DTCC hires Gina Ghent to grow OTC derivatives post-trade business; to overhaul new issues services

Source: DTCC

The Depository Trust & Clearing Corporation (DTCC) has named Gina S. Ghent vice president for Business Development, responsible for growing DTCC's OTC derivatives post-trade processing business globally.

The Depository Trust & Clearing Corporation (DTCC) has named Gina S. Ghent vice president for Business Development, responsible for growing DTCC's OTC derivatives post-trade processing business globally.

Ghent comes to DTCC from Canadian Imperial Bank of Commerce (CIBC), CIBC World Markets Corp., where she served as a trading room advisor and derivatives lawyer for the investment banking division, and has worked with a plethora of derivatives products throughout her career, including credit, equity, fixed income, commodities and others.

"As a well-known derivatives lawyer with expansive product knowledge, Gina brings unique and valuable experience to our Deriv/SERV business development team during a critical period of rapid growth," said Peter Axilrod, managing director, DTCC Business Development. "Over the past year, we have attracted several industry experts to our organization to help us meet the burgeoning demand for post-trade processing of credit default swaps, equity derivatives, interest-rate derivatives, and other OTC products."

Last month, Bill Stenning, a former chief operating officer at SwapsWire and managing director at Sungard, joined DTCC in London. In 2004, Bill Hodgson came on board in London from LCH.Clearnet, where he had led product development for its SwapClear OTC derivatives business.

"We are delighted to have Gina leading our product management effort for Deriv/SERV's equity derivatives platform, and she'll be involved in many aspects of our credit default swaps post-trade service offerings," said Janet Wynn, managing director and general manager, DTCC Deriv/SERV. "She's someone who comes to DTCC with a wealth of knowledge of this market and an established network of contacts among customers — both global dealers and the buy side community."

"It is exciting to join such an accomplished team of industry professionals," said Ghent. "I look forward to leveraging my experience as a documentation head and trading room advisor in the investment banking world and applying it to the exciting world that is continuing to be created here at DTCC."

Ghent earned business and law degrees at the Sorbonne and the University of London, and was nominated as a Rhodes Scholar. She also holds an Executive MBA degree from Cornell University. She recently co-authored an article in the 2005/06 Euromoney Derivatives & Risk Management Handbook, "Evolution of the Credit Derivatives Market: Where We Were, Where We Are and Where We Are Going." An active member of the International Swaps and Derivatives Association (ISDA), the derivative industry's main governing and policy-making organization, Ghent represented CIBC on ISDA's Credit Derivatives Market Practice Committee.

Separately, The Depository Trust & Clearing Corporation (DTCC) announced today a detailed plan for a centralized and automated service that will "revolutionize" the way new securities issues are processed after they're prepared for pricing.

The underwriting of new issues is a major business for the securities industry. In 2005, DTCC's depository made 47,178 new issues — valued at more than $4.4 trillion — eligible for processing within the industry. About 55 percent of the issues were corporate bonds, 42 percent were municipal bonds and the rest were chiefly equities. The municipal bonds included 2,992 note issues valued at $46.8 billion and 16,841 bond issues valued at $470.5 billion.

The current environment for processing new issues, however, is highly paper intensive and manual, resulting in delays and errors that represent a growing area of risk for industry participants. DTCC's new service will not only automate the capture and dissemination of information required for underwriting new issues, but will also help underwriters and other market participants, such as inter-dealer brokers and securities traders, meet new regulatory reporting requirements to ensure transparency in the trading of newly issued municipal bonds.

"This is one of the most significant automation efforts undertaken by the industry — and by DTCC," said James Balbo, DTCC managing director of Asset Services. "It will totally revolutionize the traditional way of handling new issues, including equity IPOs, and how the underwriting process is completed."

First proposed only for municipal bonds, the new service will eventually be expanded — at the urging of the securities industry — to cover all new issues including corporate debt, equities and other securities.

"Our goal is to make the underwriting process far more efficient and to reduce information-gathering costs across the industry," Balbo said.

According to DTCC's action plan, critical information on new municipal bond issues is often not available in time to meet a 15-minute deadline for reporting trades because "current notification practices are decentralized and involve a variety of formats, manual processes, numerous intermediaries and redundant steps."

At the urging of The Bond Market Association, the securities industry asked DTCC, as part of a major overhaul of its securities underwriting and corporate action processing platforms, to build a service that could overcome the problem. Meanwhile, the Securities and Exchange Commission recently approved a decision by the Municipal Securities Rulemaking Board to postpone enforcement of the new issue reporting requirements until the end of 2007, giving the industry time to initiate and use DTCC’s new service.

"The major bookrunning services, which work on behalf of the lead managers of underwriting syndicates across all asset classes and handle most of the industry's volume, are willing to participate in the new service," noted Peter Inguanta, DTCC director for Product Management.

"Our clients are interested in us doing this," added Cheryl Horowitz, a senior executive of i-Deal, one of the industry's principal bookrunning services. "And anything we can do to help the industry be more efficient, we'll do," she said.

"Our new service will eliminate re-keying of data and help create an "electronic pipeline" that can take and make delivery all across the industry," Inguanta said. "We'll be able to get the data much sooner than we do now, and we’ll be able to speed up the task of making an issue eligible at the depository," he explained.

The data received in the information-gathering process on a new issue will be made available and disseminated to the industry, Inguanta said. The data will also be used to make the new issue eligible for DTCC's depository.

The service, which will be available not only to DTCC's depository participants but also to other industry parties such as correspondent underwriters, is expected to undergo testing and, subject to regulatory approval, be implemented next year. To achieve that, the depository has set an accelerated timetable for creating the service that includes:

  • Q1/06 – Publication of customer system requirements
  • Q2-4/06 – Resolution of technology and operating issues such as transmission protocols, data elements and underwriter audit reports
  • Q2-4/06 – Regulatory changes involving MSRB participation and mandatory electronic data submission rule changes with the SEC
  • Q1/07 – Limited pilot testing and customer training
  • Q2/07 – Beginning of customer transition to new system
  • Q3/07 – Completion of customer transition to new system

"Given all that we have to do, and all that the industry has to do, this is an aggressive timetable," Balbo said. "But it will solve a regulatory compliance problem for the industry — on time — while delivering better risk management and reduced costs."

In addition to the Bond Market Association, the Securities Industry Association and the Syndicates Operations Association, more than 100 firms, industry utilities and regulators worked on defining the business and functional requirements for the different asset classes to be included in the new service.

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