DTCC Seeking Fed Oversight For Trade Information Warehouse
May 28 2009 - 3:57PM
Dow Jones News
The Depository Trust & Clearing Corporation moved Thursday
to have its Trade Information Warehouse for credit derivatives
overseen by the Federal Reserve as the U.S. government tightens
regulation of over-the-counter markets.
The DTCC wants to establish The Warehouse Trust Company under
the supervision of the Fed and the New York State Banking
Department, which together oversee the only U.S. clearinghouse for
credit derivatives, as the New York-based clearing entity looks
ahead to an expanded role in post-trade processing of OTC
derivatives.
A subsidiary is planned for Europe, where the DTCC has discussed
the creation of a Trade Information Warehouse with regulators in
recent months.
The DTCC's push for U.S. oversight follows this month's
announcement of a Treasury-backed plan that would mandate clearing
of standardized over-the-counter derivatives and increase reporting
requirements for market participants.
"It makes sure we're bringing into alignment the infrastructure
we've created so it's consistent with where regulators in the U.S.
and overseas are headed in terms of regulating the marketplace,"
said Stuart Goldstein, spokesman for the DTCC.
The New York-based DTCC launched the Trade Information Warehouse
in November 2006 to record details of U.S. credit default swap
trades, part of a wide-ranging effort to reduce a backlog in
outstanding trades.
Atlanta-based IntercontinentalExchange Inc. (ICE) structured its
credit derivatives clearinghouse, launched in March, as a New York
trust bank regulated by the Fed and the New York State Banking
Department.
The Obama Administration is backing the clearinghouse approach
as a way to reducing systemic risk in over-the-counter markets,
with a central counterparty serving as middle man to bilateral
trades in credit derivatives and other off-exchange
instruments.
The DTCC, a user-owned utility that clears nearly all cash
equity trades in the United States, has pledged to work with all
clearinghouses for over-the-counter trades.
In the U.S., Nasdaq OMX (NDAQ) owns a clearing service for
interest rate swaps, while CME Group Inc. (CME) is readying its own
credit derivatives clearing and trading platform.
-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117;
jacob.bunge@dowjones.com