Skip to main content

by Stuart Z. Goldstein

Related Information

  • NYPC: Reducing Risk and Improving Capital Efficiencies - A Q&A with Walter Lukken, CEO of NYPC

  • SEC Approval for Transformational One-Pot Margining Sets Stage for NYPC Launch

  • After receiving final approval from the Commodity Futures Trading Commission (CFTC) to engage in "one-pot" margining with DTCC's Fixed Income Clearing Corporation (FICC) subsidiary, New York Portfolio Clearing (NYPC) announced plans to launch operations formally on March 21.

    As part of the launch, NYSE Liffe U.S. announced that it will begin trading Eurodollar futures on March 21 and will launch 2-year, 5-year and 10-year U.S. Treasury futures along with U.S. Bond and Ultra Bond futures products on March 28, subject to regulatory filings.

    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. It will also provide important operational efficiencies to its members, including the "locked-in" trade delivery process that allows expiring futures to be seamlessly submitted to FICC for physical delivery.

    In commenting on the CFTC approval, which was announced on March 2, Walter Lukken, CEO of NYPC said, "Today marks a historic day for competition and choice in the futures industry. In receiving these final regulatory approvals, NYPC is now ready to offer unprecedented capital and operational efficiencies to the fixed income markets. While long in the making, I believe NYPC's value will prove worthy of the wait."

    Interest-rate futures traded on NYSE Liffe U.S. will benefit from the powerful capital efficiencies of NYPC's one-pot margining which, for the first time ever, will assess margin across fixed income securities, repos and interest rate futures to more accurately capture the actual risk of a clearing member's portfolio. Additionally, all U.S. Treasury Futures traded on NYSE Liffe U.S. will benefit from an innovative, streamlined delivery process allowing for the seamless netting of futures and cash securities. These innovations provide unique benefits to global futures market participants by reducing the cost, complexity and risk inherent in the traditional trading and clearing model.

    "We thank our members and clients for their unwavering commitment as we have worked in partnership toward planning this revolutionary cross-platform launch," said Lynn Martin, COO of NYSE Liffe U.S. "We are excited to bring real competition and choice to the U.S. futures market through this one-of-a-kind service."

    NYPC's "open access" architecture will enable other derivatives exchanges and clearinghouses to link into the "one-pot" margining system, providing a viable alternative to the dominant vertical clearing model and enabling new entrants to compete in the U.S. futures market. At launch, one-pot margining of cash and futures positions will only be available for the proprietary accounts of common members of NYPC and FICC. @