The boards of the Depository Trust and Clearing Corporation (DTCC) and Euroclear have announced they have given their companies a go ahead to establish a joint venture to streamline margin settlement processes and enhance access to collateral processing infrastructure.
The joint venture is said to be providing straight-through processing for the settlement of margin obligations via a Margin Transit Utility (MTU), and to address sub-optimal collateral mobility and allocation at a global level with a Collateral Management Utility (CMU).
"In bringing together two of the industry's largest post-trade market infrastructures, we will be addressing sub-optimal collateral mobility and allocation issues by creating the biggest open architecture collateral processing ecosystem, accessible to all market participants across the globe," says Tim Howell, CEO of Euroclear. "By delivering tangible benefits to the industry, we will improve efficiency and mitigate risks at a time when regulatory change is expected to significantly increase the volume of margin calls and securities collateral settlement."
While the DTCC will focus of the MTU, Euroclear will leverage its technology to operate the CMU pilot, with the eventual goal of providing a seamless front-to-back collateral processing platform.
“Collateral processing continues to become more complex, with margin calls expected to rise steeply and the need to seamlessly integrate collateral and spot market settlements similarly increasing," says Mike Bodson, president and CEO of the DTCC. "Firms are actively looking for global solutions to solve these issues."
The completion of the joint venture is subject to regulatory approval.
James and Anthony talk about the looming Sibos event in Toronto and take a look at some recent M&A activity and blockchain developments in the capital markets.Subscribe to Weekly Wrap emails