Broadridge Financial Solutions (NYSE:BR) today announced that it has become the first service provider to be certified as fully-compliant by the Fixed Income Clearing Corporation (FICC), a subsidiary of The Depository Trust & Clearing Corporation (DTCC), for implementation of the FICC's new Central Counterparty services (CCP), scheduled to launch in the Fall of 2009.
Over the past several years, FICC has embarked on an ambitious program to modernize its MBS Clearing Services through the introduction of a central counterparty operating model. According to the FICC website, "The operation of a central counterparty is expected to revolutionize how trades are cleared and settled in the mortgage-backed securities market (MBS), where trading in the U.S. now surpasses $100 trillion annually. The CCP will make trade processing easier, cheaper and less risky."
"We are thrilled to be the first vendor to become CCP compliant. As a leading service provider in the mortgage-backed securities industry with products like MBS Expert, we collaborated extensively with the FICC and more than twelve of our MBS Expert buy-side and sell-side clients to develop the necessary tools and processes to create a seamless support environment for CCP," said J. Michael Hopkins, General Manager, Securities Processing Solutions, Fixed Income, Broadridge. "By distributing the expense of implementing the necessary changes to support the new CCP operating model across our large client base, Broadridge is providing all of its fixed-income services clients with the crucial benefit of preparing for this industry change without incurring the significant expense and infrastructure overhaul that such change would require," Mr. Hopkins added.
According to the FICC, its longer-range plans are to extend its central counterparty services to include daily to-be-announced (TBA) netting and novation, including the allocation of TBAs versus FICC as CCP.
Broadridge's MBS Expert is an institutional solution engineered to handle all facets of TBA trade processing. The system's various modules enable the user to manage the entire lifecycle of MBS Trades from trade inception to settlement. This process includes MBS TBA trade entry, FICC submission and exception management, TBA balancing and netting, pool allocations and substitutions, full EPN processing, in inventory management, TBA pair offs, trade assignments, and broker give-ups. MBS Expert also allows the clients to access the most up-to-date pool analytics and geographical data thus enabling best economic allocation and pool inventory decisions.