DTCC Connection

May 03, 2010 • DTCC Connection

‘The Risk Mitigator’

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Thought Leadership

This is the title of a recent article in Markets Media magazine, based on an interview with Michael Bodson, DTCC’s executive managing director, Strategy and Business Management.


‘The appreciation throughout the marketplace of what we do in terms of risk mitigation, in terms of systemic risk, in term of delivering cost efficiencies, has increased as a result of the events of the last two years.’Michael Bodson, DTCC executive managing director, Strategy and Business Management


The piece reports on a series of DTCC initiatives that will reduce risk in the market. These include the central counterparty for mortgage-backed securities; New York Portfolio Clearing, the planned joint venture with NYSE Euronext that will allow firms to use "single pot" margining across cash and derivatives trading; the proposal to move the equity trade guarantee to trade date from the current midnight of T+1; and the drive to bring more buyside firms under the DTCC umbrella.


Also discussed in the article are DTCC’s Trade Information Warehouse and regulatory proposals regarding over-the-counter (OTC) derivatives. "We have spoken to regulators globally to explain that a single repository per asset class is essential to their ability to get a full, holistic and standardized view of what’s happening in the credit-default-swap [CDS] market or any other OTC market," Bodson said.


He explained how DTCC lowers risk in the markets "by leveraging our network, by leveraging our systems and our processes. Also, our unique position in the market allows us to aggregate trade information so that the industry and regulators have a single central vantage point across asset classes to see all this exposure." The article describes how DTCC conducts "war game" exercises to prepare for the possible failure of large firms.


"The appreciation throughout the marketplace of what we do in terms of risk mitigation, in terms of systemic risk, in term of delivering cost efficiencies, has increased as a result of the events of the last two years," Bodson noted.


Markets Media is a bimonthly publication with high readership among the buyside. The publication has print circulation of approximately 3,500 and unique visitors to its website of approximately 10,000 monthly.


To read an excerpt of the article, Click Here. @


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