1 / 13

DTCC Deriv/SERV Trade Information Warehouse

DTCC Deriv/SERV Trade Information Warehouse. Transformation of Credit Derivatives Market. Rapid, multi-dimensional growth on a global scale Trading volumes; new products; new market participants; secondary market development Rapid spread of automated trade confirmation

ellis
Télécharger la présentation

DTCC Deriv/SERV Trade Information Warehouse

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. DTCC Deriv/SERV Trade Information Warehouse

  2. Transformation of Credit Derivatives Market • Rapid, multi-dimensional growth on a global scale • Trading volumes; new products; new market participants; secondary market development • Rapid spread of automated trade confirmation • Bulk of all trading is now confirmed on an automated basis – both inter-dealer and dealer-to-customer Trends create both concern around post-trade processing and opportunity to mitigate

  3. Growth in Credit Derivatives Market(Notional Value Outstanding) $US Trillions

  4. Spread of Automated Confirmation through Deriv/SERV All major dealers globally use Deriv/SERV Global buy-side take-up* * Includes 2nd tier dealers

  5. Current Bilateral Administration Environment Parties must constantly “sync up” during contract life • Payments, events, margining, etc. • Many manual and duplicative reconciliation/resolution processes (internal and between firms) Each party is hostage to its counterparties’ processing • You’re only as good as your counterparty – your records may be right, but if your counterparty disagrees or doesn’t know, you have a problem • Operating models vary across firms: different processes for different counterparties

  6. Central Trade Information Warehouse Two primary components: • A comprehensive, centralized trade database with the most up-to-date record of each contract • A central processing capability to standardize and automate “downstream” processing of payments and other post-confirm processes • Processing flows automatically from the electronic confirmation environment

  7. Model for Warehouse • Central asset servicing through central securities depositories or listed derivative clearing houses But • NO book-entry DVP services and • NO central counterparty (CCP) credit intermediation Complexities of OTC derivatives demanded a multitude of unique and innovative servicing solutions.

  8. Warehouse Schematic – 1st Phase Market Participants ECNs, e-Checkout Services, AffirmXpress Deriv/SERV Automated Confirmation • Trade Warehouse • Contract Maintenance • Event Processing* • Payment Calculation • Bilateral Netting Back Loading External Data Sources (notional factors, etc.) Automated Funds Transfer Central Funds Settlement Agents * Events include credit events, assignment consents

  9. Warehouse Schematic – Potential Build Out* *Assuming market participant support Market Participants ECNs, e-Checkout Services, AffirmXpress Deriv/SERV Automated Confirmation • Trade Warehouse • Contract Maintenance • Event Processing* • Payment Calculation • Margin Calculation • Bilateral Netting Other Automated Confirm Services Back Loading External Data Sources (add pricing, resets, etc) Automated Collateral Transfer Automated Funds Transfer Central Funds Settlement Agents Central Securities Depositories * Events include credit events, assignment consents, corporate actions

  10. Core Principle – Extensible Design

  11. Participant Cost Savings Processes eliminated: • Verbal or ad hoc trade checkouts • Portfolio substantiation/tie-outs • Bilateral cash flow reconciliation • Assignment e-mail processes • Margin disputes, delays • Investigation of breaks with respect to the above Overhead reduced: • Reduced nostro fees • Efficient collateral processing • Standardized, automated processing for credit (and other) events • More efficient portfolio management (tear-ups, position netting, etc.)

  12. Participant Risk Reduction Correct balance sheet: Achieves immediate contract transparency Reduces risk in: • Reporting (corporate, regulatory, etc.) • Market risk management • Counterparty credit risk management Other risk reduction: • Credit event management (especially multiple credit event scenarios) • Ad hoc reconciliation eliminated • Fully transparent data set • Standard messaging • Similar for other events • Payments always correct and complete • Collateral always correct and complete

  13. User Oversight Global Senior Oversight Group • Established by OTC Derivatives Operations & Planning Committee of DTCC Board • Dealers – Senior personnel from the 14 major dealers • All committed to their European and North American regulators to support this project and undertake other actions regarding reducing operational risk in the credit derivatives market • Other dealers are eligible to participate if they make the same commitments • Buy-Side – Senior personnel from Europe and North America • Where possible, nominated by hedge fund and traditional and asset manager trade associations

More Related