NYPC is a joint venture of Depository Trust & Clearing Corporation (DTCC) and NYSE Euronext (NYX) and it was created to deliver capital efficiencies to the market by netting and reducing risks between a clearing member’s portfolio of cash bonds and derivatives.
Initially, NYPC intends to clear Eurodollar and US Treasury Futures for NYSE Liffe US, the US derivatives exchange of NYSE Euronext.
NYPC provides operational efficiencies that reduce systemic risk and enhance market efficiency, such as the ‘locked-in’ trade delivery process to allow expiring futures to be submitted to FICC for physical delivery.
NYPC CEO Walt Lukken said that NYPC’s DCO registration is an important milestone in the transformation of the US derivatives market towards a more open and competitive structure.
"The innovative operational and capital efficiencies of NYPC’s cross-margining system will be a powerful catalyst for new competition in our industry while increasing transparency and mitigating systemic risk," Lukken said.
In addition, NYPC’s cross-margining arrangement with DTCC’s Fixed Income Clearing is currently under review with the CFTC and the Securities and Exchange Commission.
Pending regulatory approvals, NYPC expects to begin operations in late first quarter of 2011.
