Definition: is a subsidiary organization created to function in the form of a secure depository of the parent’s company’s contracts, financial transactions, swaps, and other off-balance sheet obligations. A DPC represents a counterparty that exists to perform credit-sensitive derivative transactions, while it prospers from a higher credit rating when compared to the parent company. Additionally, such a company exists independently of the parent’s financial liabilities, acting as a sort of safety net for their owners. Alternatively, a DPC can be called a special purpose vehicle.
In a Sentence:
Tri-Cube has opened a new derivative products company to store its most valued contracts there. This was done to protect those contracts from any liabilities of the parent organization.
As a parent firm, Virtua Plus takes good care of its derivative products company to ensure that it has a high credit ranking. As they use it for all of its derivatives, the reputation of their DPC is vital for their financial security.
Synonyms and related words: derivative product, subsidiary, parity products, products liability