Northern Trust To Use GlobalCollateral's Margin Settlement Service

It joins State Street in a pilot program to help increase efficiency and transparency.

peter-cherecwich-northern-trust
Peter Cherecwich, Americas head, corporate and institutional services, Northern Trust

Northern Trust is the latest company to implement DTCC-Euroclear Global Collateral's Margin Settlement Messaging Service.

Northern Trust will be implementing the margin settlement system developed by GlobalCollateral, a joint venture between the Depository Trust & Clearing Corporation (DTCC) and Euroclear.

The firm joins State Street, which announced its participation in early July, in a pilot for GlobalCollateral's Margin Settlement Messaging Service.

The service aims to create efficiencies by improving risk management processes and adding transparency, said Pete Cherecwich, Northern Trust's head of corporate and institutional services for the Americas, in a statement.

"We believe that one of the keys to excellent client service is to take advantage of new and innovative technologies, especially those that not only create operational efficiencies and improved risk management, but can also enable us to provide increased transparency to our clients," Cherecwich said.

With the messaging service, Northern Trust hopes to streamline its margin call process and automate its collateral settlement tracking as volumes of collateral start to increase.

State Street, Northern Trust and other firms implementing GlobalCollateral's margin settlement system expect that collateral volumes will increase so it is important to have a process that will handle the amount of work that has to be done quickly. The service is ready for client onboarding, GlobalCollateral said, and is expected to go live in the first half of 2017.

The service takes the place of a largely manual process that often requires a constant back and forth between all parties involved. GlobalCollateral's messaging service, running on the back of its Margin Transit Utility (MTU), automates the full operation from margin call to settlement.

Northern Trust could offer the Margin Transit Utility service to clients if there is enough demand for it. Implementation will depend on customer feedback.

After the pilot, Northern Trust and other institutions involved in the program will be able to use the MTU service to track collateral movement with settlement instructions to confirm success or failure.

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