Euroclear and the Depository Trust and Clearing Corporation (DTCC) have announced the launch of a joint collateral processing service, which aims to automate elements of margin call workflows for derivatives trades.
The establishment of the joint service between Euroclear and the DTCC means that they are able to offer automatic segregation of collateral for agreed margin calls covering over-the-counter derivatives trades, as well as other instruments that transact on a collateralized basis. A further enhancement of links between the two utilities will eventually create a single collateral pool for mutual clients, and the service will be operate on a cooperative basis, allowing for outside, non-discriminative links from other collateral processing bodies.
"The industry is focused on collateral management as a result of concerns over how to address operational and counterparty credit risk while navigating the changing regulatory landscape," says Michael Bodson, president and CEO at the DTCC. "DTCC's Margin Transit Utility, currently under development, will help mitigate risks, lower costs and create greater efficiencies, by providing straight-through-processing to help satisfy obligations of clients. We look forward to leveraging the strengths of both institutions to meet the collateral needs of industry participants."
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