Euroclear and The Depository Trust & Clearing Corporation have signed a memorandum of understanding to create a joint collateral processing service.

The service is designed to increase efficiency, reduce risk and support the growth collateral needs of industry participants.

The joint services will offer automatic transfer and segregation of collateral based on agreed margin calls relating to over-the-counter derivatives and other collateralized contracts. 

The joint service will be operated as an industry cooperative and will provide open and non-discriminatory access to all other providers that wish to link their servicers to the joint service. 

“As demand for collateral increases, both DTCC and Euroclear are each developing our own means to ease collateral sourcing and mobilisation for clients,” said Tim Howell, CEO of Euroclear.

He added, “Euroclear’s global Collateral Highway is a key part of our strategy to deliver such an infrastructure. We are delighted to work with DTCC and its clients to optimise the use of our collateral inventories as part of a new, joint service.”