Cashflow Matching provides operational efficiencies by allowing all counterparties on the system to streamline and standardize their cashflow matching process thereby facilitating timely settlements.

DTCC, through its wholly owned subsidiary DTCC Deriv/SERV LLC (“Deriv/SERV”) has launched a global automated over-the-counter (OTC) equity derivatives cashflow matching and netting service; the first of its kind in the equity derivatives space. The OTC derivatives industry, through a competitive proposal process, selected Deriv/ SERV to build the Equity Derivatives Cashflow Matching Service (CFM).

CFM provides operational efficiencies by allowing all counterparties on the system to streamline and standardize their cashflow matching process thereby facilitating timely settlements.

CFM Overview

CFM automates what once was a manually intensive process for agreeing on OTC equity derivative payments. The matching process reconciles the details of the paying party’s payment – including amount, currency and date – with the details of what the payee expects to receive, and also reconciles selected details of the underlying derivative trade. Furthermore, breaks in payment, trade and substantiation details are identified to assist with break resolution. Through netting, counterparties consolidate multiple payments owed between each other on multiple contracts into a single payment.

CFM enables market participants to reconcile their payments ahead of payment date and carry out the reconciliation and netting in an automated fashion which facilitates timely settlements.

Who Can Use CFM

The CFM customer base includes the major global derivatives dealers and is accessible to buy-side firms. CFM facilitates processing for third party solution providers such as fund administrators.

The Main Benefits of CFM

Real Time Cashflow Matching – CFM matches cashflows as they are submitted and provides users a running balance of all expected payments and receivables. Furthermore, it leverages links to enhance the cashflow matching process.

Multiple Payment Shape Matching – CFM nets multiple payments to match one or more payments submitted by a counterparty for a single deal on a given value date.

Broad Product Coverage – CFM supports single and periodic payments on options, equity swaps, variance swaps, dividends swaps and equity structured products.

Comprehensive Break Resolution Tools – CFM identifies cashflows breaks and reduces the time to resolve them.

One Bilateral Net per Counterparty – CFM factors all the cashflow data to produce one payment amount per counterparty, per currency, per day. The number of payments made and reconciled will drop substantially.

Standard Industry Process for Cashflow Matching – CFM creates a single user interface to interact with all counterparties and the major dealers are already live.

In Depth Reporting and Full Audit Trail – CFM provides a comprehensive array of detailed reports to monitor cashflows and bilateral nets in addition to a real time audit trail.

Cashflow Matching:

1. Cashflow is submitted via spreadsheet upload or MQ.
2. Submitter sees the unmatched side of the cashflow; counterparty sees the alleged side of the same cashflow.
3. Counterparty affirms the cashflow via the Web GUI. (The counterparty may also submit via spreadsheet or MQ)
4. Each party will see the matched cashflow which will be added to the bilateral net.

We invite you to learn more

For more information, please contact:
Robert Masri at rmasri@dtcc.com and (212)-855-2894
Charles Nardo at cnardo@dtcc.com and (212)-855-5387

You can also visit DTCC online at www.dtcc.com for more information.

CFM is a product offering of DTCC Deriv/SERV LLC, a wholly-owned subsidiary of DTCC.