LONDON May 6 Financial markets post-trade
services providers the Depository Trust & Clearing Corporation
(DTCC) and Euroclear have proposed a joint venture that will
simplify the settlement of trades and ease access to collateral,
the two companies said on Tuesday.
The need for collateral - cash or top-quality government
bonds - is expected to rise sharply as new European Union rules
for derivatives require that trades need to be backed by
The reforms put a further strain on banks, which are already
dealing with broader banking regulations forcing them to build
up their capital buffers to withstand any future financial
DTCC and Euroclear's planned tie-up will focus on increasing
automation in the settlement of margin calls - a demand by a
broker that an investor post additional cash to its account -
and will pilot a scheme to improve the mobility of collateral.
The companies intend to extend access to the service to
other settlement platforms.
"Collateral processing continues to become more complex,
with margin calls expected to rise steeply and the need to
seamlessly integrate collateral and spot market settlements
similarly increasing. Firms are actively looking for global
solutions to solve these issues," Michael C. Bodson, president
and chief executive of DTCC.
The launch of the joint venture is subject to several
conditions, including any necessary regulatory approvals, the
(Reporting by Clare Hutchison; Editing by Greg Mahlich)