Northern Trust Expands Capabilities For Processing OTC Derivatives

To help clients exercise control over valuation of assets

Northern Trust, a Chicago-based provider of investment management, asset and fund administration, banking solutions and fiduciary services, has expanded its platform for processing over-the-counter (OTC) derivatives to provide daily independent pricing for structured products and other bespoke instruments.

The expanded capabilities, including transparency reporting for OTC instrument types, were developed through a strategic alliance with Numerix, a provider of derivative and structured products valuation and analytics company.

The improvements will allow Northern Trust to independently price exotic OTC derivative instruments and provide clients access to the mathematical model, calibration techniques and market data components of the pricing process to enable transparent reporting.

Specifically focused on hedge funds, investment managers and institutions requiring daily independent pricing for structured products, these capabilities are delivered to clients globally through Northern Trust's integrated derivatives processing platform. In addition, Numerix financial engineers work alongside the derivative pricing teams at Northern Trust operation centers throughout the globe to provide clients with access to valuation support.

Peter Cherecwich, COO for corporate and institutional services at Northern Trust, said: “The derivatives industry, regulators, investors and our clients globally are demanding increasing independence and transparency for OTC derivative valuations.

"Derivatives perform critical functions for investment managers and institutional investors, and our global alliance with Numerix brings a range of valuation capabilities and depth of knowledge to help our clients exercise greater control over valuation of these assets while meeting the standard for transparency demanded by sophisticated investors.”

Steve O'Hanlon, CEO and president at Numerix, said: “Through this alliance, Northern Trust will offer its clients the benefits of independent valuations, innovative transparency reporting.”