The Depository Trust & Clearing Corp. has launched a new automated, global over-the-counter equity derivatives cash flow matching and netting service, with all 14 of the major dealers l(G14) live on the platform.
The launch of this platform was in accordance with the G14’s commitment to global regulators to strengthen the operational infrastructure of the OTC derivatives market.
DTCC’s Deriv/SERV subsidiary is running the platform, the first of its kind.
“DTCC is focused on partnering with users of OTC derivatives markets, service providers, law makers and regulators to achieve our collective goal of reducing risk and protecting the soundness of the financial system,” said Stewart Macbeth, managing director at DTCC and general manager of the Trade Information Warehouse.
“In launching this new service, DTCC is working to help the industry attain a greater degree of accuracy, certainty and operational efficiency in the processing of ETC equity derivatives payment obligations,” Macbeth said. “We’ve seen the value that our Trade Information Warehouse’s automated netting and settlement functionality has brought to the OTC credit derivatives market, and we believe the Equities Cash Flow Matching service can now also deliver similar benefits to another OTC derivatives asset class.”
Payments between counterparties of an OTC equity derivatives trade must be made at the time of the transaction, periodically or at maturity. The Deriv/SERV system can reconcile these payments ahead of the payment date, with information fed through a computer-to-computer link or via the web. The system also offers many tools for reconciling and resolving payment discrepancies, contains automated messaging and online web reporting of the matching status.