The Depository Trust & Clearing Corporation (DTCC) in the U.S. and The Canadian Depository for Securities Limited (CDS) have announced the launch of a joint study to assess opportunities where they can collaborate.
DTCC promises that the study, to be completed over the next four to six months, will be a “rigorous review” of opportunities to work together on risk management, transaction services, information-based services, technology platforms and business continuity planning.
DTCC and CDS have co-operated for over twenty years on cross-border clearance and settlement services for our participants. “The question now is whether or not we can identify additional areas where `borrowing vs. building’ capabilities can increase the quality and scope of support CDS and DTCC can provide to their marketplaces and customers,” says a DTCC spokesman.
DTCC points to compatibility in our business models, similar IT architecture, user governance, CCP services and similar asset servicing and entitlement processing capabilities as the foundations for working together more closely. “We believe by leveraging strengths at CDS and DTCC, each of our organizations may be able to speed access to new services and capabilities, share technology upgrades and product enhancements and expand the roles our respective staffs can play in meeting customer requirements,” continues the spokesman.
Both CDS and DTCC are adamant that the study is not a precursor to a merger or an acquisition. But CDS is the only clearing and settlement organization with a full cross-border link into the U.S., encompassing central counterparty clearing and “delivery versus payment” settlement and asset servicing. Although both organizations have successfully linked their custody services with other depositories, the link between CDS and DTCC is well-established and efficient.
The feasibility study will determine if there is a sufficient business case to support further collaboration and will provide ample time to gain customer input on possible shared services, discuss with regulators their concerns and, ultimately, present findings and recommendations to the respective Boards of Directors.
Plans to conduct this study have been outlined to the CDS and DTCC Boards, and regulators in both countries have been briefed on the study aims.
“We have a common desire to serve our clients in the best and most efficient way possible in clearing, settlement, custody and asset servicing, and we believe that if it is possible and cost effective for us to leverage capabilities, without causing any significant adverse impact for our members, then we will have achieved a major win for everyone,” concludes the DTCC spokesman.