new infrastructures for otc derivatives central repository for forward contracts november 2011
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New Infrastructures for OTC Derivatives Central Repository for Forward Contracts November 2011. DCV in figures In detail, Central Repository for Forward Contracts The Derivatives Market in Chile Overview Central Repository for Forward Contracts Background - PowerPoint PPT PresentationTRANSCRIPT
New Infrastructures for OTC Derivatives
Central Repository for Forward Contracts
November 2011
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1. DCV in figures
2. In detail, Central Repository for Forward Contracts
i. The Derivatives Market in Chile Overview
ii. Central Repository for Forward Contracts Background Current issues with existing operating
procedures Features of the new service Service model Some statistics Phase 2 & Phase 3 Conclusions
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DCV in figures
Chile’s national CSD with 18 years of experience in the market
176 participants
Shareholders:Pension Funds 27%Banks 27%Santiago Stock Exchange 21%DTCC holding ILLC 10%Life Insurance Cos. 9%Electronic Exchange 5%Others 1%
US$ 250 billion under custody in local securities
Transactions registered in 2011 (sept): US$1,037 billion
Transactions registered in 2011 (sept): 1,2 million
Through DCV Registros (subsidiary) maintains Corporation’s shareholders registries
Role of NNA, issuing ISINs for Chilean securities
International custody services for local participants investing abroad
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The Derivatives Market in Chile
Overview:Active OTC derivatives market in Chile
Forwards (82%)Swaps (18%)
Currencies in Forwards ContractsCLP - US dollar (95%)Euro – US dollar (2%)US Dollar – Yen (2%)Others (1%)
Volumes in Forwards ContractsNotional amounts: US$ 1,5 billion (daily average) # of CLP – US dollar contracts: 70,000 annual basis
Potential new gross income2012 USD 100,0002013 USD 150,000
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Central Repository for Forward Contracts
Background:
The idea was originated from the need to provide a comprehensive and centralized solution for pension funds / banks regarding their forward contracts: subscription, registration and custody
This is an opportunity to generate a new source of funds for DCV
We worked together to define the scope, objectives and commitments
An agreement between Pension Funds and Banks took place in March 2010; this became the business reason for the project
The potential market considers the rest of current participants… and also their institutional customers
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Central Repository for Forward Contracts
Current issues with existing operating procedures
Lack of standard procedures
Too many administrative procedures (Too much time-consuming paperwork)
Need to keep updated records of representatives authorized to sign the contracts
Receiving contracts with inaccurate data
Receiving signed contracts several days after the respective operations agreements
Involved many operational and financial risks
High operating costs
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Central Repository for Forward Contracts
Features of the new service
Electronic and centralized subscription, registration and custody
Official legal record
Digital certificate with an advanced electronic signature
Control of expiration dates
On-line information (100% reliable)
Pension Fund Services: Daily reports to the Pension Funds Superintendence
STP with the Electronic Stock Exchange
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Central Repository for Forward Contracts
Some Statistics
21 Participants have adhered the service8 Participants operating13 Participants in the road to activate their accounts
Up to september 984 contracts registered
Up to september 161 contracts matured
Central Repository for Forward Contracts
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N° Total de Registros por Mes
520
45 4121
29
2
102
148
200
136
178
218
0
50
100
150
200
250
Marzo Abril Mayo Junio Julio Agosto Septiembre
Vencimiento Suscripción
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Central Repository for Forward Contracts
Phase 2:
Registration of contracts between a participant and their corporate customers
Expanding to other types of Forwards contracts and Swaps
Payment instructions to banks
Supporting collateral management
Phase 3:
Interconnection with a CCP, managed by banks
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Central Repository for Forward Contracts
Conclusions:
Service started on last March 15th
Smooth incorporation of new participants
Aims to build a modern, standard and competitive infrastructure to provide high efficiency and safety levels to the market
THANK YOU!