Euroclear and DTCC to dissolve joint collateral service
15 January 2020 London
Image: Shutterstock
Euroclear and the Depository Trust & Clearing Corporation (DTCC) are calling time on their joint collateral management and margin platform, GlobalCollateral, less than a year after the platform went live.
In a joint statement, the firms confirmed that they will be parting ways as of 10 March but the platform’s products will continue to operate, with DTCC set to integrate Margin Transit Utility (MTU) into its Institutional Trade Processing business and Euroclear becoming the sole owner of the GlobalCollateral entity offering the Collateral Management Utility (CMU).
MTU aims to deliver a streamlined and standardised collateral management service for over-the-counter derivatives transactions and other marginable products, while CMU promises to reduce collateral processing risk and allow for the seamless allocation of securities directly into a counterparty’s collateral account.
The DTCC-Euroclear GlobalCollateral platform was formed in 2014 but only moved beyond its pilot production phase in March 2019 after a delay that was, in part, caused by the initial margin requirements it was meant to offer a service for being pushed back.
The platform was initially pitched as a solution to the market’s demand for collateral management solutions that streamline and automate processes while enabling firms to meet emerging regulations.
Addressing the reasons behind the decision to split, Euroclear says it has been “very pleased with industry receptiveness” to GlobalCollateral’s products but that the joint venture was no longer “the most efficient way to deliver the highest-quality services to support clients”.
Separate spokespersons for DTCC and Euroclear were unable to offer further details on the specific factors that led to this conclusion.
The firms’ written statement went on to say that the two firms “are carefully managing this process to ensure the transition is seamless and that there is no impact to clients,” adding that they will continue to collaborate closely to develop both products further.
According to GlobalCollateral, as of March 2019, users of its MTU product Goldman Sachs, J.P. Morgan, Morgan Stanley, Societe Generale, UBS and Wells Fargo.
At the time, a statement by the platform said the banks joined more than 30 other investment management, administrator and custodian firms, including Brandywine Global Investment Management, Fidelity International, Franklin Templeton, Vanguard and Brown Brothers Harriman, as users of the service.
In a joint statement, the firms confirmed that they will be parting ways as of 10 March but the platform’s products will continue to operate, with DTCC set to integrate Margin Transit Utility (MTU) into its Institutional Trade Processing business and Euroclear becoming the sole owner of the GlobalCollateral entity offering the Collateral Management Utility (CMU).
MTU aims to deliver a streamlined and standardised collateral management service for over-the-counter derivatives transactions and other marginable products, while CMU promises to reduce collateral processing risk and allow for the seamless allocation of securities directly into a counterparty’s collateral account.
The DTCC-Euroclear GlobalCollateral platform was formed in 2014 but only moved beyond its pilot production phase in March 2019 after a delay that was, in part, caused by the initial margin requirements it was meant to offer a service for being pushed back.
The platform was initially pitched as a solution to the market’s demand for collateral management solutions that streamline and automate processes while enabling firms to meet emerging regulations.
Addressing the reasons behind the decision to split, Euroclear says it has been “very pleased with industry receptiveness” to GlobalCollateral’s products but that the joint venture was no longer “the most efficient way to deliver the highest-quality services to support clients”.
Separate spokespersons for DTCC and Euroclear were unable to offer further details on the specific factors that led to this conclusion.
The firms’ written statement went on to say that the two firms “are carefully managing this process to ensure the transition is seamless and that there is no impact to clients,” adding that they will continue to collaborate closely to develop both products further.
According to GlobalCollateral, as of March 2019, users of its MTU product Goldman Sachs, J.P. Morgan, Morgan Stanley, Societe Generale, UBS and Wells Fargo.
At the time, a statement by the platform said the banks joined more than 30 other investment management, administrator and custodian firms, including Brandywine Global Investment Management, Fidelity International, Franklin Templeton, Vanguard and Brown Brothers Harriman, as users of the service.
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