Operations to start on March 1st, 2010. The Depository Trust & Clearing Corporation (DTCC) announced today that the Federal Reserve Board had approved its application to establish a DTCC subsidiary that is a member of the Federal Reserve System to operate the Trade Information Warehouse (Warehouse) for over the-counter (OTC) credit derivatives.
The new DTCC subsidiary will be called the Warehouse Trust Company LLC (Warehouse Trust). Its regulation is an important step forward in furthering regulatory and industry objectives to bring greater transparency and added risk mitigation to the global OTC credit derivatives market. While the Warehouse Trust will be directly regulated by the Federal Reserve and the New York State Banking Department, it is also expected to be subject to a global cooperative oversight framework involving other U.S. and non-U.S. regulators. DTCC fully supports such a cooperative oversight framework and embraces the concept of regulatory harmonization across borders.
Working Towards a Global Cooperative Oversight Framework
"As the operator of the global processing infrastructure and trade repository for the OTC credit derivatives market, DTCC is committed to working with regulators and market participants worldwide to protect the safety and soundness of the OTC derivatives market," said Peter Axilrod, DTCC managing director for New Business development."In establishing the Warehouse Trust as a regulated entity, our aim is to ensure that regulators, wherever they are located, have unfettered access to the information they need to assess risk exposure in this global market, and that industry participants have the assurance of that regulatory oversight over the critical infrastructure that supports their market activities."
The Trade Information Warehouse provides a wide array of automated downstream processing services for recorded contracts, including the netting and settlement of credit default swap (CDS) payment obligations in multiple currencies (through a partnership with CLS Bank International), processing of credit events (such as bankruptcies) and so-called "successor" events such as mergers, acquisitions and reorganizations. The Warehouse today contains virtually all OTC credit derivatives traded worldwide.