FICC Plans Central MBS Counterparty

Fixed Income Clearing Corp., New York, has announced plans to develop services to support a central counterparty for mortgage-backed securities that it hopes to establish within two years.In phase I of a three-phase process, FICC said it will allow for the matching of specified pool trades via its real-time trade matching service. Phase II will focus on simplifying and automating routines for substituting the mortgages allocated to a pool, and phase III will allow for central counterparty netting and guaranteed settlement of specified pool trades, the company said. "When we get the central counterparty fully operational, we expect to lower clearing costs, reduce operational and counterparty risk, decrease our customers' capital charges, and bring down the fail and financing expenses of our clearing members," said Tom Costa, head of FICC and managing director of clearance and settlement for The Depository Trust & Clearing Corp., FICC's parent company. DTCC can be found online at http://www.dtcc.com.