DTCC Deriv/SERV Expands Processing Pipeline for OTC Derivatives.Release of New Equity Derivatives Products Planned in Q12007 NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- The Depository Trust & Clearing Corporation (DTCC DTCC See: Depository Trust and Clearing Corporation ) continues to expand its powerful automated post-trade processing platform for OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). derivatives, with a range of new equity derivatives products early in 2007. New global products will include: Asia ex-Japan Asia Ex-Japan The region of countries located in Southeast Asia, not including Japan. These countries are generally considered emerging markets and are of interest to investors looking for high-growth investment opportunities. (AEJ AEJ Apache Escort Jammer AEJ Arbeitsgemeinschaft der Evangelischen Jugend in der Bundesrepublik Deutschland eV (German: Federation of Protestant Youth in the Federal Republic of Germany) AEJ Ashley Elizabeth Jewelers ) share and index options, AEJ share and index swaps, AEJ share and index variance swaps, and Japanese index variance swaps. DTCC will now have 21 global OTC equity derivatives products supported by its automated matching and confirmation platform. Prior to the addition of the new products, Deriv/SERV already supported American and European share and index options, swaps, and variance swaps and Japanese share and index options. Increasing Automation "With the large number of OTC equity derivatives products that currently exist and continue to emerge across the globe, automating this dynamic and complex market is increasingly important," said Gina Ghent, vice president, DTCC business development. "DTCC is working closely with global dealers and buy-side firms, as well as industry groups to bring to market a comprehensive, robust platform that supports a wide range of OTC equity derivatives products. We are leveraging our experience in automating the OTC credit derivatives market, but we're much farther up the learning curve for equities." The OTC equity derivatives market continues to grow at a steady pace. As of June 2006, according to the International Swaps and Derivatives Association The International Swaps and Derivatives Association (ISDA) is a trade organization of participants in the market for over-the-counter derivatives. It is headquartered in New York, and has created a standardized contract (the ISDA Master Agreement) to enter , Inc. (ISDA ISDA See: International Swap Dealers Association ([R])), the market had $6.4 trillion in notional value outstanding, an increase of 32% over the prior year. With the number of market participants and products offerings also expanding rapidly, global dealers and buy-side firms are placing greater attention to improving their operational practices, which still rely predominantly on manual methods. "These recent enhancements are another step in DTCC's ongoing effort to bring greater depth and diversity to the automated service it provides in this fast-growing market," said Peter Axilrod, managing director, DTCC business development. "By continually expanding on the capabilities of Deriv/SERV's electronic platform, we aim to help market participants meet their commitment to regulators to strengthen their operational infrastructure, increase efficiency and reduce operational risk." The Documentation Challenge According to an October 2006 report, "Trends in the OTC Equity Derivatives Market" by independent research firm Aite Group, a primary obstacle to increased automation lies in the lack of legal documentation or Master Confirmation Agreements (MCAs) that have been signed between firms for their OTC equity derivatives transactions. Because of the multi-faceted nature of the market place, identifying and completing the vast array of documents required between counterparties has become cumbersome and problematic. In a November 21, 2006, letter to the Federal Reserve Bank of New York The Bank of New York, abbrieviated to BNY, was a global financial services company that existed until its merger with the Mellon Financial Corporation on July 2, 2007.[1] The bank now continues under the new name of The Bank of New York Mellon Corporation. , 17 of the leading global OTC derivatives dealers addressed the documentation issue and characterized standardization as "our foremost focus and an important precursor to large-scale automated trade matching." The dealers also commented in the letter that they have developed a prioritization plan to create and publish additional MCAs, and to move towards greater adoption of electronic processing platforms. These market participants also pledged to create an environment where frequently traded products are supported by streamlined documentation. Earlier this fall, DTCC hosted a series of meetings in both NY and London to provide market participants with a greater understanding of the complexities related to documentation for OTC equity derivatives transactions. "Completing these MCAs is an important first step in getting dealer and buy-side firms to begin processing trades in an automated environment, and DTCC will assist the industry every way possible to help MCA MCA in full Music Corporation of America Entertainment conglomerate. It was founded in Chicago in 1924 by Jules Stein as a talent agency. In the 1960s it bought Decca Records and Universal Pictures, and today it produces films, music, and television shows. execution," said Ghent. About DTCC The Depository Trust & Clearing Corporation (DTCC), through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments Money market instruments See: Cash investments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC's depository provides custody and asset servicing for more than 2.5 million securities issues from the United States and 100 other countries and territories, valued at $31.2 trillion. Last year, DTCC settled more than $1.4 quadrillion One thousand times one trillion, which is 1, followed by 15 zeros, or 10 to the 15th power. See space/time. in securities transactions. DTCC has operating facilities in multiple locations in the United States and overseas. DTCC's derivatives services are offered through DTCC Deriv/SERV LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of DTCC. For more information on DTCC, visit www.dtcc.com. To obtain a copy of the Aite Group's report "Trends in the OTC Equity Derivatives Market," go to www.aitegroup.com. ISDA([R]) is a trademark of The International Swaps and Derivatives Association, Inc. |
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