The Clearing Corporation, and the Depository Trust & Clearing Corporation have signed an agreement that facilitates central counterparty services for the over-the-counter derivatives marketplace.
Under the agreement, CCorp members will benefit from CCorp’s netting and risk management processes and will leverage the asset servicing capabilities of DTCC’s Trade Information Warehouse. The Warehouse is a global repository and centralized post-trade infrastructure for servicing OTC credit derivatives contracts throughout their multi-year lifecycles.
The agreement with DTCC will allow CCorp members to utilize CCorp as the central counterparty guarantor for OTC contracts in credit derivatives while continuing to utilize the Warehouse as the “golden” record for net open positions and for post trade event processing.
The initiative is targeted to launch in third quarter of this year and will be fully implemented in several product specific phases in 2008-2009.
CCorp’s
CDS clearing initiative will be open to all qualified clearing participants that satisfy CCorp’s requirements relating to credit worthiness and experience in the CDS market. At present, CCorp’s clearing participants hold a significant portion of the positions in this marketplace.
At first, the clearing initiative will support CDX North American High Yield and Investment Grade indices. CDS products such as iTraxx indices, index tranches, and single name products are scheduled for subsequent roll outs throughout 2008 and 2009.
