DTCC-Euroclear collateral utility delayed to 2017

DTCC's Jennis said use of the utility won't take off until after the start of the margin requirements.

The margin service launched by DTCC and Euroclear will not go live until 2017 due to a lack of demand for the utility.

GlobalCollateral, the joint venture between the two market infrastructures, intended to launch its margin transit utility (MTU) in mid-2015. It was then pushed back to the fourth quarter of last year.

According to Mark Jennis, DTCC’s managing director for strategy and business development and executive chairman of the joint venture, the delay of the launch was attributed to European regulations.

“Firstly because European regulations mandating the posting of margin were delayed by nine months to September 2016, this lessened the industry’s need to use the margin transit utility (MTU),” Jennis says.

“Secondly, because the broker dealers will not need the utility until after the initial requirements have been met, we have moved out the go live date.

“We have met with a number of broker dealers and the buy-side who plan to begin using the MTU from the start of 2017, when they must begin posting variation margin (March 2017).”

According to one source with knowledge of the matter, Pimco and Franklin Templeton are involved in the launch of the utility.

A spokesperson from DTCC declined to comment on the involvement of the two asset managers.

An exact launch date is yet to be released, however it has received regulatory approval from the UK Financial Conduct Authority (FCA).

“We are still finalising the development of the MTU and are speaking to clients globally about its capabilities,” added Jennis.