DTCC discusses role of its Trade Information Warehouse with proposed CDS central counterparties

By Angela McDaniels

Tacoma, Wash., Jan. 12 - Depository Trust & Clearing Corp. said it is in discussions with ICE Trust/Clearing Corp., CME/Citadel, Liffe/LCH and Eurex about how they will use DTCC's Trade Information Warehouse in their efforts to provide central counterparty services trade guarantees for credit default swaps.

The Warehouse is a central trade registry maintained by DTCC on credit derivatives. DTCC said it does not act as a central counterparty but does serve as the industry's central net settlement and asset servicing platform.

Discussions and systems testing with the four proposed central counterparties are at varying stages, and the proposed central counterparties are considering varying degrees of linkages with the Warehouse, according to a DTCC news release.

"By utilizing the Warehouse's post-trade processing infrastructure rather than investing valuable resources to build their own, central counterpartys can achieve the objectives of central counterparty clearing - that is, to mitigate and mutualize counterparty risk and increase market liquidity - at the lowest cost and the greatest efficiency to their central counterparty members," Peter Axilrod, managing director of business development and DTCC Deriv/SERV, said in the release.

"Our support of central counterparty providers will give the industry standard centralized asset servicing across both cleared and bilateral trades."

The industry has committed to use the Warehouse as the "single, centralized source of industry portfolio statistics to enhance the transparency of the market for participants and supervisors," according to the release.

DTCC said the commitment was made in an Oct. 31 letter sent to Timothy F. Geithner, then president of the Federal Reserve Bank of New York, from the 16 major dealers, the Asset Management Group of the Securities Industry and Financial Markets Association, the Managed Funds Association and the International Swaps and Derivatives Association, Inc.

DTCC is based in New York and provides clearance, settlement and information services through its subsidiaries.

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