DTCC continues its journey to provide an integrated post-trade infrastructure, including a no-touch workflow for the entire trade lifecycle, from initial match to settlement finality. During DTCC’s Fixed Income Forum, Bob Stewart, DTCC Executive Director, ITP Product Management and David Kirby, DTCC Executive Director, Head of Americas Relationship Management, outlined three key Institutional Trade Processing (ITP) updates.
Related: CSDR and UMR: Are US Firms Prepared?
1. Helping our clients prepare for CSDR
- To assist clients with the upcoming implementation of CSDR’s Settlement Discipline Regime, we are expanding the DTCC Exception Manager service to include a new CSDR add-on module. This module will identify in scope CSDR transactions, calculate a predictive penalty associated with a given trade and drive workflow through exception prioritization functionality which allows for customizable priority weighting logic to transactions to effectively manage failed trade risk.
- Given that inaccurate or incomplete standing settlement instructions (SSIs) are one of the biggest sources of trade failure we have been helping our clients prepare for CSDR by focusing our efforts on growing the adoption of ALERT, the industry’s largest SSI data base with 11.5 million SSIs. Over 4.4 million of those are managed directly by Global Custodians and Prime Brokers – and we are working on growing that coverage.
- Further investments are being made into ALERT’s Global Custodian Direct (GC Direct) workflow to streamline the onboarding process for custodians, in addition to developing tools such as ALERT Global Custodian Web (GC Web) to assist the smaller custodians that are not able to build out SWIFT messaging. To that end, GC Web functionality allows smaller custodians to take part in the custodian managed SSI model by maintaining SSI data directly on a web-based platform, eliminating the need for the high cost of direct integration and a technology build.
- Additionally, ALERT clients can automatically enrich their trades with the most up to date SSIs by leveraging our ALERT Key Auto Select (AKAS) functionality – a free rules-based service that eliminates the need to provide ALERT Keys as part of the trade information.
2. Expanding ITPs Settlements Management Capabilities
- Key to the overall ITP strategy is our ability to provide an end-to-end workflow via a single integrated platform. An important step to making this a reality is the work we have been doing to expand our Settlements Management capabilities within ITP, this begins with upgrading CTMs current Settlement Notification and Third-Party Notification services and migrating users to a new and improved Notification user interface that provides enhanced capabilities and will be fully integrated with the suite of ITP services.
- A new initiative, in partnership with the Hong Kong Stock Exchange (HKEX), will soon leverage ITP’s expanded Settlements Management capabilities to facilitate an optimal no touch workflow from trades matched in CTM through to settlement finality at the HKEX. By leveraging Unique Transaction Identifiers (UTIs) via ITP’s suite of solutions, clients will be able to easily track specific transactions through the entire trade lifecycle.
3. OASYS to CTM Migration
- The migration of OASYS US trade volume to CTM, which began in 2019, is pivotal to overall ITP modernization efforts. Currently 99% of overall OASYS volume is accounted for in the form of a project/agreement to migrate or has completed migration to CTM (based on 2020 volume).
- If a firm has not signed up for CTM by November 1, 2021, an OASYS termination notice will be sent out. As of January 1, 2022, a 50% surcharge will be applied to all trades processed on OASYS.