DTCC recently rolled out enhancements to its CNS Prime Broker Interface service to allow for an efficient, automated matching process and asset transfer among Prime Brokers, leveraging the triad of NSCC’s Continuous Net Settlement (CNS®) system, Universal Trade Capture (UTC) system and ITP’s TradeSuite ID® system.
The enhancement to the CNS Prime Broker Interface can also be used for the transfer processing of a Hedge Fund asset position(s) between two prime broker accounts. The interface leverages an existing automated and standardized matching process to reduce the likelihood of fails and reclaims, resulting in more straight-through and less resource intensive asset transfer processing and reduced operational risk.
“The industry request was for an automated matching process of the transfer instructions, and a streamlined method to settle the assets,” said Bill Kapogiannis, Executive Director, DTCC Clearing Services. “We provided several possibilities to clients that met their needs, but it was also important to leverage DTCC’s current capabilities and efficiencies since this allowed us to offer a viable solution with minimal technology lift for everyone.”
“The introduction of PB Asset Transfers underscores DTCC’s commitment to collaboration with the industry, offering new tools to mitigate risk and elevate the efficiency of the industry as a whole,” said Jason Sefferino, Global Operations Chief Operating Officer, Citadel.
The proposed workflow is flexible and allows clients to determine the preferred settlement path (CNS or bi-lateral DTC) settlement of the asset. This will be controlled by the eligibility status of the receiving & delivering Broker Dealer/Agent and Agent ID number. If all parties including the asset being transferred is CNS eligible, upon a completed confirmation and affirmation process, ITP will feed NSCC’s UTC application to be further processed in CNS for settlement. If parties of the transfer choose to bypass CNS processing, ITP upon a completed confirmation and affirmation process, will send bi-lateral settlement instructions to DTC for settlement.
The CNS Prime Broker Interface for asset transfers leverages existing DTCC services that broker/dealers already use in their clearance and settlement process today to achieve matching and settlement for prime broker transaction processing. These include:
- ITP’s TradeSuite ID system – For trade matching and comparison of prime broker transactions
- NSCC’s Universal Trade Capture (UTC) system – For trade capture of all street-side trades including ITP prime broker trades
- NSCC’s Continuous Net Settlement (CNS) system – For netting of settlement obligations to one net position per security per broker where NSCC becomes the central counterparty
- DTC’s Settlement system – To accommodate the book-entry deliver order movements to settle their CNS long and short obligations and direct DTC position movements
"The introduction of PB Asset Transfers underscores DTCC's commitment to collaboration with the industry, offering new tools to mitigate risk and elevate the efficiency of the industry as a whole." - Jason Sefferino, Global Operations Chief Operating Officer, Citadel."
The enhancements were developed with the participation of several firms, who served on an industry working group. According to Kapogiannis, it was this cooperation and collaboration in the working group that enabled DTCC to bring this new enhancement to market. “Collaborations such as this really help DTCC enhance and build its service offerings,” said Kapogiannis. “We appreciate the active participation of clients in our working groups.”
The enhanced CNS Prime Broker Interface service is now available to all NSCC clients. For more information, please contact DTCC client services at 1-888-382-2721.