DTCC and Clearstream enter strategic partnership for loans and collateral management services

The Depository Trust & Clearing Corporation (DTCC) and Clearstream today announced they would establish a strategic partnership to support the bilateral loan (also known as credit claims) and syndicated loan markets. Clearstream will leverage DTCC’s Loan/SERV Reconciliation Service and begin to offer it in the first half of 2012. They will also develop bilateral loan services, which will be built on DTCC’s existing Loan/SERV platform and integrated with Clearstream’s collateral management platform.

DTCC’s Loan/SERV Reconciliation Service automates the reconciliation process and enables agent banks and lenders to view and reconcile syndicated loans on a daily basis. Under the strategic partnership, DTCC and Clearstream will distribute the Loan/SERV Reconciliation Service to existing and prospective clients across Europe, the Middle East, Africa and Asia.

In addition to supporting syndicated loans, DTCC and Clearstream will enhance the Loan/SERV Reconciliation Service to support the processing of European bilateral loans in early 2012. Bilateral loans are loans involving one lender and one borrower, as opposed to syndicated loans which involve one borrower and many lenders.

The partnership also will focus on integrating Loan/SERV’s upcoming bilateral loan module with Clearstream’s collateral management platform. This will enable Clearstream clients to facilitate the mobilization of their bilateral loan portfolios as collateral with their respective national central banks and will extend the potential types of assets to be used as collateral in interbank triparty transactions, according to  the long-standing recommendation of the ICMA European Repo Council (ERC).

Michael C. Bodson, chief operating officer, DTCC, said: “We are pleased to partner with Clearstream on this initiative. The strategic partnership will benefit the customers of both DTCC and Clearstream by bringing together highly complementary strengths and services in loans and collateral management respectively, as well as help expand existing loan services in Europe and elsewhere.”

Jeffrey Tessler, chief executive officer, Clearstream, said: “We are pleased to cover a new asset class with our services and create a new market infrastructure for loans. We are looking forward to partnering with DTCC and to be able to draw on DTCC’s experience of the syndicated loan market. Our goal is to improve the existing syndicated loan service for bilateral loans and enhance it with our collateral management capabilities.”

Loan/SERV Reconciliation Service is a service offering of DTCC Loan/SERV LLC, a subsidiary of DTCC.

About DTCC

DTCC, through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC's depository provides custody and asset servicing for more than 3.6 million securities issues from the United States and 121 other countries and territories, valued at US$36.5 trillion. In 2010, DTCC settled nearly US$1.66 quadrillion in securities transactions. DTCC has operating facilities and data centers in multiple locations in the United States and overseas.

About Clearstream

Clearstream is the post-trade services provider of Deutsche Börse Group. As an international central securities depository (ICSD) headquartered in Luxembourg, Clearstream provides the post-trade infrastructure for the Eurobond market and services for securities from 52 domestic markets worldwide. The company ensures that cash and securities are promptly and effectively delivered between trading parties. It also manages, safekeeps and administers the securities that it holds on behalf of its customers. Over 300,000 domestic and internationally traded bonds, equities and investment funds are currently deposited with Clearstream.

Clearstream’s customers comprise approximately 2,500 financial institutions in more than 110 countries. Its services include the issuance, settlement and custody of securities, as well as investment fund services and global securities financing – Clearstream is the leading service provider in liquidity and collateral management services in Europe with more than 20 years of experience in this field. With almost €11 trillion in assets under custody, Clearstream is one of the world’s largest settlement and custody firms for domestic and international securities.