The Depository Trust & Clearing Corporation (DTCC), the main post-trade market infrastructure for the global financial services industry, has achieved connectivity between its margin transit utility (MTU) and major tri-party agents in the financial industry, including Bank of New York Mellon, BNP Paribas Securities Services, Clearstream, Euroclear, JP Morgan, SIX and State Street.
The MTU enables users to efficiently enrich, settle, monitor and report matched collateral calls globally, while seamlessly connecting to and sharing information with multiple counterparties, including automated instructions for major tri-party agents.
The utility’s tri-party messaging service assists clients in complying with regulatory requirements, such as BCBS-IOSCO’s uncleared margin rules (UMR). A number of clients impacted by the UMR phases 4 and 5, as well as many firms that will fall into scope under UMR phase 6, have or are planning to implement the MTU to achieve seamless connectivity with tri-party agents.
UMR phase 6 is anticipated to bring approximately 700 to 900 firms into scope, the DTCC states, and building connectivity with multiple tri-party agents could prove to be a significant time and resource drain. The MTU’s pre-integrated connectivity and standardized settlement messaging for all major tri-party agents delivers a common infrastructure, eliminating the need for direct builds. Further, the MTU, the DTCC argues, creates efficiencies for tri-party agents by eliminating the need to onboard hundreds of clients in preparation for UMR phase 6.
“The MTU triparty messaging service will create efficiencies for in-scope firms and tri-party agents, assisting in compliance with the regulation and delivering a significant win for the industry,” says Bob Stewart, executive director, institutional trade processing, at the DTCC. “For many firms caught by UMR phase 6, the requirement to onboard to a tri-party venue to receive collateral can be new and unfamiliar. This is where the MTU core features and functionalities deliver a turnkey solution to the industry challenge.”