DTCC Deriv/SERV Enhances Payments Matching Service To Support Real-time Messaging

The Depository Trust & Clearing Corporation (DTCC) recently enhanced the payment matching and bi lateral netting capabilities of Deriv SERV to accommodate real time computer to computer messaging between DTCC and customers. The move speeds the processing of payments for

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The Depository Trust & Clearing Corporation (DTCC) recently enhanced the payment matching and bi-lateral netting capabilities of Deriv/SERV to accommodate real-time computer-to-computer messaging between DTCC and customers.

The move speeds the processing of payments for credit default swaps and other over-the-counter (OTC) derivatives, providing greater accuracy and straight-through processing for payments processed through DTCC.

DTCC also announced that it has surpassed the 1 million mark in payment transactions processed for the fourth quarter 2005, with 1.2 million credit derivative payments matched and bi-laterally netted through the system. This reflects a growth of 400% from December 2004, when 300,000 payments were processed through the system.

Five major dealers, including Bear Stearns, Credit Suisse First Boston, Deutsche Bank, J.P. Morgan Chase and Morgan Stanley adopted the new direct computer-to-computer link as part of their credit derivative transactions payment process since it went live at the end of 2005.

With the OTC derivatives market particularly in credit default swaps continuing to grow at such a rapid pace, the need to strengthen the markets operational infrastructure takes on even greater importance, said Richard Ingram, executive director, Morgan Stanley Fixed Income Operations. The ability to further simplify our payment processing through an automated computer-to-computer link is another step forward in addressing this need, and we are pleased that DTCC has added this feature to the Deriv/SERV platform.

The new computer-to-computer link allows users of the payment service to transmit credit derivatives payment information directly to DTCCs computer system in real-time. Previously, this data would need to be submitted to DTCC via an Excel spreadsheet, requiring manual intervention to complete the process.

The five banks now enjoy fully automated integration between their own internal cash management systems and the DTCC central service. Plans are under way to extend the service in the near future to all OTC derivatives asset classes, focusing initially on interest rates and equities, providing the same level of efficiency, accuracy and cost reduction for all OTC payments.

This most recent enhancement to Deriv/SERVs payment matching and bi-lateral netting service is another example of how we are working with market participants to deliver automated solutions that bring greater safety and soundness for derivatives processing, from trade confirmation through settlement, said Peter Axilrod, managing director, DTCC New Business Development. We are committed to continuing to build and enrich our platform to foster a higher degree of automation in the marketplace.

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