Rather than use an existing Depository Trust & Clearing Corp. (DTCC) service, a group of Wall Street's biggest firms is tapping Clearing Corp. (CCorp) to operate a centralized clearinghouse for over-the-counter derivatives. The idea, say sources close to the situation, is to assuage regulatory concerns, limit risk and ensure continued dealer leverage over pricing in the booming sector.
While DTCC's Deriv-Serv has the necessary processing mechanisms and data, the dealers, according to sources, decided they could both satisfy regulators and protect their bid-offer spreads and share of the $62 trillion credit default swaps (CDS) market by tightly controlling the development of clearing services.
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