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DTCC Launches Equity Derivatives Reporting Repository, Gains FSA Approval for UK Subsidiary

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Following its announcement last month that it would be establishing a European-based derivatives trade reporting repository, the Depository Trust & Clearing Corporation (DTCC) has indicated that it has gained the approval of the Financial Services Authority (FSA) to establish the required UK subsidiary to launch a repository on European shores. DTCC has also launched its Equity Derivatives Reporting Repository (EDRR) in the US market, which will hold key position data, including product types, notional value, open trade positions, maturity and currency denomination for participants’ transactions, as well as counterparty type. Both moves should strengthen the vendor’s utility pitch for the reference data space, should it choose to go down this route, following its acquisition of Avox last month.

The building of the EDRR repository follows a competitive request for proposal process led by the International Swaps and Derivatives Association (ISDA) last year, and all of the 14 global market dealers are now live on EDRR.

The service is initially supporting OTC equity derivatives including options; equity, dividend, variance and portfolio swaps; contracts for difference (CFDs); accumulators and other structured products. The idea is that by aggregating and maintaining the data, DTCC’s EDRR will generate reports that keep industry participants and regulators up to date on the industry’s outstanding notional and positions as well as other position related information through a single, secure portal.

The new European subsidiary, DTCC Derivatives Repository has received approval to operate as an FSA regulated service company. This new subsidiary will jointly house the global equity derivatives repository and will maintain global credit default swap (CDS) data identical to that maintained in its New York based Trade Information Warehouse. According to the DTCC, the move is, in part, intended to help ensure that regulators globally have secure and unfettered access to global data on CDSs by establishing identical CDS data sets on two different continents.

“It is very common for counterparties to be located on different continents and to trade on underlying securities issued across borders,” explains Stewart Macbeth, managing director and general manager of the Trade Information Warehouse. “We felt that steps needed to be taken to ensure that the data is always available to regulators globally regardless of events and circumstances taking place in one location or another.”

Another by-product of these moves is that in its role as a data repository for these new markets, the DTCC will have direct access to a store of the related reference data. As noted recently by Darren Purcell, European director for Cusip Global Services (CGS), which is partnering with new DTCC subsidiary Avox on entity identifiers, its position as a market infrastructure could also strengthen its pitch to the US and European market as a neutral reference data utility provider.

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