DTCC-Euroclear GlobalCollateral Ltd, a joint venture (JV) of Euroclear and The Depository Trust & Clearing Corporation (DTCC), has announced that financial services company Northern Trust will implement GlobalCollateral’s Settlement Messaging Service. The adoption of the service will streamline Northern Trust’s margin call process, increase transparency through automated collateral settlement tracking, enhance client service and improve custodian communications.
GlobalCollateral’s Settlement Messaging and Tracking Service powered by Margin Transit Utility technology is currently ready for client on-boarding and is anticipated to go live with client collateral movements during the first half of 2017. It will provide straight-through processing to the settlement of margin obligations, as the industry prepares for pending global derivatives regulations projected to create an increase in margin calls and operational complexity.
Mark Jennis, Executive Chairman at GlobalCollateral Ltd, said:
Global derivatives regulation and the resulting increase in collateral calls will require market participants to improve their collateral management processes. It is great to see Northern Trust and other leading global fund administrators recognize the benefits of an automated margin call process, including lower operational risk, increased transparency and improved client and counterparty satisfaction.”
Pete Cherecwich, Americas Head of Corporate & Institutional Services at Northern Trust, added:
Northern Trust looks forward to taking advantage of GlobalCollateral’s Settlement Messaging capabilities. 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.”
Northern Trust plans to offer the Margin Transit Utility service to its clients, based upon demand. Development and deployment timelines will be determined based upon client feedback. When fully implemented, Northern Trust will confirm the underlying clients’ collateral movements with MTU handling the margin call process. MTU would enrich the collateral movement with settlement instructions, delivering those instructions to the appropriate custodian for movement of the collateral, and delivering confirmed settlement details back to Northern Trust and its counterparties. This will provide automated notification that the call has been successfully completed and that the collateral has been received, providing Northern Trust with the information to help to ensure that their clients are fully collateralized.