The financial services firm GlobeOp is live with the first automated buy-side payment matching link to the Depository Trust & Clearing Corporation's (DTCC) payment reconciliation service for OTC credit default swaps (CDS).

The company said buy-side firms could use its proprietary electronic link to the DTCC's Deriv/SERV platform to increase process automation and efficiency and reduce the operational risks associated with manually matching payments on their CDS positions.

According to ISDA operations benchmarking statistics released on April 16^th credit derivatives remain the fastest growing class of OTC derivatives, accounting for 73 per cent of volume in the past year.

The Federal Reserve Bank of New York has said that more than 90 per cent of OTC credit derivatives are now matched and confirmed electronically through platforms like Deriv/SERV.

However, CDS trades continue to require bilateral reconciliation involving a significant number of manual operations, while the absence of industry standards for payment request reconciliation, combined with the continued volume growth of OTC derivative trading, has placed considerable pressure on payment processing speed and reliability.

GlobeOp said its new service, known as GoPayments, would provide fund managers with a cost efficient and automated solution.

"GoPayments' centralized database generates and receives bundled requests from all clients linked to Deriv/SERV, eliminating manual processing of individual trades on a per client basis," said Vernon Barback, president and COO of GlobeOp.

According to GlobeOp, the new service will transform payment matching from a multi-day to an intra-day process.

The company also said GoPayments "set the stage" for buy-side clients to go live with Deriv/SERV's central settlement service for OTC derivatives when it is opened up to the buy-side in 2009.

The DTCC teamed up with CLS Bank to launch its central settlement service for contracts housed in the Trade Information Warehouse in December 2007. The service is currently only available to sell-side firms.

The DTCC's Peter Axilrod said the organisation was pleased to link-up with GlobeOp to meet the "buy-side's need for live linkage to our payment reconciliation service."

GlobeOp made its name as a provider of fund administration and outsourcing services to the hedge fund industry, with particular expertise in processing OTC derivatives trades.

Last year the firm launched an OTC derivatives outsourcing service for mutual funds and custodian banks active in the UCITS III space.