Euroclear and the DTCC are exploring the creation of an industry utility to streamline margin settlement processes and improve access to collateral across the globe. The two have proposed a joint venture to deliver a collateral processing infrastructure that will build upon their capabilities.
Euroclear and the DTCC have been authorized by their respective boards to finalize negotiations in an effort launch a joint venture.
The first step for the JV will be to launch a Margin Transit Utility (MTU) that will provide straight through processing to the settlement of margin obligations, officials say. The next step will be the piloting of a Collateral Management Utility (CMU) to address the problem of sub-optimal collateral mobility and allocation at a global level.
The MTU will use the development work underway at the DTCC and the CMU pilot will leverage current Euroclear technology. When fully operational, the utilities will be integrated. The JV will operate open architecture services, where DTCC’s and Euroclear’s settlement platforms represent two of many linked settlement locations, officials say. The intention is to extend access to other interested settlement platforms such as central securities depositories, custodians and settlement agents.
Consummation of the joint venture is subject to several conditions, including completion of definitive documentation, final approval from the boards and receipt of any necessary regulatory approvals, officials add.
Need a Reprint?
Leave a Reply