NYSE Euronext and the Depository Trust & Clearing Corp have
finalised plans to develop a new joint venture clearing house,
intended to go live in the second quarter of 2010, subject to
Known as New York Portfolio Clearing, it will offer clearing
services for fixed income securities and derivatives.
The idea was unveiled in June but NYSE and DTCC said on
October 13 that they were in a position to apply for the status
of a designated clearing organisation from the Commodity
Futures Trading Commission.
The joint venture plans to submit its application "in the
coming weeks", at the same time as it sends draft amendments to
the rules of DTCC’s Fixed Income Clearing Corp to
the CFTC and the Securities and Exchange Commission.
The new clearing house will combine NYSE
Euronext’s US futures exchange, NYSE Liffe US,
with the DTCC’s Fixed Income Clearing Corp
The 50-50 joint venture will allow investors to pool margin
calls for fixed income securities and derivatives into one
portfolio, with a single margin call. New York Portfolio
Clearing said this could provide "substantial capital relief to
the industry", while opening the US futures market to "new
"By margining cash and derivatives markets in a single pot,
rather than through existing cross-margining agreements, NYPC
will be the first to bring together cash positions and their
natural derivatives hedge in an open manner, designed to
substantially improve both operational and capital efficiency,"
said the JV partners.
"At the same time, NYPC will increase transparency by giving
regulators a more comprehensive tool to manage and mitigate
systemic risk across asset classes. FICC handled about $4.5tr
of trading each day in the fixed income market in 2008."
The joint venture has been criticised by Neal Wolkoff, chief
executive of ELX Futures, the new exchange which opened in July
and offers US Treasury futures in competition with CME Group.
It was founded by eight banks plus trading firms Breakwater,
Getco and Peak 6 and broker BGC Partners.
Wolkoff said he believed the DTCC-NYSE Euronext venture
would damage competition. "To my knowledge, no SEC-regulated
clearing organisation is allowed to have exclusive
relationships with one partner," said Wolkoff.
However, the joint venture later said the new clearing house
would accept and clear trades from "multiple qualifying trading
platforms and clearing organisations" after an initial trial
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