Central Counterparty Opportunities
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Central Counterparty Opportunities ACSDA, November 2002 Keith C. Kanaga DTCC. Some Trends Which May Influence CCPs. Increasing market growth Straight Through Processing (STP) needs Technology investment Increasing cross-border flows Multiple listings by issuers Internalization

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Central Counterparty Opportunities ACSDA, November 2002 Keith C. Kanaga DTCC

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Central counterparty opportunities acsda november 2002 keith c kanaga dtcc

Central Counterparty Opportunities

ACSDA, November 2002

Keith C. Kanaga

DTCC


Some trends which may influence ccps

Some Trends Which May Influence CCPs

  • Increasing market growth

  • Straight Through Processing (STP) needs

  • Technology investment

  • Increasing cross-border flows

  • Multiple listings by issuers

  • Internalization

  • Real-time trade guaranty

  • Product expansion, integration

  • Integration of CCPs, CSDs


Focus

Focus

  • Demand for STP

  • Real-time trade guaranty

  • Continuing technology investment


Demand for stp

Demand for STP

  • High labor cost

  • Growth in business volumes

  • Reduced settlement time periods

  • Declining cost of IT hardware

  • Error cost

  • Operational risks


Real time trade guaranty

Real-Time Trade Guaranty

  • Increased volume  increased risk

  • Volatility and market exposure

  • Regulatory concerns re systemic risk

  • Technology as an enabler


Continuing investment in technology

Continuing Investment in Technology

  • Technology enables new solutions, e.g. handhelds, real time trade matching (RTTM), real time risk management

  • New product development

  • Demand for integration of new with existing products


Continuing investment in tech cont d

Continuing Investment in Tech (cont’d)

  • Increasing volumes

  • STP

  • Rapid implementation requirements

  • Competition from third parties


Some opportunities

Some Opportunities

  • The good news – all these play directly to CCP strengths

  • Limitations on achieving success – the cost, finite resources, and effort required to meet these requirements

  • What can we do to improve our chances of success?


Improving our chances of success

Improving Our Chances of Success

  • Integration

    • Already done – CCPs, CSDs, settlement systems, e.g. DTC, NSCC, others

  • Alliances

    • To do – others within same national boundaries, e.g. OCC

    • To do – others across national boundaries; links are a good start


Improving our chances cont d

Improving our chances (cont’d)

  • Systems development

    • Jointly with other CCPs

    • Jointly through third-party providers, such as OM

  • Jointly operated systems – nationally, regionally


Improving our chances cont d1

Improving our chances (cont’d)

  • Opportunities for jointly operated systems

    • Applications Service Provider (ASP)

    • Business Service Provider (BSP)

      • Remote processing, or

      • On-site processing


Benefits of jointly operated systems

Benefits of Jointly Operated Systems

  • Cost reduction

    • Development

    • Operation

  • More rapid implementation

  • Broader range of products supported

  • Business continuity


Benefits cont d

Benefits (cont’d)

  • Brand name retained (private label)

  • Low volume products can be supported cost effectively


Dtcc s plans

DTCC’s Plans

  • Committed to work with other CCPs

    • In U.S.

    • Cross-border

  • Both outsource and provide

  • Partnering with other firms with proven expertise in financial processing


Central counterparty opportunities acsda november 2002 keith c kanaga dtcc

Central Counterparty Opportunities

ACSDA, November 2002

Keith C. Kanaga

DTCC


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