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New York Portfolio Clearing, LLC (NYPC), the new clearing platform for interest rate futures, successfully executed its first physical deliveries of U.S. Treasury futures to DTCC’s Fixed Income Clearing Corporation (FICC) in late June and early July.

NYPC’s “locked-in” trade delivery system submitted $1.275 billion notional in expiring U.S. Treasury futures to FICC on June 30 and July 6. Those trades were then automatically netted with all trades, totaling $2.552 trillion par value, that the member firms cleared with FICC on that day.

NYPC’s locked-in delivery process combined with its “one-pot” margining across proprietary futures and cash portfolios gives market participants significant capital and operational efficiencies across their portfolios.

Ease and efficiency

“We are proud of the successful and orderly completion of our first series of physical deliveries for our U.S. Treasury futures complex,” said Walter Lukken, CEO of NYPC. “All current NYPC customers will benefit from the ease and efficiencies of our locked-in physical delivery processes. We look forward to expanding the universe of market participants that will benefit from the unique capital and operational advancements as we onboard new clearing members in the coming months.”

Tom Wipf, NYPC Board member and global head of Bank Resource Management for Morgan Stanley said, “NYPC’s trade delivery process is a clear improvement in operational mechanics of U.S. Treasury physical delivery that seamlessly integrates the futures and cash fixed income settlement systems. Market participants will substantially benefit from this transparent and efficient innovation.”

Murray Pozmanter, DTCC managing director and general manager, Clearing Services, and chairman of NYPC’s Board of Directors, said, “Besides reducing the collateral requirements for firms by margining in a single pot, the locked-in delivery process is probably the most important benefit we provide to customer firms.This first use of the process went very smoothly and demonstrated to firms, for the first time, the key processing efficiencies and improvements that will help transform the way futures contracts and Treasurys will be processed in the future.”

More on NYPC NYPC is a joint venture of DTCC and NYSE Euronext created to deliver unique capital efficiencies to the market by netting and reducing risks between a clearing member’s portfolio of cash bonds and derivatives, combined with a streamlined delivery process allowing for the seamless netting of futures and cash positions.

NYPC currently clears Eurodollar and U.S. Treasury futures listed on NYSE Liffe US, the U.S. futures exchange of NYSE Euronext.@

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