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by Stuart Z. Goldstein

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OTC Derivatives

DTCC plans to establish a new subsidiary called DTCC Derivatives Repository Ltd, which will maintain global credit default swap (CDS) 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 CDS by establishing identical CDS data sets on two different continents.

“DTCC has always envisaged a ‘global solution’ for repository services supporting each OTC asset class,” said Stewart Macbeth, DTCC managing director and general manager, Trade Information Warehouse. “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.”

London headquarters

DTCC Derivatives Repository Ltd will be headquartered in London under a regulatory application filed with the Financial Services Authority (FSA) in the U.K.

The 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.

The repository 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.

DTCC and the CDS market

DTCC’s current customer base in the credit derivatives market includes all major derivatives dealers and more than 1,700 buyside firms and other market participants located in more than 50 countries and supporting reference entities in 90 countries.

The total gross notional value of the approximately 2.3 million CDS contracts held by DTCC is $25.1 trillion. @