Wall Street & Technology: Blog: OTC Derivatives Update: DTCC Partners With CLS; T-Zero Integrates With GEMýs FpML Mediator

OTC Derivatives Update: DTCC Partners With CLS; T-Zero Integrates With GEM’s FpML Mediator

Ivy Schmerken, Wall Street & Technology

Automation of the OTC derivatives market continues to be a priority for the industry.
The Depository Trust & Clearing Corp. (DTCC) announced its selection of CLS Bank International (CLS) to provide central settlement of payments for over-the-counter (OTC) derivatives contracts housed in DTCC’s DerivSERV Trade Information Warehouse.

The partnership between the two industry-owned organizations will create an integrated payment-processing infrastructure for the handling of OTC derivatives contracts, stated the release.

The solution will initially support credit derivatives, but is designed to be extended to other OTC derivatives products including rates, equities and commodities — the timing of which will be worked out in collaboration with TradeWarehouse customers.

CLS provides global settlement services in 15 currencies and is an integral part of the foreign exchange market, settling 270,000 instructions equivalent to approximately $2.9 trillion each day.

In other news, DTCC said it continues to expand its automated trade-matching platform for OTC derivatives with a range of new equity derivatives products in early 2007. New global products will include: Asia ex-Japan (AEJ) share and index options, AEJ share and index swaps, AEJ share and index variance swaps, and Japanese index variance swaps.

DTCC will now have up to 21 global OTC equity derivatives products supported by its automated matching and confirmation platform.

Meanwhile, Global Electronic Markets (GEM) has integrated the trade comparison component of its FpML Mediator software platform with T-Zero, the service provider in credit derivative processing.

T-Zero has integrated the FpML Mediator trade comparison component with its existing service that is being utilized by numerous buy-side and dealer clients.

This will enable T-Zero’s buy-side clients to perform trading activities such as assignments and early terminations on credit default swap (CDS) trades with the assurance that they are in synch with the trade state maintained by the DTCC’s Deriv/SERV derivative trade confirmation service.

For example, when a T-Zero client wishes to perform a transaction on an existing CDS, T-Zero retrieves the deal’s details from DTCC and uses GEM’s FpML Mediator component to compare the client’s version of the trade with the information retrieved from DTCC.

Posted by Ivy Schmerken at 01:37 PM

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