Mitigating Risk, Improving Efficiency

The Power of Community

By Tim Keady, DTCC Managing Director and Head of DTCC Solutions | Nov 03, 2020

Tim Keady, DTCC Managing Director and Head of DTCC Solutions.
Tim Keady, DTCC Managing Director and Head of DTCC Solutions.

I was recently catching up with one of my industry friends and our conversation turned to how much the marketplace has evolved over the past two decades. We were both struck by the levels of efficiency that post-trade solutions, particularly matching services, have brought to the global markets and how this has facilitated greater cross-border and domestic trading. While reminiscing, it occurred to us that CTM™ will celebrate its 20th anniversary next year.

The success of CTM is personal because I helped bring it to market in 2001. Back then, we had confidence in the service and recognized it filled a gap, but I could never have predicted it would become the world’s leading post-trade workflow engine. One reason for this success is our extensive community of users, spanning the buy-side, sell-side and custodian banks. This community adds value by contributing their data and integrating the CTM workflows into their ecosystems. I am proud to say that the service has the largest number of counterparties across the globe – 2,000 counterparties across 52 markets. With that size, depth and breadth, the CTM community is self-propagating: additional users sign on in order to instantly access their counterparties in both established and growth markets.

Results Tell the Story

One of the most impressive achievements of CTM is its trade-date match rates, which have reached 96% and above. It’s not surprising that a client recently told me that CTM helps him “sleep better at night” because he knows his trades are going to be settled in the morning. Our clients have been clear: they want to reap the benefits of an optimal single central matching engine. With this in mind, we integrated the OASYS U.S.-only trade flow into CTM and are committed to retiring OASYS in 2021.

In the years since we launched CTM, we’ve prioritized listening and responding to clients and have taken steps to continually evolve its value, including integrating it further with DTCC’s suite of institutional trade processing services. A game-changer for the industry was when we integrated CTM with ALERT®, bringing the ability to automatically enrich the trade with the most up-to-date standing settlement instructions (SSIs) and account information. As a result of this golden-sourced enrichment and matching, an authoritative trade record is created, enabling all settlement parties to be notified with the same instruction to ensure settlement finality. Once again, the community deserves credit because they helped us build ALERT into a central SSI database with more than 9 million settlement instructions across asset classes and geographic markets. The community benefits because CTM is the only matching service integrated with ALERT. In other words, using a different matching service without ALERT enrichment ultimately means you’re adding risk of a fail.

Our latest innovation, ALERT Key Auto Select (AKAS) takes it a step further by adding a free, rules-based smart enrichment feature to CTM. And because CTM supports extensive connectivity options, including API, FIX and file-based connections, users can interface with counterparties across the global community and all segments and markets irrespective of their size or level of technical sophistication.

CTM’s value was brought into focus during the recent pandemic-driven market volatility. As markets endured severe movements in March and April, CTM volumes nearly doubled compared to 2019 daily averages and hit record levels for U.S. and cross-border equity and fixed income trades. Despite this, CTM’s high match agree rates stayed constant, proving the benefits of using automated tools during volatile periods like this.

As the financial services landscape continues to change, we’re listening closely to client sentiment. We’ve heard from clients that they want one platform to manage the entire trade lifecycle, from trade agreement through to settlement finality. With this in mind, we’re now laser focused on re-imagining post-trade processing to bring clients an optimal no-touch processing workflow that eliminates all redundancies and manual processing across asset classes.

Industry Ownership and Governed

While these factors have helped fuel CTM’s growth over the past two decades, one characteristic differentiates it from other solutions providers: DTCC’s industry-ownership and governance model. This influences all aspects of how we operate -- from product development and delivery to client support, risk management and resilience. As a result, solutions like CTM are designed and enhanced to meet firms’ evolving needs, provide comprehensive client support and maintain the highest levels of safety and soundness for the industry.

As I said, I’m very proud of what CTM has accomplished. It has helped transform the marketplace in ways we could never have imagined when we launched it in 2001. We look forward to celebrating its anniversary next year and continuing to bring that same innovation and focus to developing new solutions for our clients to help them achieve their goals.

 

 

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