In a move aimed at calming the industry and bringing “safety to the markets,” Depository Trust & Clearing Corporation will support all central counterparty programs for credit default swaps in a non-discriminatory manner.
Through its DTCC Deriv/SERV subsidiary (“Deriv/SERV”), the company is currently working with ICE Trust/The Clearing Corporation, CME/Citadel, LIFFE/LCH, and Eurex to facilitate their efforts to provide CCP services trade guarantees for credit default swaps (“CDS”).
The Trade Information Warehouse (“Warehouse”), as the market’s central registry and industry-recognized post-confirm infrastructure for credit derivatives, is optimally equipped to support any and all CCPs that are established in the CDS market. Virtually all dealers and buy-side participants along with 15 third-party service providers in the global CDS market are already linked to the Warehouse and utilize its functionality.
“From the outset of our involvement in the OTC derivatives market in 2003, DTCC has been committed to bringing automation, certainty and reduced risk to trading in CDS and other derivatives instruments,” says Peter Axilrod, managing director, Business Development and Deriv/SERV, at DTCC. “By utilizing the Warehouse’s post-trade processing infrastructure rather than investing valuable resources to build their own, CCPs can achieve the objectives of CCP clearingthat is, to mitigate and mutualize counterparty risk and increase market liquidityat the lowest cost and the greatest efficiency to their CCP members. Our support of CCP providers will give the industry standard centralized asset servicing across both cleared and bilateral trades.”