Euroclear Bank’s DerivManager links with DTCC’s Deriv/SERV Trade Information Warehouse

19 May 2008

Euroclear Bank has today launched a link between its DerivManager OTC derivatives service and the Depository Trust & Clearing Corporation’s (DTCC) Trade Information Warehouse, a service offering of DTCC’s Deriv/SERV unit that currently covers over-the-counter (OTC) credit derivatives contracts. DerivManager aims to both minimise counterparty disputes involving trade valuation and optimise collateral usage to cover exposures arising from all types of OTC derivatives contracts.

With the launch of the DerivManager link, Euroclear Bank clients that are also customers of DTCC’s Deriv/SERV and the Trade Information Warehouse may elect to transmit relevant credit derivatives trade data automatically from the Warehouse’s trade database to DerivManager in order to compare and manage exposures with their trading counterparties. Based on the Deriv/SERV Warehouse’s trade data, and on valuation data supplied by Euroclear Bank clients for all types of derivatives trades, DerivManager identifies and reports on a daily basis any exposure discrepancies between counterparties to these trades. DerivManager also provides clients with aggregated views of all their derivatives trade exposures, facilitating the allocation of collateral to cover these exposures.

Furthermore, DerivManager clients may outsource the management of collateral needed to fulfil obligations determined by DerivManager to Euroclear Bank, Europe’s leading triparty collateral management agent. Matthew Flanigan, First Vice President, Merrill Lynch Global Markets and Investment Banking Services and a member of the Operations Management Group (OMG), a senior industry leadership group comprised of OTC derivatives operations professionals, said: “We welcome this collaboration between Euroclear Bank and DTCC. There is a significant need for greater transparency, interoperability, flexibility and automation in managing bilateral OTC derivatives trade processing and exposure management. The combined efforts of Euroclear Bank and DTCC to remove uncertainty and reduce risks in these domains help to alleviate concerns in the market and within regulatory circles, while safeguarding the environment for growth.”

Pierre Yves Goemans, Managing Director, Product Management, at Euroclear, said: “Euroclear and DTCC share a common goal: to provide a safe, efficient processing environment for the global OTC derivatives market. By linking DerivManager with the DTCC’s Trade Information Warehouse used by Deriv/SERV clients, we are helping our mutual customers manage rising trade volumes while reducing post-trade risks.”

With a customer base of more than 1,100 dealers and buy-side firms in 31 countries, DTCC Deriv/SERV has the OTC derivatives market’s largest community of users. Deriv/SERV provides automated matching and confirmation for OTC credit, interest rate and equity derivatives transactions. The Deriv/SERV Trade Information Warehouse’s global trade database now contains the legal, or ‘golden’, copies of approximately 3 million OTC credit derivatives contracts.

“We are excited about the link between the Deriv/SERV Warehouse and Euroclear’s DerivManager,” said Peter Axilrod, Managing Director, Business Development, at DTCC. “We believe the link will benefit our mutual customers by increasing operating efficiencies and reducing operating risks.”

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