DTCC Connection

Mar 02, 2009 • DTCC Connection

Service Description for Central Counterparty (CCP) for Mortage-Backed Securities – The Next Steps

Executive Summary

The Fixed Income Clearing Corporation (FICC), a subsidiary of The Depository Trust & Clearing Corporation (DTCC), working with its members, has identified a strategy to align the services provided by its Mortgage-Backed Securities Division (MBS) with a central counterparty (CCP) model of settlement.

Given the complexity in moving from a bilateral settlement process that does not involve FICC to settlement directly with FICC as the CCP, FICC and its members agreed upon a multi-phased development approach, leveraging existing infrastructure as much as possible in order to minimize development efforts. The first two stages of the development, introduction of a Specified Pool Trade (SPT) service and creation of a Pool Substitution service for FICC’s Electronic Pool Notification (EPN) system were rolled out in June, 2007 and January, 2008 respectively. It is anticipated that this third phase, which will introduce a Pool Netting service with FICC as the trade guarantor on all matched trades and the novated counterparty on eligible pool obligations, will begin its pilot production in Q2, 2009, with full production availability by the end of Q3, 2009. As we move toward the realization of these initiatives, FICC would like to take this opportunity to introduce to our members the next steps of the CCP development initiative.

Download the White Paper: Service Description for Central Counterparty (CCP) for Mortage-Backed Securities – The Next Steps

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