The Commodity Futures Trading Commission (CFTC), the US regulator, has granted a license to New York Portfolio Clearing (NYPC) the derivatives clearing house joint venture between the Depository Trust & Clearing Corporation (DTCC) and NYSE Euronext (NYX).
NYPC will deliver single-pot margin efficiency between fixed income securities and interest rate futures, according to a statement by the firm.
NYPCs DCO registration is an important milestone in the transformation of the US derivatives market towards a more open and competitive structure, says Walt Lukken, CEO of NYPC. The innovative operational and capital efficiencies of NYPCs cross-margining system will be a powerful catalyst for new competition in our industry while increasing transparency and mitigating systemic risk. We appreciate the significant time and consideration that the commission has taken in granting this groundbreaking DCO registration.
The NYPC was created to deliver unique capital efficiencies to the market by netting and reducing risks between a clearing members portfolio of cash bonds and derivatives, according to the statement. It will also provide important operational efficiencies that reduce systemic risk and enhance market efficiency, such as the locked-in trade delivery process to allow expiring futures to be submitted to FICC for physical delivery.
NYPC intends to initially clear Eurodollar and US Treasury Futures for NYSE Liffe U.S., the US derivatives exchange of NYSE Euronext. NYPCs cross-margining arrangement with DTCCs Fixed Income Clearing Corporation is currently under review with the CFTC and the Securities and Exchange Commission. Pending regulatory approvals, NYPC expects to begin operations in late first quarter of 2011.