Two of the industry's largest post-trade market infrastructures to develop and streamline margin settlement processes and enhance access to securities collateral worldwide, improving the stability and soundness of financial markets
Brussels/London/New York – September 30, 2014 – The Depository Trust & Clearing Corporation (DTCC) and Euroclear today announced the creation of a joint venture that will leverage both companies’ expertise, technology and franchises, focusing on collateral processing. The newly-created company, DTCC-Euroclear Global Collateral Ltd, will be domiciled in the United Kingdom, and its operations are subject to regulatory approvals.
Ownership and governance of the joint venture company will be shared equally between DTCC and Euroclear with its Board and senior executives drawn from the two firms’ management. Michael Shipton, Euroclear Managing Director and Head of Corporate Technology, will assume the role of Chief Executive Officer of DTCC-Euroclear Global Collateral Ltd, with Mark Jennis, DTCC’s Managing Director, Strategy and Business Development, assuming the role of Executive Chairman. In addition to Messrs Shipton and Jennis, the joint venture company’s Board will include Euroclear’s Jo Van de Velde, Managing Director and Head of Product Management; and Mei Li Powell, Managing Director and Head of Communications, Marketing & CSR; along with DTCC’s Peter Axilrod, Managing Director and Head of Corporate Strategy and Business Development; and Andrew Douglas, Managing Director and Head of Government Relations for Europe and Asia.
The joint venture will bring to market a Margin Transit Utility (MTU) and Collateral Management Utility (CMU). The MTU will provide straight-through processing of margin obligation settlement, leveraging current DTCC infrastructure, as well as additional infrastructure currently in development in coordination with the industry. Industry testing of the MTU is scheduled to begin in mid-2015. The CMU will address the global challenge of sub-optimal collateral allocation and mobility, through utilizing Euroclear’s market-leading Collateral Highway, and will follow the launch of the MTU.
Euroclear Chief Executive Officer Tim Howell said: “We are delighted to be partnered with DTCC in this milestone for our industry. The creation of this joint venture company will deliver to our clients increased efficiency and reduced costs within the highly-fragmented and complex collateral management industry. Firms within the post-trade world span multiple countries, if not continents. By drawing on the combined resources and expertise of two of the largest post-trade infrastructure providers in the world, this strategic partnership with DTCC will play a leading role in addressing the challenge of efficiently allocating and mobilizing capital across the globe.”
DTCC President and CEO Michael Bodson added: “This joint venture reflects DTCC’s and Euroclear’s commitment to delivering global solutions that help safeguard the stability of the financial markets. The company will play a critical role in helping the industry address capital and operational challenges resulting from the vastly increased volume and velocity of margin movements worldwide that are anticipated under regulations promulgated by financial reform legislation such as Dodd-Frank and EMIR. We are pleased to be partnering with Euroclear in the development of an open-architecture venture that will be accessible to market participants from across the globe.”
The joint venture will operate open architecture services thereby facilitating access to other central securities depositories, custodians and settlement agents.
With over 40 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry. From operating facilities, data centers and offices in 15 countries, DTCC, through its subsidiaries, automates, centralizes, and standardizes the post-trade processing of financial transactions, mitigating risk, increasing transparency and driving efficiency for thousands of broker/dealers, custodian banks and asset managers worldwide. User owned and industry governed, the firm simplifies the complexities of clearing, settlement, asset servicing, data management and information services across asset classes, bringing increased security and soundness to the financial markets. In 2013, DTCC’s subsidiaries processed securities transactions valued at approximately US$1.6 quadrillion. Its depository provides custody and asset servicing for securities issues from 139 countries and territories valued at US$43 trillion. DTCC’s global trade repository processes tens of millions of submissions per week. To learn more, please visit www.dtcc.com or follow us on Twitter @The_DTCC.
Euroclear is one of the world's largest providers of domestic and cross-border settlement and related services for bond, equity, ETF and other mutual fund transactions with offices in 15 countries across the globe and links to 46 international markets. Euroclear is a proven, resilient capital market infrastructure committed to delivering risk-mitigation, automation and efficiency at scale for its global client franchise which includes over 100 central banks and supranationals. The Euroclear group includes Euroclear Bank, which is consistently rated AA+ by Fitch Ratings and AA by Standard & Poor's, as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & Ireland. The group settles the equivalent of $782 trillion (€572 trillion) in securities transactions annually representing 170 million domestic and cross-border transactions. The group holds $1.1 trillion (€833 billion) in average daily collateral outstandings, and over $34.5 trillion (€25.2 trillion) in assets for clients. For more information, please visit www.euroclear.com or follow us on Twitter @EuroclearGroup.