DTCC Connection

Jun 01, 2010 • DTCC Connection

DTCC Pilot Tests OTC Equity Derivatives Reporting Repository

by Judy Inosanto


DTCC is pilot testing its soon-to-be-launched over-the-counter (OTC) Equity Derivatives Reporting Repository (EDRR) in preparation for going live with the new service at the end of July. The creation of this repository is part of commitments to improve market transparency made by major dealers, buyside firms and industry trade associations in their June 2009 letter to global regulators.


“Launching the OTC Equity Derivatives Reporting Repository is a critical step in the industry’s efforts to strengthen its operational infrastructure and bring greater clarity and understanding to a broader range of OTC derivatives instruments,” said William Stenning, managing director, DTCC Deriv/SERV Business Development. “DTCC’s global repository for credit default swaps [CDS] clearly demonstrates the value these types of data services deliver for assessing market risk and providing an accurate picture of the size and scope of this market.”


Upon launch, DTCC anticipates having 16 dealer and buyside organizations across the globe live on the EDRR, with more firms coming on board in the following months.


How EDRR will work

The EDRR will hold in its central registry key position data, such as product types, notional value, open trade positions, maturity and currency denomination for participants’ transactions.


OTC equity derivatives products initially supported by the service include options; equity, dividend and portfolio swaps; CFD (contracts for difference); accumulators and other structured products. Stenning noted that DTCC will provide a report on this transaction data to regulators and participating firms on a monthly basis.


Participating firms are responsible for loading all their open third-party positions in the repository. DTCC will be responsible for managing this data, and providing reports to regulators and participants via its website.


Technology and experience

“In building the equity repository, DTCC leveraged the existing infrastructure and automated processing services that had already been established for OTC derivatives trading to suit the specific needs of the OTC equity derivatives asset class,” said Andrew Green, vice president, DTCC Deriv/SERV Business Development.


Different from the CDS Warehouse, which offers a full suite of repository and lifecycle event processing services, the EDRR will offer only position recording and reporting services, which aligns with the industry’s primary focus in developing this repository.


Green said, however, “The develop-ment and growth of the EDRR continues to evolve and can be extended to suit industry and regulatory needs.”


DTCC drew on the knowledge gained in creating the CDS repository and its close collaboration with market participants, regulators and MarkitSERV to ensure the global service was brought to market in nine months. @


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