by Craig Donner
National Securities Clearing Corporation (NSCC) has begun migrating its four legacy trade capture systems to a single, real-time validation and reporting engine that will deliver a host of risk mitigation and operational benefits to customers.
The phased launch of the Universal Trade Capture (UTC) system began on November 19 when NSCC sunset the Correspondent Clearing (CORR) application. Over the course of the next several months, NSCC will migrate the remaining three trade capture applications that interface with the exchanges and the over-the-counter (OTC) market, with the system expected to be fully operational by the end of January 2011.
"We successfully completed the first migration late last year and gained valuable insight that will help us as we continue the transition to UTC throughout January and February," said Susan Cosgrove, DTCC managing director, Clearance and Settlement/Equities. "We are working closely with our customers and the exchanges throughout this process to ensure we make the migration as smooth as possible. We'll also continue to support the legacy formats as promised so firms have the flexibility to transition to UTC on their own schedule."
Trade capture is considered the first step on the road to clearing a trade. After a trade is executed at virtually any of the equity trading venues in the U.S., including the major exchanges, transaction data is sent to NSCC for processing. NSCC edits the data and produces and transmits contract reports to the firms for reporting and reconciliation.
UTC is designed to modernize and transform this process by eliminating the four legacy systems that serve each of the markets, replacing them with a single real-time system that features a standardized input record from all marketplaces and standardized real-time output messages to participants. (Under the legacy applications, each marketplace used its own unique format for submitting input data to NSCC, which produced four different contract reports in a machine readable output [MRO] data file format in batches throughout the day.)
Another benefit of the new system is that it will increase NSCC throughput and reduce storage costs, which will boost efficiencies and accommodate future growth in trading volume.
The UTC's real-time reporting mechanism has been widely applauded by the industry because it will enhance risk management capabilities, which is particularly important in today's fast-paced markets. It will also accelerate reconciliation and streamline the purchase and sales process for firms.
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. This will eliminate the need for customers to run their own internal conversion programs or outsource the function to a third party.
The new standardized input and output formats will be available as a FIX message that can be communicated via MQ or the FIX engine. NSCC will also produce a new universal intra-day MRO file. In addition, UTC will continue to support existing interfaces with markets and customers. @
[To learn more about the Universal Trade Capture (UTC) system, contact William Kapogiannis at email@example.com or 212.855.5667.]