Chicago, June 13, 2005 The Clearing Corporation ("CCorp") today announced the availability of an integrated over-the-counter (OTC) derivatives clearing and cash market settlement service.
Named "Concero", this service platform will significantly enhance credit risk-management and counterparty settlement services through CCorp's central counterparty (CCP) facilities for commercial and institutional users of the OTC energy, foreign exchange, and financial markets.
Specifically, Concero enhances traditional CCP services by offering:
-Freedom to choose non-exchange execution venues such as bilaterally negotiated and voice or electronically brokered transactions and submit them for clearing; -Lower transaction costs and greater capital efficiencies due to bilateral position offset, portfolio margining and re-use of collateral; -Seamless straight through processing of related derivative and cash market transactions; -Flexible capture of OTC-style trade details; -Risk management and mark-to-market methodologies that extend beyond futures style variation margin; -Broader functionality such as confirmation and billing services for OTC and cash market products.
In certain instances, Concero will also allow market participants to execute the products on multiple marketplaces and realize the efficiency of a single CCP for risk and collateral management.
Importantly, the launch of the new Concero services will not impact CCorp's existing futures market clients. In addition, many of the new Concero services will be made available using existing communication links and will be transparent to customers.
The technology behind the Concero clearing services platform derives from advances in CCorp's industry-leading clearing and trade management technology, including the globally deployed onExchange ECS clearing system. CCorp will use Concero to launch a number of new cleared products in 2005, both as independent CCorp initiatives and also in partnership with marketplace sponsors.
Concero was first deployed earlier this month when North American Energy Credit and Clearing ("NECC") completed the delivery of its first cash-market physical electricity trade on June 7 which had been cleared on June 3. NECC's integrated cash and forward market model is especially suited to the flexibility offered by the Concero services platform. CCorp's previously announced agreement to clear HedgeStreet's binary options products will also use the features of the Concero clearing services platform. CCorp will announce other initiatives as they become available.
Brett Paulson, President and COO of The Clearing Corporation said, "The Concero platform's capability to process various cash market and OTC trades based on each product's unique specifications demonstrates the platform's breadth of functionality to accommodate a broad range of physically and financially settled products, whether they are fixed income, currency, interest rate, credit, commodity or other derivatives. CCorp is focused on packaging these services so that our clearing participants can launch them with minimal system or operational impacts. We will work with our clearing participants to make the new product launches as quick and seamless as possible."
Richard Jaycobs, CEO of The Clearing Corporation added, "CCorp is actively working with commercial and institutional market users to understand how CCorp can add value and differentiate itself from other clearinghouses. The availability of Concero means that CCorp now has the tools to be responsive to those requirements and will establish itself as a pacesetter in product innovation for other clearing organizations." Jaycobs added, "This also demonstrates our commitment to offering our clients the products and services they need to address their cash and OTC market needs rather than require those clients to adhere to more constraining futures market conventions".