ds_enews-sep08 by gegeshandong


									Welcome to the inaugural issue of Deriv/SERV’s quarterly e-newsletter. You will find in this and upcom-
ing issues brief articles on key industry and service developments that are relevant to how you use our
service. Our goal is to keep you updated on the important issues that affect your operations and ensure
you are up-to-speed on recent enhancements on the Deriv/SERV platform. We will also continue to publish
our quarterly newsletter Deriv/SERV Today, which provides more in-depth articles on the industry and our
service overall.

For the DerivSERV - Markit Strategic OTC Derivatives Partnership announcement, please follow this link:

July 31st Fed Letter OTC Derivatives Operational Processing Goals
The latest Operations Management Group (OMG) Letter to the Federal Reserve Bank of New York and
other regulators outlines the major 2008 and 2009 operational goals and includes deliverables that
represent a substantial increase in the commitments from the March 27th Letter. It is important to
note that the OMG is comprised of the 17 major dealer banks, 7 buyside participants and the ISDA,
SIFMA and MFA trade associations.

Below is the link to the Fed Letter

Novation Consent Update, Fed Letter Requirements
In late 2007, Deriv/SERV launched its Novation Consent application which allows a transferor to obtain
the required consent from a Remaining party electronically, providing one-touch assignment processing
by retrieving trade information from the Warehouse and submitting an assignment record to the
confirmation matching system. All major dealers are presently live on this service.

It is important to note that the July 31st letter to the regulators requires that all participants, major
dealers and buy-side firms, submit and manage novation requests for electronically eligible trades via
electronic processing platforms by December 31, 2008. After this date the major dealers will not
consent to proposed novation requests via email.

Deriv/SERV recommends that you take the necessary steps to evaluate vendor solutions that provide an
electronic novation consent platform to meet this industry target. ISDA’s website provides a Novation
Fact Sheet and Interoperability Process flow to assist you in this decision:

    •	   ISDA Novation Fact Sheet (on ISDA’s Website)

    •	   Infrastructure Interoperability Process flow (on ISDA’s Website)

In response to industry requirements and to best meet client needs, Deriv/SERV has expanded the
frequency of its Novation Consent webinar sessions to weekly and is also providing in-house training
sessions in New York and London. For details, please contact your client account manager or email

TIW Event Processing
There are presently four credit events that the TIW will be processing. Tembec Inc., Federal National
Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”) each
with an Effective Determination Date of September 8, 2008, and Lehman Brothers, with a Determination
Date of September 15, 2008. ISDA Protocol is in the process of being established for all events. The
auctions for Tembec, Fannie and Freddie will take place the first week of October with a cash settlement
date of October 15, 2008. The auction for Lehman will take place on October 10th with a cash
settlement date of October 21st. The Deriv/SERV Trade Information Warehouse will process the credit
event payment calculations for these four events through its Event Processing facility.

For your information, Deriv/SERV has produced an Events Processing PowerPoint Presentation, which is
located under the Product Training and Support tab at:

This presentation outlines the TIW’s Event Processing framework, features and procedures and includes a
walk through of the required fields and steps necessary for Event processing.

Additionally, TIW released on August 7, 2008 Successor Event processing for corporate actions resulting
in renames or reorganizations. TIW successfully completed processing its first successor reorganization
event for Domtar on September 11, 2008.

To continue to help our customers best respond to recent market events, Deriv/SERV has increased the
frequency of its Event Processing Webinars. They are now offered weekly, every Tuesday at 9.30 am EST /
2.30 pm GMT. For a complete Webinar schedule, please follow this link:

3rd Quarter Central Settlement Results are in!
Over the initial three quarterly payment cycles, since the service launched in November 2007, DTCC has
reduced 1.62 million gross payments valued at US$72.5 billion (£36.5 billion) gross to 823 net payments
valued at US$3.5 billion (£1.8 billion), achieving an average 95% netting factor.

Due to the expanded central settlement relationships amongst the major dealers, for the recent
September 22nd quarterly payment cycle, even greater netting was achieved - 1.3 million gross payments
were netted down to 731 net payments for this payment cycle alone. This represents approximately 60%
of all eligible Warehouse payment calculations being settled through CLS.

Focus now moves to onboarding buyside participants onto the service.

Central Settlement Update: Expansion to the Buy-Side
Onboarding to take place commencing Q4 2008 through 2009
Requirements have been received to support buy-side onboarding onto the central settlement service,
with the exception of the Asset Manager-Custodian relationship. The enhancements to the TIW service
will be available in October enabling onboarding for Q4 2008 and onward.

Deriv/SERV through its Custodian Working Group is collecting requirements and anticipates that the
service for Asset Managers to onboard will be available in early 2009.

In order to join the Deriv/SERV’s Central Settlement service, buy-side firms will need to take certain

           •	   Ensure all positions are in TIW (backloading may be required)
           •	   Ensure ability to reconcile internal risk systems to match TIW payments and take into
                account the “No Confirm, No Pay” rule
           •	   Must have an established CLS relationship
           •	   Participate in UAT Testing to ensure integration with the service

DTCC Deriv/SERV’s Equity Service
Deriv/SERV’s Equity Matching Platform automates matching and confirmation for a wide range of over-
the-counter (OTC) equity derivatives products, including Equity Options, Equity Swaps, Variance Swaps
and Dividend Swaps.

Recently launched, MCA-Xpress™ is a dedicated platform designed to address the complexities causing
delays in the execution of Equity Derivative Master Confirmation Agreements (MCAs).

Coming Soon:
Deriv/SERV Check-Out Service is an affirmation platform (expected Q4’08/Q1’09) that permits middle-
office, marketers and front-office staff to efficiently review and affirm structured over-the-counter (OTC)
equity derivative transactions.
Management and Risk Mitigation
Non-electronically confirmable transactions will be managed real time on a globally accessible central
system which will provide reports to management on the status of outstanding transactions.
Additionally, the service provides a secure environment to affirm transactions on T+0 while maintaining a
detailed audit trail.

For more information on our Equities Matching Service, MCA-Xpress™ and the latest on Deriv/SERV’s
Check-Out Service, please contact your client account manager or follow this link:

DTCC Deriv/SERV Interest Rate Derivatives - Trade Confirmation Service
Product Coverage:
In August 2008 Deriv/SERV broadened the existing product coverage by adding Caps, Floors, Forward
Rate Agreements (FRAs) and Bond Options to the platform. The existing coverage includes; Interest Rate

Swaps (IRS), Swaptions, Inflation Swaps, Asset Swaps, Overnight Index Swaps (OIS), Zero Coupon Swaps,
Cancellable (callable) Swaps, Amortising, Accreting and Rollercoaster Swaps. All major currencies are

Coming Soon:
Participants will be able to input trades via the Deriv/SERV portal on the web -- currently participants can
only validate via Deriv/SERV’s web portal, upload via a spreadsheet through the web, and upload using a
third party vendor or directly using MQ.

For more information about Deriv/SERV’s Interest Rate product offering, please follow this link:
http://www.dtcc.com/products/derivserv/members/trade_confirm_rates.php or contact your client account

Deriv/SERV Recent Release Highlights:
August and September Enhancements
Deriv/SERV is proud to announce that, as of the first week of August, the Trade Information Warehouse
is able to process Successor Events. This functionality now enables the TIW to process Reorganization
and Rename corporate actions seamlessly. Additionally, automation of disable requests has been recently
added, which enables users to initiate the disable process directly. Also note that the LEVX Index has
recently been added for payment eligibility calculation in the TIW.

Coming Soon: Fourth Quarter
Deriv/SERV plans to continue expanding coverage to include European CDS on Loans (ELCDS), CDS
Swaptions, and Tranche payment calculations in the fourth quarter. Also planned are enhancements
for Event Processing to support Index versioning and factor updates as well as the facility to support
Account Swings and Bulk Novations.

For more information on Deriv/SERV’s enhancements, please stay current with our Important Notices
which are emailed to you and can also be found by following the below link:

Deriv/SERV Regional Seminars
Thanks to all of our New England customers for attending and making our free, morning seminar,
Optimizing Deriv/SERV: Keep Pace with Industry Change, such a success.
Future seminars are planned for London on October 15th and Chicago on October 23rd. For an invitation
and to review seminar details, please follow this link:

If you would like to attend either seminar, simply email DerivSERV_CAM@DTCC.com with your name and
the names of colleagues who plan to attend.

We look forward to seeing you at one of our free regional seminars soon!

To stay current with Buy Side Issues, join Deriv/SERV’s Buy Side call:
Alternating Wednesdays at 11 am EST / 4 pm GMT
Toll free dial in:       1 866 248 5984
International dial in:   44 (0) 808 100 5145
Participant Passcode:    9194595
Next call: October 1st

For more discussion on buy-side topics, please check out the Asset Managers Forum at:

We welcome your suggestions on content to include in this newsletter and your comments overall. Please
email them to DerivSERV_CAM@DTCC.com.

For more information on any of the above topics, to join our Important Notice distribution list, and for
details on our full product offering, please contact your Client Account Manager or email DerivSERV_


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