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NYSE Euronext, DTCC Conclude Joint Venture Agreement

To create New York Portfolio Clearing, a 50/50 joint venture that initially plans to clear interest rate products traded on NYSE Liffe US

NYSE Euronext and Depository Trust & Clearing Corporation (DTCC) have finalised their formal agreement to create a new joint venture, New York Portfolio Clearing (NYPC). NYPC expects to be operational in the second quarter of 2010.

Reportedly, a draft application for NYPC to be granted status as a Derivative Clearing Organization with the Commodity Futures Trading Commission (CFTC) and draft amendments to the rules of DTCC’s Fixed Income Clearing Corporation (FICC) are expected to be circulated to the CFTC and Securities and Exchange Commission (SEC), respectively, in the coming weeks.

According to the NYSE Euronext, the NYPC will be a 50/50 joint venture between NYSE Euronext and DTCC. NYSE Euronext plans to commit a $50 million financial guarantee as an additional contribution to reinforce the NYPC default fund. NYPC initially plans to clear interest rate products traded on NYSE Liffe US.

Additionally, NYPC will be powered by NYSE Euronext’s clearing technology, TRS/CPS, which currently facilitates member position management for the NYSE Liffe market in London and ICE Clear Europe. DTCC will provide FICC’s capabilities in risk management, settlement, banking and reference data systems.

Thomas Callahan, CEO of NYSE Liffe US, said: “NYSE Euronext is thrilled to finalize this groundbreaking agreement with DTCC. NYPC is a story of innovation. Because of the strength of our global derivatives franchise, NYSE Euronext is singularly positioned to partner with DTCC on this important initiative due to our proprietary technology, strong capital base, broad market connectivity, and our industry-leading futures clearing expertise.”

Murray Pozmanter, managing director, fixed income clearance and settlement group at DTCC, said: “Through our open access model, DTCC intends to support competition in the US futures markets. By extending the unique NYPC risk methodology to multiple markets and products, we will offer our unique capital efficiencies to a wide range of customers and market participants. DTCC looked at several potential providers of derivatives clearing technology. We decided after careful review that NYSE Euronext has the robust, proven and ready technology and appropriate safeguards to ensure a successful launch of this initiative.”