Both Euroclear and DTCC are industry owned and governed, and the firms will collaborate with market participants as solutions are developed.
The joint venture will initially focus on launching a margin transit utility (MTU) that will provide straight through processing to the settlement of margin obligations and piloting a collateral management utility (CMU) to address the pressing problem of sub-optimal collateral mobility and allocation at a global level.
The MTU service has already received significant interest from the industry. The MTU will take advantage of development work being undertaken by DTCC and the CMU pilot will use current Euroclear technology.
When fully operational, the utilities will be integrated to provide a seamless front-to-back collateral processing platform.
The joint venture will operate open architecture services, where DTCC’s and Euroclear’s settlement platforms represent two of many linked settlement locations. The intention is to extend access to other interested settlement platforms such as central securities depositories, custodians and settlement agents.
Tim Howell, CEO of Euroclear, said: "We are delighted to be partnering with DTCC on this important evolution of the post-trade industry.”
“In bringing together two of the industry's largest post-trade market infrastructures, we will be addressing sub-optimal collateral mobility and allocation issues by creating the biggest open architecture collateral processing ecosystem, accessible to all market participants across the globe.”
Consummation of the joint venture is subject to several conditions, including completion of definitive documentation, final approval from the Boards and receipt of any necessary regulatory approvals.