Major dealers back DTCC-Euroclear collateral management project

Six swap dealers have adopted the service which aims to streamline reporting and collateral settlement processes. 

A joint project between the DTCC and Euroclear designed to streamline collateral settlement and reporting processes has gone live four years after its initially planned launch date.

GlobalCollateral, the joint venture between DTCC and Euroclear, has officially gone live with its flagship Margin Transit Utility (MTU) with six dealers on board, including Goldman Sachs, JP Morgan, Societe Generale, Morgan Stanley, UBS and Wells Fargo.

Over 30 investment managers, administrators and custodians have also signed up to the service, such as Fidelity International, Franklin Templeton and Vanguard. Nine global custodians are also in various stages of testing with the MTU, and GlobalCollateral is in the process of engaging with around 40 other regional custodians.

The MTU was initially supposed to be launched in mid-2015, however a lack of client demand for the services and the delay of the initial margin requirements pushed back the go-live of the service for several years.

The service includes connectivity from AcadiaSoft’s MarginSphere and DTCC’s ALERT to provide enhanced standing settlement instructions (SSI) to custodians and tri-party providers.

“Calculating margin calls, generating and affirming calls and determining eligible collateral, and then instructing our custodian with real-time settlement updates and end-of-day position reporting, will significantly reduce operational, counterparty and liquidity risks,” said John Montgomery, senior specialist, global collateral, Vanguard.

“Leveraging MTU in conjunction with AcadiaSoft’s MarginSphere and our collateral management system will greatly increase our overall collateral management efficiency beginning with OTC derivatives and then later for TBAs, ETDs and OTC cleared derivatives.”

The MTU will help custodians automate the processes for connecting to collateral providers, an essential need for buy-side participants who will be required to post initial margin with a tri-party custodian for their uncleared derivatives from September this year.