Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, June 18, 2009

NYSE Euronext & Depository Trust Create Joint Venture for Clearing U.S. Fixed Income Derivatives

NYSE Euronext and The Depository Trust & Clearing Corporation today agreed to create a joint venture for clearing U.S. fixed income derivatives. The new clearing house, New York Portfolio Clearing , “NYPC”, will combine the capabilities of NYSE Euronext’s U.S. futures exchange (NYSE Liffe U.S.) and DTCC’s Fixed Income Clearing Corporation (FICC) to offer risk management, clearing and settlement efficiencies for U.S. fixed income securities and derivatives. The initiative has been approved by the Boards of both companies and is expected to be operational in the second quarter of 2010, subject to definitive documentation and regulatory approval.

NYSE Euronext and DTCC have entered into an exclusive arrangement to pursue a 50/50 joint venture.  NYSE Euronext plans to commit a $50 million financial guarantee as an additional contribution to reinforce the safety and soundness of the NYPC default fund.

Pending Registered Derivatives Clearing Organization status approval from the U.S. Commodity Futures Trading Commission as well as other required regulatory approvals, NYPC initially will clear interest rate products traded on NYSE Liffe U.S.  , with the ability to add other exchanges in the future.  NYPC will be powered by NYSE Euronext’s market leading clearing technology, TRS/CPS , which currently facilitates member position management for the NYSE Liffe market in London and ICE Clear Europe. DTCC will provide FICC’s market-leading capabilities in risk management, settlement, banking and reference data systems.

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