GFI, Icap and Tullett collaborate with DTCC on credit derivatives

Inter-dealer brokers GFI, Icap and Tullett Prebon have come together to launch what they call a 'multi-broker electronic checkout service' in conjunction with the Depositary Trust & Clearing Corporation (DTCC). Initially deployed as a one-year pilot scheme, the service will be available for credit default swaps (CDS) and will become available for other over-the-counter (OTC) derivatives at a later stage. It is expected to go live in January 2006.

New York-based DTCC will provide a single centralised hub for the integration of dealers’ trade capture systems with the brokers, where the dealers can review, verify and affirm CDS trade information. At their discretion, they will also be able to submit trades to DTCC Deriv/SERV, which creates a legal confirmation immediately after verification of trades.

The service will initially work with single name CDS and index products, but the participants expect it will also eventually tackle other OTC derivatives, including interest rate swaps and swaptions and equity derivatives. The brokers say they will offer the service at no charge to the dealers and will bring aboard other inter-dealer brokers after the one-year pilot period comes to an end.

“These banks can now process the bulk of the trades they do on the market with one protocol, one system and in one location,” said Michael Fuhrman, GFI’s head of e-trading in New York. “At the end of the working day, they won’t have to come to GFI to check their trades and then move to another broker to do another. It will reduce the workload for both dealers and brokers alike,” he added.