State Street Launches Derivatives Clearing Service
September 07 2011 - 11:24AM
Business Wire
State Street Corporation (NYSE: STT), one of the world’s leading
providers of financial services to institutional investors, today
announced the expansion of its futures commission merchant (FCM)
activities to include the launch of its swaps clearing platform,
enhancing its comprehensive, end-to-end derivatives solution that
includes servicing, custody and accounting, collateral management,
valuation, and risk and analytics.
As the Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank) is implemented, the majority of swap contracts
currently traded Over the Counter (OTC) directly between two
parties will migrate to a centrally cleared environment through
established Central Clearing Counterparties (CCPs). Parties to
these trades will be required to work through an FCM that acts as
intermediary between its clients and the CCP. The new regulations
will also impose collateral requirements and real time reporting
requirements designed to reduce counterparty credit risk and
bolster market transparency.
“As the derivatives markets evolve, we are increasingly aware of
the need for full-service clearing and other services to help
clients realize the benefits of the new derivatives regime, through
enhanced transparency, more open execution platforms and central
clearing,” said Clifford Lewis, executive vice president and head
of State Street’s eExchange business. “State Street is in a unique
position to leverage our award-winning technology platform and
strong client service to benefit our clients in an un-conflicted
way.”
State Street’s clearing capabilities are integrated with its
existing servicing offering, forming a global end-to-end solution
that reduces operational risk through automation of the many stages
of derivatives processing including cash and securities flows
between the middle and back offices, client reporting, valuations,
and the reconciliation of positions. This solution provides clients
with a single source for the reporting of both clearing and
processing related activities. State Street Global Markets, the
investment research and trading arm of State Street, is an FCM and
currently clears futures and options on futures transactions for
clients.
“State Street is committed to providing flexible, customizable
solutions to help our clients navigate an increasingly complex
global market,” said Jeff Conway, executive vice president and head
of Investment Manager Services at State Street. “State Street’s new
derivatives clearing capabilities are a key component of our
derivatives offering, which now includes clearing, end-to-end OTC
and exchange traded derivatives servicing, collateral management,
and independent valuation, providing our clients the option of
either a complete solution for derivatives or a component-based
approach tailored to their specific needs.”
The derivatives clearing offering combines the expertise of
eExchange, a division of State Street Global Markets, and State
Street Global Services. eExchange delivers advanced trading
solutions for foreign exchange, futures, US treasuries, and the
subscription and redemption of money market funds and exchange
traded funds and State Street Global Services provides asset owners
and managers with a wide range of support, from core custody,
accounting, fund administration and shareholder recordkeeping to
complete investment operations outsourcing solutions and servicing
for complex alternative assets like OTC derivatives, private equity
and real estate.
Furthering its thought leadership within the derivatives market,
State Street also launched a new Vision Report, entitled
“Regulatory Reform and the Implications for Derivatives.” The
report examines the current and upcoming changes in the derivatives
market as a wave of new and proposed regulatory requirements begin
to take hold in the United States and around the world. State
Street’s Vision Series addresses key trends and developments
impacting the financial services industry. Previous reports have
focused on technology innovation, pensions, UCITS IV,
exchange-traded funds and sovereign wealth funds. To download a
copy of this Vision Focus report or others in State Street’s Vision
series of in-depth reports, please visit
www.statestreet.com/vision.
About State Street Corporation
State Street Corporation (NYSE: STT) is one of the world's
leading providers of financial services to institutional investors,
including investment servicing, investment management and
investment research and trading. With $22.8 trillion in assets
under custody and administration and $2.1 trillion* in assets under
management at June 30, 2011, State Street operates in 26 countries
and more than 100 geographic markets worldwide. For more
information, visit State Street’s website at
www.statestreet.com.
*This AUM includes the assets of the SPDR Gold Trust (approx.
$58 billion as of June 30, 2011), for which State Street Global
Markets, LLC, an affiliate of State Street Global Advisors serves
as the marketing agent.
This document is not intended to suggest or recommend any
investment or investment strategy and does not constitute
investment research. Products and services outlined in this
document are offered to professional investors through State Street
Global Markets, LLC, which is a member of the National Futures
Association, FINRA, SIPC and the New York Stock Exchange, and are
intended for institutional clients in the US or other
jurisdictions. This information is not intended for and must not be
used by Retail or other similar private investors. Futures trading
is speculative and involves risk of substantial loss. The valuation
of futures and options may fluctuate and as a result clients may
lose more than the amount originally invested and may have to pay
more later. Additionally, trading futures in foreign markets
carries particular risks due to fluctuations in the currency
exchange rate and differences in regulatory protection. Investments
in futures may not be suitable for all investors.
State Street Global Markets, LLC is a wholly owned subsidiary of
State Street Corporation. The references in this document to State
Street or State Street Corporation may include State Street
Corporation and any of its affiliates. The products and services
may not be available in all jurisdictions.
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