DTTC's Credit Derivatives Operations in FED System

[Kathy Shwiff]

DTTC's Credit Derivatives Operations Allowed To Join Fed System


DOW JONES NEWSWIRES

The Federal Reserve has approved the credit-derivative clearing operations of Depository Trust & Clearing Corp. to become part of the central bank system.

Warehouse Trust Co. in November received approval from the New York State Banking Board for the operations, which will begin soon. Among other functions, it will settle credit-default-swap payment obligations in multiple currencies and process credit events--such as bankruptcies--and "successor" events like mergers, acquisitions and reorganizations.

Warehouse, which contains virtually all over-the-counter credit derivatives traded worldwide, will be directly regulated by the Fed and the New York State Banking Department and also will be overseen by other U.S. and international regulators.

DTCC Chief Executive Donald Donahue has been calling for a single central repository for credit and other OTC derivatives to help regulators have direct access to trade information. In July, he told the U.S. Chamber of Commerce that it's vital to have data on the trades stored in one central location.

The DTCC, a leading processor of mutual funds and insurance transactions, was approved last week to have Warehouse operate a central trade registry for credit default swaps.

-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; [e-mail]