By Bari Trontz
DTCC has received regulatory approval to launch DTCC Trade Risk ProSM, a new post-trade risk monitoring service that will help clearing firms monitor the intra-day exposure of their correspondents, clients and their own equity trading desks.
Scheduled to go live during the first quarter of 2012, Trade Risk Pro will be the only service in the U.S. marketplace that offers a single, centralized view of all U.S. equity trades submitted for clearance.
DTCC created Trade Risk Pro to give clearing firms the ability to easily monitor and set equity trading credit limits in order to mitigate their overall risk.
“We designed this innovative service to help mitigate systemic risk in the U.S. equity markets,” said Murray Pozmanter, DTCC managing director and general manager, Clearing Services. “It will give U.S. clearing firms the ability to monitor their daily trading limits in near-real-time, which, in turn, enables them to more effectively manage the exposure introduced by their correspondents and their own firms.”
In a nutshell
Trade Risk Pro is a web-based service that provides DTCC clearing members with a continuously updated snapshot of their equity trading activities in a centralized and standardized method.
It reports aggregate and net value and share exposure for equity transactions within seconds. It also provides an early warning system that alerts clearing firms to trading activity that is nearing the credit limits they have set for their own and their correspondents’ accounts, enabling them to effectively manage potential risk.
An offering of National Securities Clearing Corporation (NSCC), a DTCC subsidiary, the service sources its data from NSCC’s Universal Trade Capture system. That system combines virtually all broker-to-broker equity, listed corporate and municipal bond and unit investment trust trading in the U.S. The data is available intra-day, and refreshed within seconds, compared to previous reporting systems that regenerated data over minutes or sometimes hours.
As the central counterparty for the U.S. equities market, NSCC leverages trade submissions and position offsets from exchanges and other liquidity destinations to report this information to participants.
How the service works
Through the web-based portal, participating firms create “Risk Entities” that track the activity of their correspondents and their own trading desks. The Risk Entity information entered by the firm will drive position calculations and displays within the system. Customers set and update share and dollar limits with respect to each Risk Entity at gross, adjusted and net levels.
Trade Risk Pro nets, aggregates and displays position information to monitor credit limits. If positions near or exceed the established limits, Trade Risk Pro notifies the customer via screen alerts. The alert allows the firm to view exposure at the CUSIP and individual trade levels.
Because the service offers complex scalability, as well as “off-the-shelf” capability, NSCC’s largest member firms, as well as broker/dealers that typically handle lower trading volumes, are expected to sign up for it. @
[To learn more about Trade Risk Pro service, contact Bonnie Bowes at 212.855.8024 or firstname.lastname@example.org.]