NYSE Euronext and The Depository Trust & Clearing Corporation (DTCC) has agreed to create a joint venture for clearing U.S. fixed income derivatives.
The new clearing house, New York Portfolio Clearing , NYPC, will combine the capabilities of NYSE Euronexts U.S. futures exchange (NYSE Liffe U.S.) and DTCCs Fixed Income Clearing Corporation (FICC) to offer risk management, clearing and settlement for U.S. fixed income securities and derivatives.
The initiative has been approved by the Boards of both companies and is expected to be operational in the second quarter of 2010, subject to definitive documentation and regulatory approval.
Recent market dislocation has underscored the need to improve market efficiencies and provide more thorough and timely information about the positions of participants across asset classes, said Duncan L. Niederauer, Chief Executive Officer of NYSE Euronext. In uniting NYSE Euronexts proven strength and expertise in execution with DTCCs market-leading clearing capabilities, we will help to lower the traditional barriers between the cash and derivatives markets. NYPC will provide a more comprehensive view of participants overall risk exposure and increases capital efficiency through a cross-asset class risk management program.
Partnering with one of the worlds largest and most liquid exchange groups to create NYPC is a significant milestone in DTCCs mission to mitigate risk and safeguard the integrity of the U.S. financial system, added Donald F. Donahue, Chairman and Chief Executive Officer of DTCC. By providing greater transparency of investment positions between cash and derivatives, NYPC will bring a superior match between traders total portfolio risk and the underlying margin requirements. Additionally, regulators will gain the ability to monitor market participants total exposure across multiple interest rate asset classes in real-time.”