by Craig Donner
National Securities Clearing Corporation (NSCC) moved one step closer to the launch of its new equity trade capture system with the start of user testing in mid-September.
The new system, called Universal Trade Capture (UTC), will transform the trade capture and reporting process for equities in the U.S. by consolidating four legacy trade capture systems into a single, near- real-time validation and reporting engine. It is scheduled to go live in January 2011.
Near real time
Trade capture is considered the first step on the road to clearing a trade. It involves receiving transaction data from virtually all equity trading venues, including the major U.S. exchanges, and producing contract reports that are transmitted to firms for reporting and reconciliation needs.
"By validating and reporting trades in near real time, UTC will allow our customers to enhance their own internal risk management operations, accelerate reconciliation and streamline their purchase and sales process," said Susan Cosgrove, DTCC managing director, Clearance and Settlement/Equities. "In addition, UTC will help reduce the cost of the post-trade process by giving firms normalized, or standardized, data in a common output format. As a result, customers will no longer need to run their own internal conversion programs or outsource the function to a third party."
UTC will increase NSCC throughput and reduce storage costs, which will boost efficiencies and accommodate future growth in trading volume.
Canned test output
The start of user testing represents the first opportunity for firms to begin processing the new UTC contract output to ensure its compatibility with their systems. During this initial stage of testing, NSCC is making available a series of canned output, including the UTC Contract Machine Readable Output (MRO), which will show a sample of trades across different marketplaces.
"Testing is critical for firms because it helps them identify additional system modifications that may be needed before the launch of UTC," said William Kapogiannis, DTCC director, Equities Clearance and Settlement Product Management. "In the coming months, we’ll give firms a broad range of output and data so that they have sufficient time to test the new UTC functionality, including the real-time messaging capabilities that are the centerpiece of the new system."
UTC will provide a common format for all trade capture input and output, including a standardized input record from all marketplaces and standardized real-time output messages to participants. The new input format will be a FIX trade capture message that can be communicated via MQ or the FIX engine. UTC will also continue to support existing interfaces with markets and members.
Customers will have the option of receiving the new UTC trade capture output in three ways:
- Near-real-time FIX standard message using MQ
- FIX standard message using the FIX engine
- New universal intra-day MRO file.
NSCC will also continue to support existing legacy MRO files currently received by members for a period of time after implementation.
"UTC represents a marked improvement over the current trade capture process," Cosgrove said. "While we anticipate that many firms will take advantage of UTC when the system goes live, we intentionally designed it with maximum flexibility so that our customers and markets can migrate at their own pace." @
[To learn more about the Universal Trade Capture (UTC) system, contact William Kapogiannis at firstname.lastname@example.org or 212.855.5667.]