DTCC-Euroclear’s margin utility launch pushed back again

The DTCC-Euroclear margin transit utility (MTU) service was initially set to launch in 2015 but has been hit by a number of delays.
By Paul Walsh

The launch of DTCC and Euroclear’s GlobalCollateral margin transit utility (MTU) has stalled again with sources citing a lack of client demand for the service as a reason for the hold up.

The MTU was originally pencilled in to launch in mid-2015.

Ted Leveroni, chief commercial officer for GlobalCollateral, confirmed that the MTU project was now targeting a mid-2017 launch.

Since the initial 2015 launch date three major regulations requiring increased collateral demand have been implemented across Europe.

These include margin and clearing requirements.

Global Custodian revealed in April 2016 that the service would not launch until 2017 due to the impact of European regulations according to DTCC’s managing director for strategy and business development Mark Jennis.

However, as of March 2017 Europe will have seen the start of all margin and clearing rules, though some phases will be rolled out gradually.

Initial Margin (IM) requirements for the largest derivatives users came into force from 1 September 2016.

Variation Margin (VM) requirements are also set to come into force in March while central clearing rules for OTC derivatives were applied recently.

One source with knowledge of the matter suggested the project would be all but forgotten in 12 months time, stating the project has “zero business and little prospect for any business in the future”.

A DTCC spokesperson also confirmed that Andrew Douglas has relinquished his role on the GlobalCollateral board to be replaced by James Hollands, managing director and global head of sales at DTCC.

Douglas will continue his role as CEO for the DTCC Derivatives Repository and managing director for government relations in EMEA and Asia.

According to the DTCC spokesperson, the reshuffle occurs as the focus of GlobalCollateral has “evolved from the start up and regulatory approval phase to one of community building.”

DTCC responded stating that last year State Street and Northern Trust announced plans to leverage the MTU settlement messaging service. Leveroni added that a number of firms including larger broker dealers “have also indicated their intent to leverage the service.” 

DTCC could not confirm any other clients for the service. 


NB: This story was updated at 16.48 on Monday 20 February 2017.