27 July 2016
Reporter: Stephanie Palmer

New mandate for Euroclear-DTCC collaboration

Northern Trust has adopted the margin settlement service offering of GlobalCollateral, the joint venture between Euroclear and the Depository Trust & Clearing Corporation (DTCC).

The GlobalCollateral Settlement Messaging Service automated collateral settlement tracking in a bid to improve custodian communications and client service.

By removing the manual processes involved in the margin call procedure, it is intended to improve collateral movement with settlement instructions.

The service delivers instructions to the appropriate custodian and sends confirmed details back to Northern Trust and its counterparties. It also provides automated notification of completion and receipt.

According to GlobalCollateral, the service was launched as a response to global derivatives regulations that are likely to create an increase in margin calls, and operational complexity.

It is intended to improve operational efficiency, reliability and transparency, while also generally streamlining the process. Northern Trust intends to go live with the service in the first half of 2017.

Mark Jennis, executive chairman at GlobalCollateral, said: “Global derivatives regulation and the resulting increase in collateral calls will require market participants to improve their collateral management processes.”

He added: “It is great to see Northern Trust and other leading global fund administrators recognise the benefits of an automated margin call process, including lower operational risk, increased transparency and improved client and counterparty satisfaction.”

Pete Cherecwich, head of corporate and institutional services for the Americas at Northern Trust, said: “We believe that one of the keys to excellent client service is to take advantage of new and innovative technologies, especially those that not only create operational efficiencies and improved risk management, but can also enable us to provide increased transparency to our clients.”

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