BlackRock managing director and co-head of market structure and electronic trading Supurna VedBrat said the firm believes that OTC clearing can help to reduce systemic risk and serve as an important mechanism to manage and reduce counterparty exposure for their clients.
"The firm will gradually increase volumes as it moves to initiate clearing across our client base, and the firm has been very pleased with Morgan Stanley’s partnership throughout this process," VedBrat said.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, it is vital for the firms, including BlackRock to clear OTC derivatives for many of their funds over the next 12-18 months.
Both firms BlackRock and Morgan Stanley in conjugation with industry groups and regulators have been working to develop a market structure which serves the interests of all market participants.
Morgan Stanley, which provides global services pertaining to both OTC and Listed Derivatives, currently provides OTC derivative clearing services for credit default swaps at ICE Clear Credit and CME Group as well as interest rate swaps at LCH SwapClear and CME Group.
As of 31 December 2011, BlackRock’s assets under management total $3.513 trillion across equity, fixed income, cash management, alternative investment, real estate and advisory strategies.
