Commerzbank and Clearstream Launch OTC Derivatives Processing Service

Commerzbank and Clearstream have partnered on a new platform, TradeCycle, to process the entire lifecycle of both cleared and uncleared over-the-counter derivative transactions.

Launching in Q4 2013, TradeCycle allows users to manage the trading, clearing, settlement and custody of OTC derivative transactions. TradeCycle will also offer services in areas such as advisory, valuation, and collateral management. This partnership is the first of its kind between a bank and infrastructure provider and aims to reduce risk, costs and inefficiencies in the OTC market by allowing users to work with a single provider rather than the common practice of using multiple vendors.

Nikolaus Giesbert, divisional board member for Fixed Income & Currencies at Commerzbank Corporates & Markets said the bank had looked at partnerships of this nature (to deliver OTC derivatives services) and chose Clearstream in view of its prior relationship with the CSD / ICSD group. “It is a natural extension of the relationship we already have with them and is preferable given that many clients welcome a European solution to regulation.”

Stefan Lepp, member of the executive board and head of global securities financing at Clearstream, added that the agreement was a “new kind of collaboration of two long-standing partners,” as the CSD / ISCD already works with other parts of the German investment bank where it uses GC Pooling and the Global Liquidity Hub to deliver liquidity services to corporates for example. “The technical architecture allows both to leverage each other’s capabilities, with Commerzbank delivering trading, custody, clearing and collateral advisory services and Clearstream delivering collateral management, securities financing and ICSD services.”