Press Releases - 2008

GlobeOp creates first automated buy-side payment matching link to DTCC for OTC credit derivatives trades

30 Apr 2008

GlobeOp creates first automated buy-side payment matching link to DTCC for OTC credit derivatives trades

30 April 2008 -- London, UK; New York, USA – GlobeOp Financial Services S.A. (“GlobeOp®”, LSE:GO.) has launched the first automated buy-side payment matching link to the Depository Trust & Clearing Corporation’s (DTCC’s) payment reconciliation service for over-the-counter (OTC) credit default swaps (CDS). The service is offered through DTCC’s Deriv/SERV LLC subsidiary. GlobeOp’s proprietary electronic link - GoPayments™ - increases process automation, which helps to significantly increase efficiency while reducing credit derivative traders’ operational risk associated with manual payment matching.

Traditionally, CDS trades require bilateral reconciliation involving a significant number of manual operations. The absence of industry standards for payment request reconciliation, combined with the continued volume growth of OTC derivative trading, places considerable pressure on payment processing speed and reliability.

According to ISDA operations benchmarking statistics released April 16th, credit derivatives remain the fastest growing class of OTC derivatives at 73 per cent by volume over the past year. According to the Federal Reserve Bank of New York, more than 90 per cent of OTC credit derivatives are now matched and confirmed electronically.

GlobeOp’s GoPayments launch responds to growing demands by hedge fund managers and other derivatives traders for fast, cost-efficient solutions and accurate, automated OTC derivatives trade processing. For instance, because GoPayments transforms trade payment matching turnaround from a multi-day to an intra-day process, counterparty discrepancies are more easily cleared on a daily, rather than weekly, basis.

GoPayments also sets the stage for GlobeOp’s buy-side clients to go live on Deriv/SERV’s central settlement service in 2009. The central settlement service, launched in late 2007, is currently used only by dealers.

“GoPayments’ live link to DTCC Deriv/SERV enables us to automate nearly 145,000 manual payment requests on a quarterly basis on behalf of our clients,” said Vernon Barback, president and COO of GlobeOp. “GoPayments’ centralized database generates and receives bundled requests from all clients linked to Deriv/SERV, eliminating manual processing of individual trades on a per client basis. This innovative service is scalable in terms of the number of clients and trade volume both GlobeOp and Deriv/SERV can accommodate."

He added: "As one of the industry’s leading OTC derivatives trade processors, we continue with GoPayments to further increase process automation and accuracy, which in turn helps to reduce the sector’s processing time and risk of errors. Faster, more reliable and more secure trade processing is an important industry goal as CDSs and other OTC derivatives continue to increase in volume and complexity.

“Deriv/SERV, as the leading automation platform for OTC credit transactions, is pleased to partner with GlobeOp in meeting the buy-side’s need for live linkage to our payment reconciliation service,” said Peter Axilrod, DTCC managing director, business development. “The GoPayments initiative is another example of how Deriv/SERV collaborates with third-party service providers to enhance operating efficiencies and reduce operating risks for market participants.”

Process automation and reduced operational risk were recently highlighted in best practice recommendations and guidelines by the Presidential Working Group in the US, and AIMA and the Hedge Fund Working Group in the UK.

For further information, please contact:

Brunswick Group
London – Leonora Pou, Natalia Erikssen Tel: +44 (0) 20 7404 5959
GoTeam@brunswickgroup.com

Notes to Editors

About GlobeOp Financial Services®
GlobeOp Financial Services ® (LSE:GO.) is a leading, independent financial technology specialist providing automated, integrated middle- and back-office, administration and risk reporting services to hedge funds and asset management firms—including banks, insurance companies, mutual & pension funds and proprietary traders. Clients trading a wide range of asset classes and derivatives outsource to GlobeOp to reduce technology investments and operational risks, and to focus resources on asset generation and portfolio management. Established in 2000, GlobeOp today serves more than 155 clients worldwide, representing $100 billion in assets under management (AuM). With headquarters in London and New York, GlobeOp employs more than 1,750 people on three continents; offices are also located in Dublin, Ireland; George Town, Cayman Islands; Harrison, NY and Hartford, CT, U.S.A.; and Mumbai (Bombay), India. Further information: www.globeop.com

About DTCC
DTCC, through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter (OTC) derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC’s depository provides custody and asset servicing for more than 3.5 million securities issues from the United States and 100 other countries and territories, valued at more than $40 trillion. In 2007, DTCC settled more than $1.8 quadrillion in securities transactions. DTCC has operating facilities in multiple locations in the United States and overseas.
DTCC provides OTC derivatives services through wholly-owned subsidiary DTCC Deriv/SERV LLC. Deriv/SERV provides automated matching and confirmation for OTC derivatives contracts, including credit, equity and interest rate derivatives. According to major market participants, approximately 95% of credit derivatives traded globally are electronically confirmed through Deriv/SERV. Deriv/SERV’s Trade Information Warehouse, launched in November 2006, is the market’s first and only comprehensive trade database and centralized electronic infrastructure for post-trade processing of OTC derivatives contracts over their lifecycles, from confirmation through to final settlement. Deriv/SERV processed 5.9 million OTC derivatives transactions in 2007. Its customer base numbers more than 1,100 firms in 31 countries. For more information on DTCC and DTCC Deriv/SERV, visit www.dtcc.com.