Northern Trust to leverage GlobalCollateral Ltd’s margin settlement messaging service
Global fund administrator adopts solution to increase transparency, enhance client service and improve custodian communications
Brussels/London/New York/Chicago – 26 July 2016 – DTCC-Euroclear Global Collateral Ltd, a joint venture (JV) of Euroclear and The Depository Trust & Clearing Corporation (DTCC), today announced that Northern Trust, one of the world’s largest fund administrators, will implement GlobalCollateral’s Settlement Messaging Service. The adoption of the service will streamline Northern Trust’s margin call process, increase transparency through automated collateral settlement tracking, enhance client service and improve custodian communications.
GlobalCollateral’s Settlement Messaging and Tracking Service powered by Margin Transit Utility technology is currently ready for client on-boarding and is anticipated to go live with client collateral movements during the first half of 2017. It will provide straight-through processing to the settlement of margin obligations, as the industry prepares for pending global derivatives regulations projected to create an increase in margin calls and operational complexity.
“Global derivatives regulation and the resulting increase in collateral calls will require market participants to improve their collateral management processes,” said Mark Jennis, Executive Chairman at GlobalCollateral Ltd. “It is great to see Northern Trust and other leading global fund administrators recognize the benefits of an automated margin call process, including lower operational risk, increased transparency and improved client and counterparty satisfaction.”
“Northern Trust looks forward to taking advantage of GlobalCollateral’s Settlement Messaging capabilities,” said Pete Cherecwich, Americas Head of Corporate & Institutional Services at Northern Trust. “We believe that one of the keys to excellent client service is to take advantage of new and innovative technologies, especially those that not only create operational efficiencies and improved risk management, but can also enable us to provide increased transparency to our clients.”
Fund administrators who support the buy-side community are leading efforts to revolutionize the way collateral is processed. Today, fund administrators often use manual processes in the margin call process, creating risk, limiting collateral settlement transparency and requiring frequent one-on-one communications with their custodian banks. Margin Transit Utility provides administrators with a better way to service their clients globally while increasing operational efficiency, settlement certainty and transparency as margin call volumes increase.
Northern Trust plans to offer the Margin Transit Utility service to its clients, based upon demand. Development and deployment timelines will be determined based upon client feedback. When fully implemented, Northern Trust will confirm the underlying clients’ collateral movements with MTU handling the margin call process. MTU would enrich the collateral movement with settlement instructions, delivering those instructions to the appropriate custodian for movement of the collateral, and delivering confirmed settlement details back to Northern Trust and its counterparties. This will provide automated notification that the call has been successfully completed and that the collateral has been received, providing Northern Trust with the information to help to ensure that their clients are fully collateralized.
DTCC-Euroclear Global Collateral Ltd (“GlobalCollateral”) is a joint-venture between DTCC and Euroclear, two of the world's largest post-trade infrastructures. An open architecture infrastructure designed to streamline collateral processing globally, GlobalCollateral provides both OTC derivatives and financing solutions that deliver transparency, collateral mobility, efficiency and security through two powerful utilities:
The Margin Transit Utility: enabling straight-through processing of margin calls and providing improved liquidity and operational risk management.
The Collateral Management Utility: automating collateral management tasks, re-positioning inventory seamlessly across settlement locations, making collateral available wherever and whenever it is needed.
For more information, visit: www.globalcollateral.net
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, and affluent families and individuals. Founded in Chicago in 1889, Northern Trust has offices in the United States in 19 states and Washington, D.C., and 22 international locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2016, Northern Trust had assets under custody of US$6.4 trillion, and assets under management of US$906 billion. For more than 125 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit northerntrust.com or follow us on Twitter @NorthernTrust.
Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/disclosures.
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DTCC: Kristi Morrow
+1 617 880 6770
DTCC: Melissa Rowling
+44 (0)207 324 5490
Euroclear: Craig MacDonald
+44 (0) 207 849 0315
Northern Trust: Tim Hacker
+1 312 557 6090