Commerzbank and Clearstream announced on 9 September a strategic partnership offering their clients increased efficiency, reduced risk and seamless processing to cleared and uncleared OTC derivative transactions. The new TradeCycle service will be launched in Q4 2013 and is the first integrated service of its kind. The joint offering will provide clients access to an integrated management solution for the OTC derivative trade lifecycle: from trading to clearing, settlement and custody, including key services such as advisory, valuation, and collateral management. Market participants will benefit from an end-to-end solution for the handling of OTC derivatives which will allow them to minimise operational inefficiencies, funding costs, enhance yield and improve their risk management as well as being prepared for future regulatory requirements such as EMIR or MiFID/ MiFIR.
Derivatives trading and market infrastructures have been brought to the forefront of regulatory attention and regulators have set in motion mandatory requirements which financial institutions and corporates will have to meet. As the market becomes more fragmented, it is not uncommon for clients to engage with a large number of banks and vendors to complete one single transaction, leading to increased costs and inefficiencies. TradeCycle will simplify this process for clients by managing all their OTC derivatives trades across the entire value chain from one single point of access.
Nikolaus Giesbert, Divisional Board Member for Fixed Income & Currencies at Commerzbank Corporates & Markets commented: “Regulatory requirements increase the complexity in the day to day business of financial institutions and corporates and there is growing demand for streamlined services. Clients with too many vendors engaged in OTC derivative transactions risk significantly higher funding expenses. Our holistic TradeCycle solution and effective collateral management strategies reduce operational inefficiencies and costs.”
Stefan Lepp, Member of the Executive Board and Head of Global Securities Financing at Clearstream, said: “For the first time, a bank and an independent infrastructure provider are partnering to offer an end-to-end derivatives solution for the industry. The offering is tailor-made, aimed at tackling market inefficiencies, saving funding costs and reducing overhead costs. Such partnership models allow us to meet the needs of the market participants in a very short time-to-market. TradeCycle will provide significant relief to our mutual clients in light of the upcoming regulatory challenge.”