DTCC Expands Deriv/SERV Platform To Support Interest Rate, Equity and Variance Swaps
The Depository Trust & Clearing Corporation (DTCC) announced today its Deriv/SERV platform was once again expanding to provide affirmation and automated matching and confirmation services for interest rate swaps and swaptions, equity swaps and variance swaps.
The expansion of Deriv/SERV was the result of intensive collaboration with both the dealer and buy-side communities over a period of months. Support for interest rate swaps and swaptions will begin immediately and equity swaps and variance swaps will begin next month.
“We are pleased to have worked with DTCC along with other key members of the OTC derivatives market to add these products to the Deriv/SERV platform,” said Ann Marie Davis, managing director, Global Operations, Citadel Investment Group LLC. “The ability to process trades for all our derivatives products through a single platform is of particular interest to us and other market participants. This expansion in Deriv/SERV’s services is an important move in that direction.”
“These recent enhancements reflect DTCC’s commitment to delivering a fully-automated processing solution for a broad range of products in the OTC derivatives market,” said Janet Wynn, managing director and general manager, DTCC Deriv/SERV. “We believe that these additions will be particularly attractive to our 100 buy-side customers, who are charged no fees to use our various OTC derivatives processing services, as well as the 23 major global dealers, who will benefit from higher trade confirmation rates.”
The addition of these new products leverages Deriv/SERV’s capabilities already in place for single reference entity credit default swaps, credit default swap indices, equity index options and equity share options. As with these other products, Deriv/SERV’s two-sided, real-time matching and confirmation for equity swaps and variance swaps will also handle such trade life cycle events as new trades, full or partial terminations, increases, amendments and exits.
The interest rate swaps and swaptions service will support affirmation or matching using a short form record designed specifically for the buy-side, including new trade and exits events, with support for assignments, allocations, amendments and full and partial termination capabilities and a long form record being added during 2005 and early 2006.
Customers currently using the Deriv/SERV platform will be able to begin affirming, matching and confirming transactions for these new products immediately. For new customers, they can access the service through an easily accessible Internet connection.
“We have worked hard to fashion flexible, automated confirmation processes for both interest rate swaps and equity and variance swaps that offer firms a choice of affirmation or two-sided matching that are well suited for the dealer-to-customer market,” said Peter Axilrod, managing director, Business Development for DTCC.
DTCC first entered the OTC derivatives market in November 2003, in response to requests from major dealers and banks that were looking to develop automated processing solutions that could help them efficiently and safely manage the industry’s rapid growth rate. First supporting real-time, two sided matching and confirmation for credit default swaps, Wynn noted that the service has been an important driver in helping increase automation rates in these products.
According to the International Swaps and Derivatives Association (ISDA), automated confirmation of credit derivatives trades has grown from about 6% in the beginning of 2004 to over 40% by the end of June 2005. DTCC points to this progress in confirming trades as evidence of Deriv/SERV success in helping to bring added efficiency and greater certainty in this market space. @