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GlobeOp Launches CDS Novation Processing Service

GlobeOp Financial Services has launched automated novation processing for credit derivatives helping its customers to reduce speed and the number of errors involved in the post-trade process.

Within GlobeOp’s GoOTC derivatives trade processing and management system, users receive real-time notification, standardised information and novation consent electronically via the Depository Trust and Clearing Corporation (DTCC)’s Deriv/Serv system. GlobeOp’s process supports full and partial novation of all DTCC-supported credit products including single name credit default swaps, index and index tranche products.

Novations will be fully integrated within the system along with the company’s straight-through processing (STP) in to trade booking, accounting, risk and other systems.

“Providing this link to the Deriv/Serv novation process helps clients reduce operational risk by replacing novation consent emails with a robust real-time electronic platform,” says Jon Anderson, global head of over-the-counter derivatives.

“GlobeOp’s technology platform reduces errors related to manual booking and email processes, eliminates time spent booking assignments and increases efficiency through the auto-generation of trade confirmation to DTCC.”

The novation functionality meets requirements set out by the Operations Management Group (OMG), an industry group that includes major investment banks and industry associations such as The International Swaps and Derivatives Association (ISDA) and the Securities Industry and Financial Markets Association (SIFMA), that novation requests should be submitted via an electronic platform rather than via email.

Customers also face an implementation deadline of 28 February 2009 after which major dealers will not accept novation consents by email.

This year US Treasury Secretary Henry Paulson joined regulators in calling for additional scale, automation and standardisation in credit derivative processing.

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