UTC Transforms Equity Trade Capture
Universal Trade Capture (UTC) has streamlined how U.S. equity trade data is captured and distributed during the clearance process. The system, launched in early 2011, delivers risk reduction, cost savings and standardization to a critical component of post-trade activity in the equity markets.
“We designed UTC to provide a more efficient and cost-effective method to capture, process and report equity trade data submitted for clearance and settlement,” said Murray Pozmanter, DTCC managing director and general manager, Clearing Services. “UTC gives our customers the ability to unify the processing of trades executed in the various market venues, which in turn strengthens their internal risk management and increases overall market efficiency.”
From four systems to one
UTC’s implementation marked the most comprehensive redesign of the industry’s equity trade capture system in decades. Its real-time platform provides contract output moments after trades are submitted for clearing. This functionality was accomplished by migrating four legacy trade capture systems into a single, near-real-time validation and reporting engine.
The system is the brainchild of National Securities Clearing Corporation (NSCC), a DTCC subsidiary. To date, approximately 50 NSCC participants, representing over 70% of the overall equity trade capture volume, have subscribed to receive UTC output. These participants are currently testing the new record format in preparation for fully incorporating it into their downstream processing.
Understanding UTC
Trade capture is the first step in the trade clearing process. It starts with NSCC’s collection of transaction data coming from virtually all U.S. equity trading venues, including the major exchanges. Once NSCC receives the trades, it records and stores them, then produces and transmits contract reports to the firms, which use them for their trade reconciliation needs.
Within the legacy system, each individual marketplace used its own proprietary format for submitting input data to NSCC, which produced four separate contract reports in a machine readable output (MRO) data file format in batches throughout the day. Given the fragmentation of that system, a firm’s ability to efficiently reconcile millions of trades intra-day was vulnerable to operational risk.
NSCC’s redesign of the legacy system helped reduce these risks by leveraging the Financial Information eXchange (FIX) protocol format to create a near-real-time system that offers a single and standardized input record from all marketplaces and standardized real-time output messages to participants.
Customers have the option of receiving the new UTC trade capture output as a FIX standard message using MQ or the FIX engine. Firms also have the ability to receive a new intra-day MRO data file. (The new system continues to support existing interfaces with markets and members, allowing them to migrate to the universal format at their own pace.)
Coming soon
A key 2012 initiative is onboarding additional members to the new UTC output and supporting the conversion of additional markets and exchanges to the FIX infrastructure.
“Our focus this year is to continue working with member firms to ensure a smooth transition to the new UTC output and to work closely with the market centers as they convert to FIX, the new universal input record,” added Pozmanter. @
[To learn more about the Universal Trade Capture system, contact William Kapogiannis at bkapogiannis@dtcc.com or 212.855.5667.]