LONDON & NEW YORK--(BUSINESS WIRE)--The Depository Trust & Clearing Corporation (DTCC), MarkitSERV and AcadiaSoft today announced that they are working to deliver a joint solution for improving communication related to setting and maintaining the collateral required between counterparties to over-the-counter (OTC) derivative transactions. The solution is the first step taken by the three companies to develop a multi-functional collateral processing platform for the OTC derivative market.
Through this collaboration, the three organizations are helping the industry fulfill commitments to bring greater transparency and reduce operational risk associated with processing bilateral collateral agreements.
Beginning later in the first quarter of 2011, the MarkitSERV portal will provide clients with integrated access to the AcadiaSoft Messaging Platform, an online service that facilitates and manages communications required for collateral calls. The new service will enable buy- and sell-side counterparties to manage information electronically on exposures, commitments and adjustments to collateral and create an audit trail of all communication about margining. AcadiaSoft’s tools are more efficient and reliable than existing processes for communicating about collateral which takes place primarily over telephone and email.
To the extent messages about collateral are used to satisfy collateral and related reporting requirements under the Dodd-Frank Act, they can be processed through DTCC’s Trade Information Warehouse facilities and regulatory reporting interface.
Jeff Gooch, CEO of MarkitSERV, said: “Clients are searching for ways to streamline the multiple post-trade requirements relating to derivatives transactions and by linking AcadiaSoft’s technology and DTCC’s capabilities to MarkitSERV, we provide our clients with a single comprehensive platform to manage collateral alongside trade processing workflow, portfolio reconciliation and valuations.”
Craig Welch, co-founder of AcadiaSoft, said: “Making our innovative service available to the buy side via MarkitSERV is a great milestone for AcadiaSoft. We anticipate that requirements for central clearing will make effective collateral management an even more critical function and we are pleased to offer our solution in conjunction with MarkitSERV and DTCC.”
Peter Axilrod, managing director, DTCC derivatives services and product development, said: “This alliance leverages our organizations’ expertise in providing market participants with the first component required for straight-through-processing for collateral. DTCC remains committed to partnering with complementary service providers to bring to market a host of automated solutions that continue to increase transparency and successively take more risk out of bilateral collateral processing and the OTC derivatives market as a whole.”
The total value of collateral circulated in the OTC derivatives market was estimated at US$3.2 trillion at the end of 2009 versus US$200 billion in 1999, according to the International Swaps and Derivatives Association. Despite the significant growth in these arrangements over the past decade, processing of OTC derivatives collateral has remained predominantly manual and fragmented, raising industry and regulator concerns about the operational risks involved in these types of transactions.
Notes to Editors:
About MarkitSERV
MarkitSERV, jointly owned by The Depository Trust & Clearing Corporation (DTCC) and Markit, provides a single gateway for OTC derivatives trade processing. By integrating electronic allocation, trade confirmation and portfolio reconciliation, MarkitSERV provides an end-to-end solution for post-trade transaction management of credit, interest rate, equity and commodity derivatives. MarkitSERV also connects dealers and buy-side institutions to trade repositories and all six major central clearing counterparties worldwide.
For more information, see www.markitserv.com
About DTCC
DTCC, through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments 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 3.6 million securities issues from the United States and 121 other countries and territories, valued at US$33.9 trillion. In 2009, DTCC settled nearly US$1.48 quadrillion in securities transactions. DTCC has operating facilities and data centers in multiple locations in the United States and overseas.
DTCC also operates a global trade repository for over the counter (OTC) credit default swaps (CDS), through its wholly owned-subsidiary Warehouse Trust Company LLC. Warehouse Trust holds data on more than 98% of CDS trades worldwide.
DTCC also operates the global reporting repository for the OTC equity derivatives market (EDRR) through its European-based DTCC Derivatives Repository LTD (DTCC Derivatives Repository) subsidiary, which also houses global credit default swap (CDS) data which mirrors that registered in DTCC’s New York-based Warehouse Trust Company LLC (Warehouse Trust). The move is, in part, intended to help ensure that regulators globally have secure and unfettered access to CDS information by establishing identical data sets on two different continents. DTCC Derivatives Repository is a UK Financial Services Authority (FSA) regulated service company.
For more information, see www.dtcc.com.
About AcadiaSoft, Inc.
AcadiaSoft, Inc. offers a unified collateral management workflow environment that streamlines communications between broker-dealers and investment managers in the global OTC derivatives market. It allows market participants to communicate vital information on exposures, commitments and adjustments between counterparties in a complete, verifiable and secure manner. Designed for both sell-side and buy-side, the platform provides a simple solution to the complex issues associated with collateral management workflow thereby reducing operational risk, saving time and resources and improving transparency.
For more information, see www.acadiasoft.com