The Investment Industry Association of Canada has entered into deliberations with the Canadian Derivatives Clearing Corp. (CDCC) to develop a central counterparty and netting utility for Canada’s fixed income market, the IIAC said Tuesday.

“One of the lessons learned from the recent financial crisis is the need for an effective netting facility and clearing house for repo transactions to provide core funding and liquidity for debt markets,” stated Ian Russell, president and CEO, IIAC.

CDCC will leverage on their deep understanding of financial markets and experience in clearing services and IT solutions.

“The association has established an industry steering committee to work closely with CDCC and develop a strategic plan to build and implement the central counterparty and netting utility,” concluded Russell.

CDCC is a subsidiary of TMX Group, which welcomed the news of the initiative to develop the infrastructure for central-counterparty services to the Canadian fixed income market.

“We are very pleased to have earned this opportunity and we thank the IIAC for their confidence in our organization,” said Tom Kloet, CEO, TMX Group.

“The development of a multi-lateral, centralized clearing house for fixed income products will further enhance the Canadian capital markets and will make its fixed income markets more attractive to domestic and international market participants. We are excited to work with the various stakeholders in this effort.”

IE