New Automated Data Feed Between Omgeo’s Crosscheck and DTCC

Omgeo announced the availability of an automated data feed between Omgeo CrossCheck and DTCC's Trade Information Warehouse.

The link is designed to reduce operational risks in the over-the-counter (OTC) credit derivatives market by enabling market participants to align their portfolios with contract records maintained by the Warehouse, a service offering of DTCC's Deriv/SERV unit.

According to a release, Warehouse is the market's first trade database and centralized electronic infrastructure for post-trade processing of OTC derivatives contracts over their lifecycles, from confirmation through to final settlement.

Omgeo CrossCheck is a centrally hosted, exception management solution that automates the comparison of portfolios of derivatives between counterparties.

It helps minimize the risks and consequences of unaligned portfolios in advance of payments, collateral calls, credit events and other situations, according to Omgeo.

As such, firms are better able to scale their business as volumes expand, while effectively managing risk in times of market stress, allowing for high levels of transparency and efficiency, the company said in the release.

The new link enables Omgeo clients that are also customers of DTCC's Deriv/SERV and the Trade Information Warehouse to receive an automatic feed of relevant credit derivative trade data from the Warehouse to CrossCheck. With this feed in place, clients can compare their portfolio records against the Warehouse to ensure agreement with the "golden copy" of trade details for positions with all counterparties who use Deriv/SERV. "Since the debut of Omgeo's counterparty risk management offerings, and specifically our portfolio reconciliation service Omgeo CrossCheck, we've been dedicated to ensuring that the data involved is of the utmost quality," said Steve Matthews, managing director, product at Omgeo. "By linking CrossCheck to the global standard for centralized and secure data for OTC derivatives at DTCC's Trade Information Warehouse, our clients can be assured that their risks are further mitigated throughout the length of their derivatives contracts."

Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=216401750

DTCC to Support All Central Counterparties for OTC Credit Derivatives

In an effort to bring greater certainty and safety to the market for credit derivatives, The Depository Trust & Clearing Corporation (DTCC) said it will support all central counterparty solutions for credit default swaps, in a non-discriminatory manner, with its Trade Information Warehouse, whose capabilities include central net settlement and asset servicing.

Through its DTCC Deriv/SERV subsidiary, the company is currently working with ICE Trust/The Clearing Corporation, CME/Citadel, LIFFE/LCH, and Eurex to facilitate their efforts to provide CCP services trade guarantees for credit default swaps (CDS). The Trade Information Warehouse, as the market's central registry and industry-recognized post-confirm infrastructure for credit derivatives, is optimally equipped to support any and all CCPs that are established in the CDS market. Virtually all dealers and buy-side participants along with 15 third-party service providers in the global CDS market are already linked to the Warehouse and utilize its functionality.

"From the outset of our involvement in the OTC derivatives market in 2003, DTCC has been committed to bringing automation, certainty and reduced risk to trading in CDS and other derivatives instruments," said Peter Axilrod, managing director, business development and Deriv/SERV, at DTCC, in a press release. "By utilizing the Warehouse's post-trade processing infrastructure rather than investing valuable resources to build their own, CCPs can achieve the objectives of CCP clearing, that is, to mitigate and mutualize counterparty risk and increase market liquidity, at the lowest cost and the greatest efficiency to their CCP members. Our support of CCP providers will give the industry standard centralized asset servicing across both cleared and bilateral trades," he said.

Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=212800098

GlobeOp Integrates Auto-novation Processing with DTCC Deriv/SERV

GlobeOp Financial Services, an independent provider of business process outsourcing, financial technology services and analytics to hedge funds and asset managers, has rolled out an automated novation processing for credit derivatives. The service supports the Operation Management Group's (OMG) commitment that the industry will implement automated novations for credit derivatives by the end of 2008.

Auto-novation enables all trade counterparties to receive real-time notification, standardized information and novation consent electronically via DTCC Deriv/SERV. Through GlobeOp's direct, real-time link to DTCC, clients can execute novations electronically, and be fully integrated with GlobeOp's straight-through-processing (STP) into trade booking, accounting, risk and other systems. The entire process occurs within GlobeOp's GoOTC over-the-counter (OTC) derivatives trade processing system.

"Providing this link to the Deriv/SERV novation process helps clients reduce operational risk by replacing novation consent emails with a robust real-time electronic platform," said Jon Anderson, global head of OTC derivatives, in a press release. "GlobeOp's technology platform reduces errors related to manual booking & email processes, eliminates time spent booking assignments and increases efficiency through autogeneration of trade confirmation to DTCC. This latest innovation also enables our clients to act ahead of the February 28, 2009 deadline after which major dealers will not accept novation consents by email," he said.

By Leslie Kramer

Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=212501198
Publish Date: December 18, 2008

DTCC, Markit to Create Single Point of Derivatives Confirmation

Washington's calls for efficient, automated processing of over-the-counter (OTC) derivatives has grown to a clamor that vendors and Wall Street firms can't ignore. Just today, Acting Under Secretary for Domestic Finance Anthony Ryan said, "With respect to market infrastructure, we are encouraging the development of an integrated operational infrastructure for the OTC derivatives market that ensures accuracy and timeliness of trade data submission, resolution of trade matching errors, and integrated processing. We are calling for a cash settlement protocol adopted by market participants and incorporated into standard documentation, and for netting, novation and clearing of OTC derivatives contracts by a centralized counterparty."

In answer to this demand -- an echo of earlier statements made by Alan Greenspan and Ben Bernanke -- the DTCC and Markit announced today the formation of a new company that will combine Markit's front- and middle-office trade processing services with DTCC Deriv/SERV's back-office post-trade confirmation and matching services, providing a single gateway for confirming OTC derivative transactions globally. Buy-side and sell-side OTC derivative market participants will be able to confirm trades and to gain access to additional services provided by Markit and DTCC through a common portal.

Industry observers responded favorably to today's announcement. "Buy-side firms are not keen to patch together a network of internal and external communication networks and systems, and have been waiting for a major dealer-backed solution," said Denise Valentine, Aite Group senior analyst. "Two dealer-backed entities " in the form of Markit and DTCC " have responded to the buy-side demand and have created a new entity to further the cause of automation and simplification."

And analysts at the Tower Group said, "This partnership will prove to be a critical turning point in the development of a single, global operating infrastructure for the full range of OTC derivatives. The combination of Markit Wire and Deriv/SERV addresses the inefficiencies associated with the current fragmented confirmations landscape, reduces the likelihood of radical regulatory intervention, and eases the strain on industry middle and back offices. Although broker dealers may be concerned that one organization now has monopoly power in OTC confirmations, TowerGroup anticipates that the governance structure will allow the industry to continue to influence the direction of the partnership. TowerGroup expects the partnership will yield a central data repository that can be the springboard for multiple new products, such as portfolio reconciliation and collateral management services."

The new company will comprise Markit's recently acquired Markit Wire platform (formerly SwapsWire) as well as its other trade processing services such as Markit Trade Manager, Markit Tie Out and Markit PortRec. DTCC will contribute its Deriv/SERV matching and confirmation engine and its AffirmXpress, MCA Xpress and Novation Consent services. Additional services that will not become part of the new company include Markit's data and valuation services and DTCC's downstream Trade Information Warehouse, centralized settlement and payment netting services.

This initiative may accelerate the adoption of electronic processing solutions across the rapidly growing, $454 trillion OTC derivative market where approximately 50% of transactions are still confirmed on paper.

The new company will be jointly owned by DTCC and Markit, and will be governed by an 11-member board of directors. Michael Bodson, executive managing director for DTCC's business management and strategy overseeing all DTCC business lines, will be chairman of the new company. Jeff Gooch, executive vice president of Markit, will be the new company's chief executive officer.

In addition to facilitating greater industry adoption of electronic confirmation, the new company will offer automated trade affirmation, trade allocation and novation consent solutions to the market on a cross-product basis. It will initially support both DTCC's and Markit's confirmation platforms.

The new company will be headquartered in London, with a second major centre of operations in New York City and representative offices in Europe and Asia. The combined business will have over 1,100 financial institutions as customers and annual transaction volumes of over 7 million across the OTC interest rate, credit and equity derivative markets.

The DTCC-Markit agreement will become effective following completion of due diligence, regulatory filings and approval by relevant global regulators, including those in the U.K. and U.S. The name of the new company will be announced at a later date.

Publish Date: July 21, 2008
Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=209400184

Technology Upgrades Improve Derivatives Processing

Derivatives Processing picks up speed thanks to tech upgrades at DTCC, SwapWire, major broker-dealers and custodians.

What a difference two years make. In October 2005 at the Institute of International Bankers Luncheon in New York City, Timothy Geithner, president of the Federal Reserve Bank of New York, expressed grave concerns about "the growth in volume and complexity of new instruments for risk transfer, which has advanced, as it typically does, ahead of improvements in the trade-processing infrastructure and risk management and control practices." Among other problems, he cited "the degree of manual processing required for trade capture and settlement, ... and the slow adoption of market services for automated processing."

Fast-forward to summer 2007, and derivatives processing is a slightly more automated world, especially credit derivatives -- contracts that transfer the risk of the total return on a credit asset falling below an agreed level without transfer of the underlying asset. An April 2007 report from the International Swaps and Derivatives Association (ISDA) found that outstanding credit derivatives trades fell from 16.2 days worth of business in 2006 to 5.5 today; interest rate derivatives were down to 14 days from 50. The survey also found that among large firms, more than 70 percent of credit derivatives confirmations are sent out T+1, up from 50 percent a year ago.

"Last year there was a lot of attention to credit derivatives because of the fast growth in that market and outside pressure from the Fed and [British regulatory body] FSA," explains Brad Bailey, senior analyst at Aite Group. "There was a considerable spend on technology and innovation by different vendors," including Calypso, Markit, T-Zero, Thunderhead and Interwoven, and the major dealers invested heavily in these upgraded solutions, he adds.

Further, the Depository Trust and Clearing Corp., the broker-dealer-owned clearing utility, built a trade information warehouse that stores a "golden copy" of every trade record that passes through its DerivSERV engine for matching and confirming credit derivative trades electronically. About 80 percent of all credit default swaps are matched and confirmed through DerivSERV. And another major utility, SwapsWire, now has 15 dealers and 30 interdealer brokers using its electronic confirmation service for equity derivatives.

In other developments, the Financial products Markup Language (FpML) -- an XML message standard for the over-the-counter derivatives industry -- is gaining traction as a universal language for derivative transactions. A novation protocol has been agreed upon for handling the reassignment of trades to new counterparties. And large broker-dealers and custodians, such as State Street, are rebuilding their derivatives processing platforms to accommodate new derivatives products.

Yet there's work to do before derivatives processing is completely automated. "Utilities like SwapsWire and DTCC are not keeping pace with the growth in new types of derivatives products coming out," says State Street SVP Neil Wright, who along with fellow SVP Kevin Sullivan was hired by the firm at the end of April to oversee ongoing development of its derivative-processing capabilities. For instance, while the DTCC addresses credit derivatives, commodity and equity derivatives are growing quickly and are not yet addressed by the DTCC's matching service or trade information warehouse, Wright notes.

Equity derivatives are likely to be the next area of focus. "Last September the Fed announced it will look at the equity derivative market, which is a very big, client-facing global market," Aite's Bailey says. "The industry expected this, and there's been a lot of cooperation among the dealers and ISDA working groups."

State Street's New Platform

One of the major difficulties with automating derivatives, State Street's Sullivan says, is handling the many data fields each contract requires. "In the exchange-traded securities world, you might have five pieces of data on equity trades or bond trades, and it's always the same five or six pieces of data. So you can build a system around that assumption," he explains. "But in the derivatives world you might have over 100 pieces of data from a universe of about 10,000 that can exist. It's difficult to build a framework that can handle new products as they emerge quickly because the number of fields that are available is so much greater."

Sullivan and Wright are building a new asset-servicing platform to provide middle- and back-office accounting. They're constructing a service-oriented architecture into which they will plug third-party software and proprietary tools. "There's no one product on the market that can meet the needs of an asset-servicing organization the size of State Street," Sullivan notes.

The framework will accept data feeds from DTCC and SwapsWire and validate trades via the DTCC's trade information warehouse. "The industry has accepted that the DTCC's trade data warehouse view of the trade is, in fact, what they call the golden copy," Wright says. "If there's any dispute, those are the terms of the transaction that both parties have agreed to."

The new platform will make heavy use of FpML. "It provides a single dictionary for the 10,000 fields that are used in derivatives," Sullivan says. "Because everybody understands what those 10,000 fields mean, the confusion that can occur is reduced." The initial rollout of the platform -- which will accept trades in any format and convert them to FpML -- later this summer will cover all products that use FpML today, Sullivan adds, noting that the firm will be able to service new types of derivatives products as soon as they can be represented by an FpML message.

DTCC Update

DTCC launched its trade data warehouse for credit derivatives in November; all trades matched in DerivSERV are stored there automatically. These records should ease post-trade contract maintenance and result in fewer disputes, according to Janet Wynn, managing director of DTCC. All parties reconcile with the warehouse rather than with multiple dealers, which helps with portfolio margining and risk management, she explains.

The next step for the trade information warehouse is "backloading" -- getting pre-November 2006 portfolios into the warehouse. "The largest firms have the bulk of the portfolios," says Wynn. The so-called Fed 14 (the 14 major broker-dealers the Fed asked in 2005 to reduce credit derivatives backlogs) have backloaded most of their contracts; others have started. "We expect to be backloading through early next year," Wynn says.

The trade information warehouse will help DTCC automate quarterly settlements processing, Wynn continues. Credit derivatives contracts have payment obligations every quarter. In February, DTCC began work on automatically calculating these payments for single names and index trades, which Wynn says is 85 percent of the market. "We're going through a long trial period where we're showing people what the calculations would be, and they're comparing them to their own risk calculations," she says, adding that in November DTCC plans to offer straight-through processing for these quarterly payments.

DTCC also is testing and hopes to roll out by summer's end a trade information warehouse feature that lets users record a credit event, such as a company's bankruptcy or merger. "Right now if there is a credit event, people have to notify each other that an event has happened and which contracts are subject to it," Wynn reports. "Using our system, people will be able to flag an event and note which contracts are impacted." Not only would the noting of credit events help with calculating quarterly payments, it should help address the concern of regulators, such as the Fed, that the market may be ill-equipped to handle major credit events.

To use the new DTCC features, custodians and larger dealers are updating their systems. But, Wynn points out, small firms don't need to worry. "Folks that are small can just use spreadsheets for input and output," she says. "We're trying to work with them on getting an automated feed to their service provider."

Further down the road, the DTCC will work on automated processing and a warehouse for other types of derivatives, such as equity derivatives. "A small percentage of the equities market is confirmed electronically right now, so our focus at the moment is getting those transactions confirmed electronically," Wynn relates. "To drive forward automation here, we have to get a lot of participation from the buy side and across hundreds of second- and third-tier banks, because every bank in the world uses interest rate derivatives for asset/liability management."

Publish Date: Jun 18, 2007
Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=199903414

Bear, Goldman and Lehman sign up to Markit OTC affirmation service

Markit, a provider of independent data, portfolio valuations and OTC derivatives trade processing, has launched a new electronic affirmation service within Markit Trade Processing (MTP). The first dealers to sign up are Bear Stearns, Goldman Sachs and Lehman Brothers.

The new service, which builds on Markit's existing affirmation model, is unique in its ability to electronically match trades between counterparties prior to confirmation. Alternative vendor affirmation solutions simply provide a connectivity mechanism that routes information between sell-side and buy-side firms.

MTP allows clients to reduce risk by automating the post-trade lifecycle for all OTC derivative instruments. Last month alone, the service processed in excess of 60,000 trades. MTP provides trade date affirmation and trade confirmation through industry utilities such as the Depository Trust & Clearing Corporation (DTCC). Markit sends more trades to the DTCC's Deriv/SERV platform than any other service provider.

Markit's platform also supports non-STP (Straight Through Processing) workflow, enabling clients to process paper confirmations in an automated, streamlined manner. This is particularly useful for processing equity derivatives which are likely to remain a hybrid environment of paper and electronic confirmation methods.

The launch of Markit's cross-asset electronic matching service coincides with a surge in demand for equity derivative processing solutions to tackle the backlogs building up in the asset class. A letter sent by the New York Federal Reserve to major market participants in May this year stated that "there remain significant challenges to automating the equity derivatives infrastructure…Additionally, dealers have not maintained the backlog reduction levels achieved in January 2007."

"As the derivatives market continues to grow substantially in both volume and complexity, our challenges associated with manual processing have also grown," stated Terrance Berland, Senior Managing Director at Bear Stearns. "We are quite excited about the potential that Markit's trade processing platform provides us to address these challenges across credit, rates and equities."

"The OTC derivatives markets continue to grow, and market particeet participants are very aware of the need for automation to achieve operational efficiency. Goldman Sachs and its clients require trade processing services that handle all types of OTC derivatives, including new instruments such as ABCDS and LCDS, seamlessly. We have very rigorous controls and processes, and chose Markit's trade processing service because it is the most comprehensive solution in the marketplace today," noted Bradford S. Levy, Managing Director at Goldman Sachs.

Jeff Gooch, Executive Vice President and Head of Processing and Valuations at Markit, said: "Having launched an affirmation service that connected counterparties twelve months ago, it became clear that funds and dealers operate in many different ways. Markit has therefore launched a new version of the service which is the first of its kind, allowing complete flexibility to cater for an institution's preferred operating method. By offering electronic matching prior to confirmation in addition to more traditional affirmation models, we enable our clients to meet their needs in equities, credit and rates, including meeting the new Fed targets for equity derivatives."

Publish Date: June 26, 2007
Source URL: http://www.finextra.com/fullpr.asp?id=15664

WS&T News - Wall Street and DTCC Bring Derivatives Processing into 20th Century

At the SIFMA show today, Frank De Maria, global head of derivative client services and operations at Merrill Lynch, offered an interesting quote from Alan Greenspan, made six weeks ago: “I was shocked to find credit derivatives speculation and clearing operated with 19th century technology.” He was talking about trades being handled by phone, fax and paper. De Maria then Googled other 19th century inventions and found the stapler, barbed wire, dynamite and the zipper among them. Point being, it's time for modernization. Merrill Lynch and 13 other Wall Street firms have been working with the DTCC to build a data warehouse for derivatives, such that all derivatives trading data are in one place and there's one "golden copy" of every trade record.

"There will still be fails, but you will know the source of every fail," De Maria says. "You can proactively manage a fail, where today it's reactive."

So far, 850 firms are participating in the data warehouse, which is called Deriv/SERV. That includes 500 hedge funds, 150 asset managers and one custodian, according to Janet Wynn, managing director of the DTCC. "We will run heavy user acceptance tests this year," she says.
The DTCC also hopes to add other types of instruments to the warehouse as well.

In a separate session, Noland Cheng, managing director of Morgan Stanley and chairman of SIFMA's operations committee, said the committee is working to build an industry data warehouse that will combine records processing for different types of investments, reduce overhead effort for a lot of firms, and help regulators perceive the industry as efficient.

Publish Date: May 03, 2007
Source URL: http://www.wallstreetandtech.com/blog/archives/2007/04/wall_street_and.html

DTCC rebates $3m to derivative dealer customers

The Depository Trust & Clearing Corporation's (DTCC) Deriv/SERV business announced today a record year of performance supporting the global over-the-counter (OTC) derivatives market, with transaction volume tripling in 2006 and DTCC providing a first-time rebate of $3 million to its global derivative dealer customers.

Key accomplishments for DTCC Deriv/SERV:

• Processing a record 2.6 million in transaction volume in 2006, a nearly three-fold increase from the 945,000 handled in 2005;
• Increasing matching and confirmation rates for credit derivatives trades (i.e. credit default swaps) to more than 80% in 2006 up from 15% in 2004 through Deriv/SERV. This increase has played a key role in addressing regulators concerns about improving efficiency and managing risk in the marketplace;
• Growing Deriv/SERV's global customer base to 753 global derivatives dealers and buy-side firms from 207 the prior year. DTCC has the largest community of users for post-trade processing in the OTC derivatives market. Deriv/SERV customers include all major derivatives dealers and a rapidly growing number of investment managers and hedge funds in 30 countries;
• Extending the Deriv/SERV service to include additional OTC credit, interest rate and equity derivative products, thereby giving the industry a fully-integrated, single gateway through which market participants can automate processing and reduce risk for a wide range of OTC derivatives products;
• Launching the Trade Information Warehouse to provide an automated central repository for tracking OTC derivatives contracts over their life cycle, which can extend for years. This large-scale global initiative was singled-out by global regulators (U.K.'s Financial Services Authority, U.S. Securities and Exchange Commission, Federal Reserve Bank of New York) in a September 2006 Financial Times Op-Ed as important in strengthening the "systems and risk" mitigants that exist in the market.

Driving Down Costs

"DTCC's vision is to help our OTC derivative customers minimize operational risk, lower costs and facilitate growth by delivering a centralized, borderless automated solution to process trades in this dynamic market," said Robert McGrail, executive managing director, Domestic and International Core Services, DTCC.

"Following a yeaa year of exceptional performance for Deriv/SERV, we are pleased to provide this first time rebate to our dealer customers. Though modest, it reflects our commitment to bringing the benefits of cost efficiency back to our clients. We anticipate making future rebates as our transaction volume and client base continue to increase and we achieve the economies of scale that drive costs down further," said McGrail.

As a member-owned organization, DTCC and its subsidiaries operate on an "at-cost" basis, charging transaction fees for services and then returning excess revenue to its members. Deriv/SERV's dealer customers are charged these "at-cost" fees, which include volume discounts, while buy-side firms are not charged to use the service.

Deriv/SERV: The Global Industry Standard

Recognized by the industry as the global standard for post-trade processing for the OTC credit derivatives market, Deriv/SERV's matching and confirmation service played a key role in helping market participants reduce the backlog of unconfirmed credit derivatives trades by 80% as of June 2006.

Deriv/SERV was expanded in May 2006 to include credit default swap index tranches and expects in the spring to accommodate CDS on loans and CDS on single name asset backed securities. Automated support of lifecycle events for OTC interest rates derivatives went live last October. This spring, the service also expects to expand its comprehensive European and North American equity derivatives coverage to accommodate equity derivatives products such as Asia ex-Japan share and index options and swaps and Japanese index variance swaps. With these additions, Deriv/SERV expects the service will support more than 60 OTC equity, interest rates and credit derivatives products by the first half of this year.

Trade Information Warehouse: A material step forward for the market

Working closely with market participants worldwide, DTCC's launch of the Trade Information Warehouse last November is aimed at addressing industry concerns about the efficiency and certainty of post-trade processing for OTC derivatives contracts throughout their lifecycle, which can extend for years. It is designed to be a comprehensive trade database and support infrastructure that automates and standardizes post-trade processes such as payment calculation and settlement, notional adjustments and contract term changes.

In a March 10, 2006 letter to global regulators, leading credit derivatives dealers cited the development of the warehouse as a "material step forward in reducing operational risk and increasing operational efficiency in the credit derivatives market." Regulators also publicly encouraged robust adoption of the warehouse by industry participants, citing its importance in sustaining a more automated post-trade processing environment.

In December, DTCC announced that it selected CLS Bank International as its partner in providing central settlement of payments for OTC derivatives contracts housed in the warehouse. DTCC also extended its collaborations to include such service providers as Coretexa, Interwoven, Omgeo, SWIFT, Thunderhead, complementing connectivity Deriv/SERV has with such service providers as MarketAxess, Markit, T-Zero and Thomson Trade Web.

Source - http://www.finextra.com/fullpr.asp?id=13805

Publish Date - March 08, 2007

News: Swift's securities efforts boosted by DTCC link

Source URL - http://www.finextra.com/fullstory.asp?id=16002

Swift's efforts to extend its franchise further into the securities market have received a boost with the creation of a link between the SwiftNet IP messaging platform and the Deriv/Serv over-the-counter (OTC) derivatives matching and confirmation service from New York's Depository Trust and Clearing Corporation (DTCC).

The link between the two services allows Swiftnet users to deliver real-time, transaction data to DTCC Deriv/SERV for matching and confirmation without having to create a separate, direct computer-to-computer connection to DTCC.

DTCC Deriv/Serv provides automated matching and confirmation for a wide range of credit, interest rate and equity derivatives products. Its global customer base includes over 640 dealers and buy-side firms in more than 25 countries worldwide.

Peter Axilrod, managing director, DTCC business development, comments: "Our collaboration with Swift expands the options available to buy- and sell-side firms to transmit real-time data to Deriv/Serv."

The hook-up to Deriv/Serv provides a welcome boost to the Brussels-based co-operative as it seeks to regain traction in the securities business. Speaking at a press conference at Sibos in Sydney yesterday, Swift CEO Lenny Schrank admitted that the company still has more to do to win over investment managers in particular.

To that end, Swift is mid-way through a thoroughgoing re-structuring of its securities industry division under head James Donovan (pictured). Six new divisions are being created to cater directly for the needs of distinct industry segments, including custodians, broker dealers, market infrastructures and investment managers, funds and treasury. The Society is also looking to hire professionals from the industry to take critical leadership roles in the new structure.

The need for improved automation in the securities business, and the OTC markets in particular, has been emphasised by the results of a recent JPMorgan poll of 20 asset managers and institutional investors who cited data management and systems infrastructure issues as the biggest challenges they faced. Three quarters of respondents said that their current infrastructure provided limited and insufficient support for the pricing and processing of derivatives.

Kirit Bhatia, global head of securities collateral management at JPMorgan, notes: "While asset managers and institutional investors are increasingly using OTC derivatives for a variety of investment reasons, many are not equipped for the associated processing challenges. The snapshot provided by these poll results supports what we are hearing through our ongoing dialogue with our wider client base and the market."