DTCC set to launch automated payment reconciliation service

Payment reconciliation is the comparison - but not actual settlement - of payments due to and from trading partners on outstanding OTC derivatives trades. A dozen dealers last year successfully tested the new service with five currencies and a number of derivatives products. These included credit default swaps (CDS), the fastest growing category of OTC derivatives, according to DTCC.

The DTCC also plans to improve its platform by April to allow members to conduct assignments and partial terminations of CDS.

DTCC’s Deriv/SERV platform was launched in July, and is the first CDS matching service operating on a global basis, according to the DTCC. It claims 10 of the largest international dealers as customers, with further recruits expected. Close to 100% of the trades completed between these institutions since November were conducted on the automated system, said Janet Wynn, general manager for OTC derivatives at the New York-based company.

The moves follow calls from the International Swaps and Derivatives Association for the automation of all major derivatives product classes by 2006. “We believe the recommendations announced by Isda will help move OTC derivatives automation ahead that much faster, and we applaud their leadership,” said Peter Axilrod, the DTCC’s managing director of new business development.