In a development that further reduces risk in the growing interest rate segment of the over-the counter (OTC) derivatives market, all DTCC Deriv/SERV global dealer customers for interest rates are now processing assignments on the Deriv/SERV platform.

“We expect that dealer take-up of assignments processing for interest rate derivatives will encourage more buyside customers to do the same, benefiting the entire market,” said Bill Stenning, DTCC first vice president, Business Development, DTCC Deriv/SERV.

Assignments, also known as novations, refer to replacing one party of an OTC derivatives contract with another.

Expediting trades

Typically, buyside interest rate derivatives trades involve a large number of assignments and other lifecycle events. And historically, the matching and confirmation of these assignments have been time-consuming and highly manual.

“Processing rates assignments is particularly challenging for market participants because these transactions are more complex and involve more variables than other OTC derivative products,” said Stenning. “Increasing automated processing for assignments will help expedite the legal confirmation for these trades and bring greater certainty and reduced operational risk to the OTC interest rates market.”

A single platform

Deriv/SERV’s automated matching and confirmation service supports a wide range of OTC credit, equity and interest rate products and lifecycle events including assignments, terminations, increases, amendments and exits. Interest rate assignments went live late last year. Deriv/SERV also handles assignment processing for credit and equity derivatives.

“By supporting automation for a full suite of lifecycle events for interest rate, equity and credit derivatives, DTCC Deriv/SERV is responding to customer demand,” said Stenning. “Our customers, especially those on the buyside, seek to consolidate processing of their various OTC derivatives transactions on a single platform, following a single protocol.”

Over the next few months, Deriv/SERV plans to expand the matching and confirmation platform to accommodate other interest rate products. @