The Depository Trust & Clearing Corp. said Tuesday that NYSE Euronext (NYX) was the best partner for a new derivatives clearinghouse because other parties' technology wasn't up to snuff.

Trans-Atlantic exchange operator NYSE Euronext is working with the DTCC, a provider of post-trade services, to create New York Portfolio Clearing, which will clear cash Treasurys alongside related derivatives products.

The partnership has drawn complaints from ELX Futures LP, a start-up futures exchange also targeting the Treasurys market, which says that the NYPC partnership unfairly prohibited ELX from setting up a similar arrangement with the DTCC.

In a news release Tuesday, NYSE Euronext and the DTCC said that the NYPC venture will formally file for regulatory approval in the coming weeks, and continues to target a launch in the second quarter of 2010.

Murray Pozmanter, managing director of the DTCC's fixed income clearance and settlement group, added Tuesday that the company evaluated "several potential providers of derivatives clearing technology" for the venture before teaming with NYSE Euronext in June.

"We decided after careful review that NYSE Euronext has the robust, proven and ready technology and appropriate safeguards to ensure a successful launch of this initiative," Pozmanter said in a statement. "The other providers did not have the technology to meet those criteria."

NYSE Euronext already operates its own U.K.-based clearinghouse Liffe Clear, in conjunction with Anglo-French clearing house LCH.Clearnet.

ELX, which is backed by a consortium of banks, trading firms and technology companies, outsources its clearing functions to the Chicago-based Options Clearing Corp.

Clearing, in which a central counterparty acts as the buyer to every seller and the seller to every buyer, mitigates risk for traders and is a key profit center for exchanges that run their own clearinghouses.

The ability for exchanges to clear their own products in-house has also made it tough for competitors to make inroads against Chicago-based CME Group Inc. (CME), which controls more than 90% of U.S. futures trade.

NYSE Euronext and the DTCC plan to open up the New York Portfolio Clearing facility to outside parties like ELX after a period of exclusivity, expected to be two years from launch; NYSE Euronext and DTCC officials declined to confirm the length of the exclusivity period.

Neal Wolkoff, chief executive of ELX, has said three years is too long for a startup exchange like his to wait.

DTCC operates as an industry-owned utility, as does the OCC, and ELX has told regulators that this sort of organization should not be allowed to enter into partnerships that exclude other parties.

Wolkoff has said that ELX plans to raise its concerns with the Securities and Exchange Commission and the Commodity Futures Trading Commission after formal filings are made for NYPC.

-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com