Northern Trust Enhances OTC Derivatives Services

June 28, 2007 ( - Northern Trust has added independent valuation of a comprehensive array of derivatives for its custody, fund administration and investment operations outsourcing clients to its services for over-the-counter (OTC) derivatives trading.

According to a press release, the new capability links to third-party specialist providers of OTC derivatives valuations and utilizes a system of tolerance checks to arrive at optimum pricing and performance measurement.

“Independent valuation has become a crucial piece of the derivatives puzzle as institutional investors seek portfolio transparency to meet internal risk and compliance goals, as well as emerging regulation and industry best practices,” said Judson Baker, product manager for derivatives processing related services at Northern Trust, in the release.

Northern Trust’s derivatives processing initiative includes automated collateral management for OTC derivatives trades under International Swaps and Derivatives Association (ISDA) master agreements. The suite of services provides end-to-end processing including calculation of exposures, making and receiving of collateral calls, managing collateral according to the terms of the credit support agreement, legal agreement documentation management, reconciliation and settlement.

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