DTCC Sets Stage for Global Standardization of Data
July 1, 2010
The Depository Trust & Clearing Corporation Thursday took two steps to establish itself as the standards-bearer for collection and distribution of global counterparty data and over-the-counter derivatives data.
The umbrella organization for clearance and settlement of U.S. transactions said it acquired Avox,a global corporate entity information provider, from founders Ken Price and Steve French as well as majority owner Deutsche Borse.
Separately, DTCC also said that it will establish a London-based trade reporting repository which will maintain global credit default swap data identical to that held in its New York based-Trade Information Warehouse. The twin repositories will allow regulators on both sides of the Atlantic to have access to identical information, avoiding the danger of mismatching data that could emerge with regional warehouses. Bolsas y Mercados Espanoles, the operator of Spain’s stock exchange and derivatives market, already has announced plans to create a European repository which would expand beyond interest rate swaps.
"It is very common for counterparties to be located on different continents and to trade on underlying securities issued across borders,’’ said Stewart Macbeth, general manager of the Trade Information Warehouse, in a statement issued Thursday. “This means that repositories for any asset class need to maintain global information to be useful. It also means that steps need to be taken to ensure that the data is always available to regulators globally regardless of events and circumstances taking place in one location or another."
The acquisition of Avox is a natural fit with DTCC’s strategy to provide its customers – financial services firms—with a full set of data. “DTCC already offers corporate action and reference data through separate services so integrating corporate action data with reference data and Avox’s business entity data allows its participants to benefit from a single consolidated source of information,” said Patrick Kirby, managing director of DTCC’s asset services business who will be in charge of the Avox subsidiary.
Price and French will continue to head up Avox, now a subsidiary of DTCC , as chief executive officer and chief operating officer, respectively. DTCC did not specify the pricetag for the takeover of Avox, which provides two services. One is a fee-based service which scrubs business entity data provided by its customers to create an accurate golden copy for them by comparing it to authoritative sources. Customers include Citigroup, Barclays Capital, Nomura International, Standard Bank, Mizuho, Allianz, Eurex, Mitsubishi UFJ and Royal Bank of Canada.
The second service is the delivery of a subset of business entity data records on a wiki, a collaborative database accessed over the World Wide Web. Financial firms logging onto Avox’s free service at www.wiki-data.com will find basic information on more than 300,000 business entities and an Avox-created identifier known as AVID.
“The need for accurate, well-maintained reference data on securities and legal entities is a growing priority for the financial services industry, to help manage credit exposure, meet new regulatory compliance requirements and to improve transparency from the issuer to the end investor” said Kirby.
One likely outcome: corporate actions and reference data administered by DTCC could link into Avox’s business entity data. Corporate action notices – typically about corporate reorganizations – can easily affect a business entity and the securities it issues. DTCC already links information on corporate actions to its securities master file service.
