02 July 2010 News

 

London moves take DTTC closer to global goals

The Depository Trust & Clearing Corporation this week made two moves that take it closer to realising its goal of creating a global post trade processing infrastructure.

The first was the announcement of a London-based subsidiary, DTCC Derivatives Repository Ltd, that will maintain global credit default swap data identical to that maintained in its New York based Trade Information Warehouse. This move is intended to help ensure that regulators globally have secure and unfettered access to global data on credit default swaps (CDS) by establishing identical CDS data sets on two different continents.

The second was the acquisition of Avox, a reference data business, based in the UK, but majority-owned by Deutsche Börse.

Commenting on the new London operation, Stewart Macbeth, managing director and general manager, Trade Information Warehouse, said: "DTCC has always envisaged a ‘global solution' for repository services supporting each OTC asset class. It is very common for counterparties to be located on different continents and to trade on underlying securities issued across borders.  This means that repositories for any asset class need to maintain global information to be useful.  It also means that steps need to be taken to ensure that the data is always available to regulators globally regardless of events and circumstances taking place in one location or another." 

This new subsidiary will jointly house the global equity derivatives repository being built by DTCC as the result of winning the International Swaps and Derivatives Association (ISDA) global bid for this service.  The location of this European subsidiary was made based on the ISDA mandate to have the global equity derivatives repository in London. 

IT will support a wide variety of critical functions, including operational, customer, technical, and most importantly, CDS trade reporting needed to ensure greater public transparency and to support the information needs of regulators and supervisory authorities.

The Avox acquisition adds an automated, centralised corporate database resource, with readily accessible information on the legal name, address, corporate hierarchies, immediate and ultimate parent, industry sector codes, company identifiers, and regulator information applicable to these companies.

Avox clients includes firms such Citi, Barclays, Nomura International, Standard Bank, Mizuho, Allianz, Eurex, SWIFT, Mitsubishi UFJ and Royal Bank of Canada

Deutsche Börse, which held the majority of shares in Avox, formally closed the transaction with DTCC this week. Under the terms of the deal, the two founders of Avox, Ken Price and Steve French, who were also minority shareholders, will head the company in the capacity of chief executive officer and chief operating officer, respectively

Price said: "What I find particularly exciting is the DTCC's willingness to collaborate with other infrastructure organisations around the world to create a global industry standard for company related data. By combining our capabilities with DTCC and those of our clients and partners, we're in an excellent position to help the industry better mitigate risk, achieve operational efficiencies and reduce their internal compliance costs."