have resulted in banks looking to outsource certain derivatives operations to utilities.

By Joe Parsons joe.parsons@information-partners.com May 24, 2016 1:06 PM GMT

Credit Suisse has become the latest bank to outsource its post-trade derivatives operations to a utility operated by FIS.

The utility, which was founded by tech vendor Sungard before it was acquired by FIS, will take on Credit Suisse’s post-trade futures OTC derivatives operations and technology.

Last year Barclays became the first bank to join the post-trade utility.

“As the market moves away from bilateral swaps and towards cleared products, Credit Suisse is better positioned to continue to deliver innovative solutions and products to our clients in the most efficient manner possible,” says John Dabbs, global head of prime derivatives services, Credit Suisse.

“We believe this utility will transform the economics for derivatives market participants globally.”

According to the latest data from the US Commodity Futures Trading Commission, Credit Suisse is the largest US client clearer for OTC derivatives, with almost $11 billion in client collateral.

The announcement comes as bank’s look to mitigate the increased costs of processing cleared derivatives trades in the wake of heightened capital rules from Basel III.

In addition, banks are seeing more workload to their day-to-day operations increase as more products become accepted for central clearing.

“Our vision for a derivatives utility uses FIS’ existing, market-leading IP to reduce operational risks and costs while increasing efficiency throughout the industry,” adds Marianne Brown, chief operating officer, institutional and wholesale, FIS.