DTCC Connection

Oct 03, 2014 • DTCC Connection

DTCC and Euroclear Create Collateral Processing Firm

by Joseph King


With the stroke of a pen Tim Howell, Euroclear CEO (l.) and Michael Bodson, DTCC President and CEO (r.) launched DTCC-Euroclear Global Collateral Ltd. at Sibos 2014 in Boston.

The Depository Trust & Clearing Corporation (DTCC) and Euroclear announced the creation of DTCC-Euroclear Global Collateral Ltd., a joint venture agreement that brings to market two new services, The Margin Transit Utility (MTU) and the Collateral Management Utility (CMU), which aims to deliver new, innovative collateral processing solutions to the financial marketplace.

The MTU will provide straight-through processing of margin obligation settlement, leveraging current DTCC infrastructure, as well as additional infrastructure currently in development in coordination with the industry. Industry testing of the MTU is scheduled to begin in mid-2015. The CMU will address the global challenge of sub-optimal collateral allocation and mobility, through utilizing Euroclear’s market-leading Collateral Highway, and will follow the launch of the MTU.

Michael Bodson, DTCC President and CEO, and Tim Howell, Euroclear CEO, held a ceremonial signing of the joint venture agreement in front of an audience of industry colleagues and reporters at Euroclear’s booth at Sibos 2014 in Boston earlier this week.

“We are proud to partner with Euroclear to create a new business that is singularly focused on addressing the collateral management challenges our clients are facing following new regulatory mandates and required investments in risk management and compliance,” said Michael Bodson, DTCC President and CEO. “This joint venture reflects DTCC’s and Euroclear’s commitment to delivering global solutions that promote capital efficiency and help safeguard the stability of the financial markets.

Ownership and governance of DTCC-Euroclear Global Collateral Ltd. will be shared equally between DTCC and Euroclear with its Board and senior executives drawn from the two firms’ management. The firm will be domiciled in the United Kingdom, and its operations are subject to regulatory approvals.

“The creation of this joint venture company will deliver to our clients increased efficiency and reduced costs within the highly-fragmented and complex collateral management industry,” Euroclear Chief Executive Officer Tim Howell said. “Firms within the post-trade world span multiple countries, if not continents. By drawing on the combined resources and expertise of two of the largest post-trade infrastructure providers in the world, this strategic partnership with DTCC will play a leading role in addressing the challenge of efficiently allocating and mobilizing capital across the globe.”

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