NYSE Euronext, DTCC set derivatives clearing house

NEW YORK - NYSE Euronext and The Depository Trust Clearing Corp. said Tuesday they are creating a new fixed income derivatives clearing house to provide a single view of risk across asset classes.

The joint venture, New York Portfolio Clearing, is expected to be operational in the second quarter of 2010 if regulatory agencies grant approval.

Applications are expected to be sent to the Commodity Futures Trading Commission and the Securities and Exchange Commission in the coming weeks.

The new venture has the potential will promote competition by accepting and clearing trades from multiple qualifying trading platforms and clearing organizations, the companies said.

Initially, the new venture will clear interest-rate products traded on the NYSE Liffe U.S. Other exchanges may be added later, according to a statement.

"A sequential rollout has been endorsed by our board and our customers as a prudent strategy to minimize implementation risk and to ensure the success of New York Portfolio Clearing," said Murray Pozmanter, DTCC's managing director of Fixed Income Clearance and Settlement Group.

NYPC will be the first to bring together cash positions and their natural derivatives hedge in an open manner designed to substantially improve both operational and capital efficiency, the companies said.

NYSE Euronext plans to commit a $50 million financial guarantee as an additional contribution to reinforce the safety and soundness of the NYPC default fund.

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