DTCC Connection

Sep 01, 2011 • DTCC Connection

New Equity Post-Trade Risk Management Service: The Countdown Begins

by Craig Donner


DTCC is gearing up to launch DTCC Trade Risk Pro℠, a groundbreaking new post-trade risk management service for equity market participants. The company plans to roll out customer training guides in October, with the service expected to launch in pilot in 4Q2011, subject to regulatory approval.


Trade Risk Pro will provide a comprehensive approach to post-trade risk management by giving clearing firms the ability to monitor and set credit limits on their correspondents’ and other business units’ equity trading activity. It will be the only service in the U.S. marketplace that delivers a single, centralized view of post-trade activity for virtually the entire U.S. equity marketplace, including the NYSE, Nasdaq and other equity trading venues and liquidity destinations, including correspondent offsets.


The service will source its data from NSCC, which, as the central counterparty for the U.S. equity markets, holds the legal and binding contract reports for virtually all executed transactions. “Trade Risk Pro is unique in the industry because it shows the true exposure of individual firms based on their actual market activity,” said Murray Pozmanter, DTCC managing director and general manager, Clearing Services. “Pre-trade data alone can paint a skewed picture of a firm’s risk exposure because it will inevitably include orders that are never executed. We see Trade Risk Pro as a key risk management tool to help clearing brokers more effectively manage the exposure introduced by their correspondents and mitigate systemic risk.”


Learning curve

To educate customers on how to use the new post-trade risk management service, DTCC will launch a web interactive guide (WIG) in the coming weeks.


The first phase of the WIG, scheduled to be available by early October, will focus on providing detailed pre-use instructions, technical information and output formats for early adopters of the service. The second phase, which will include a user guide as well as other information on how the service works, is set for release in late October.


“The WIG will consolidate all information about Trade Risk Pro in a central location and make it easily accessible to customers via the Internet,” said Pozmanter. “We’re launching it in two phases so we can get the necessary technical information about connecting to and testing the service into the hands of the firms that will be among the first users. After that, we’ll post a comprehensive user guide to help answer any questions that new and prospective customers may have about Trade Risk Pro.”


The WIG will be accessible via the Clearance Learning Center at dtcclearning.com/learning/clearance.@


[If you have questions about Trade Risk Pro, contact Bonnie Bowes at 212.855.8024 or bbowes@dtcc.com.]


dtccdotcom