The Depository Trust & Clearing Corporation’s (DTCC) Margin Transit Utility (MTU) community has grown to 50 firms representing thousands of Credit Support Annexes (CSAs), with users including leading dealer and buy-side organisations around the world.Given today’s volatile markets and the increase in margin call demands, coupled with the final phases of uncleared margin rules (UMR) rules for over-the counter (OTC) derivatives, an increasing number of firms are actively looking to replace manual margin call processes with automation. By automating the margin call process, MTU enables firms to efficiently validate, enrich, settle, report and monitor matched collateral calls globally while connecting to and sharing information with multiple counterparties.
“As the markets have experienced unprecedented increases in volatility and margin call demands, we’ve seen firsthand the benefits of MTU and a fully-automated margin call process on our first, recently onboarded accounts,” says Krzysztof Wierzchowski, Director of Global Trade Services at Franklin Templeton, one of the first participant firms to join the MTU community. “The solution has not only enabled us to meet the challenges of today, reducing risk and increasing efficiency at a time of uncertainty, but also positions us well to meet the regulatory demands of tomorrow.”
DTCC’s MTU was created to improve settlement efficiency and reduce operational complexity and risk for collateral call processing. The service includes connectivity from AcadiaSoft’s Margin Manager and DTCC’s ALERT for enriched standing settlement instructions (SSIs), connectivity to custodians and tri-party providers, confirmation of settlement, and standardised end-of-day reporting. It also includes connectivity to a number of complementary collateral offerings, including CloudMargin, VERMEG (Colline) and TriOptima (triResolve Margin).
“MTU aims to deliver a streamlined margin settlement process, automating key processes with our counterparties. Through broader MTU participation we expect this to be integral to our ability to improve efficiency and remove complexity in tying the margin call to the settlement process and speeding reconciliations,” says Rob Marro, Executive Director at Morgan Stanley.
“We are pleased to see the continued adoption of Margin Transit Utility, as firms seek to automate the margin call process at a time of increased margin calls and as UMR phases 5 and 6 loom on the horizon,” says John Straley, Executive Director, Institutional Trade Processing at DTCC. “As a critical market infrastructure provider, our objective is to help firms efficiently comply with upcoming regulation while alleviating the pressures that spikes in margin call volume can bring, especially during today’s volatile markets.”