TriOptima wins LIBOR Solution of the Year award at Asia Risk Awards 2021

TriOptima wins LIBOR Solution of the Year award at Asia Risk Awards 2021

 

TriOptima has been awarded the 2021 Asia Risk Technology Award for LIBOR Solution of the Year in recognition of its triReduce benchmark conversion solution. Offering over-the-counter swap market participants with a powerful tool to help mitigate the risk and uncertainty stemming from benchmark reform, the TriOptima solution is on track to define itself as one of the most efficient solutions for benchmark risk.

The solution uses both compression and conversion, effectively enabling users to reduce their exposure to legacy benchmarks, while simultaneously growing their level of adoption of alternative risk-free rates.

TriOptima clients are able to take a proactive and iterative approach to compression and conversion while maintaining tight control over their market risk exposures, in addition to reducing their legacy benchmark exposures over time and so avoiding any unnecessary burden on their operational and technological resources.

TriOptima first launched a multilateral compression tool 20 years ago and has since maintained its leadership in this area of OTC derivative markets.

Speaking about the legacy of the triReduce solution and its impact, Vikash Rughani, business manager of triReduce, noted, “triRe­duce has worked with the industry to manage the transition to clearing, standardisation in credit default swap markets, as well as now in benchmark reform. triReduce has built a philosophy of delivering certainty achieved by ensuring that each firm participating in the service does so within their own degree of comfort and risk appetite and based solely on their own submitted data.”

The triReduce solution allows for a deep connectivity between users in different segments of the market, by connecting to every major clearing broker and futures commission merchant, who in turn make the platform available to all their clients.

Rughani further stated that “the importance of a broad and deep network of market participants can never be understated. Without this, it would simply not be possible to achieve the results we are seeing in our triReduce benchmark conversion exercises. At the end of the day, a cleared compression service is limited by one thing: the availability of natural offsets in the submitted population that enables it to deliver a cashflow-neutral result preserving the integrity of a clearing house.”

Almost two years ago, TriOptima embarked upon a journey to increase awareness of how the triReduce compression network can form the foundation for a robust and effective conversion mechanism for alternative benchmarks. Their existing compression activities were already positively contributing to their clients’ benchmark reform goals, but they wanted to show a future where each individual market participant could further build upon their baseline to perform their transition in a proactive and controlled manner.

The benchmark conversion is especially pertinent in today’s market.

“From the moment global regulators set about identifying alternative interest rate benchmarks, it became clear that an unprecedented period of change for global OTC swap markets was not far away,” Rughani said. “The challenge of transitioning an OTC swap portfolio with exposures beyond the 50 years is immense.”

Transitions to new benchmarks typically happens with very little pre-established liquidity figures, according to Rughani. However, a solution such as triReduce can help in establishing activity in these new benchmarks which can be incredibly useful for market participants.

Singapore’s Swap Offer Rate (SOR) market clearly shows the magnitude of the impact of the triReduce benchmark conversion solution, he said. TriOptima has noted an unprecedented take-up of its compression services since the Monetary Authority of Singapore laid out a plan for the market to reduce SOR benchmark exposures. The level of exposure reduction it has witnessed was only made possible with the proactive participation from the broad cross-section of participants in the market.

Over the past 12 months, TriOptima has seen its benchmark conver­sion functionality move from concept in its pilot phase to a full market launch, with the solution live for currencies with benchmarks subject to index cessation in both the London Clearing House and the Japan Securities Clearing Corporation. There are now plans for it to also be used for OTC interest rate swap trades cleared through the Chicago Mercantile Exchange.

TriOptima has clearly been busy over the past few years in further developing its solution and growing market participation within its network, both to meet the firm’s own objectives as well as to help ensure a level playing field for the marketplace overall.

“triReduce’s network of customers and experience is helping to extend conversion opportunities beyond the cleared world and into additional products that house exposure to legacy benchmarks subject to cessation,” Rughani said.

While some of these contracts will go through fallback implementation, “we expect the market to continue to seek further certainty by transitioning them onto alternative RFRs in a more formal sense once the necessary ecosystem of products is available and to the extent resources allow,” he added.

Trade novation to support Asset Manager merger

Client type: Global Asset Manager

 

Challenge:

Following the completion of an asset manager merger, Custom Processing was approached to facilitate the transfer of selected funds and associated bilateral trades on OSTTRA MarkitWire and OSTTRA Trade Manager

 

OSTTRA Solution:

Following a review of the scope of work, the asset manager leveraged the Custom Processing team to handle all activities pertaining to the novation of trades across OSTTRA MarkitWire and OSTTRA Trade Manager

 

OSTTRA Delivered:

 


Customer Benefits

 

Focused, Tried and Tested

 

For more information or to arrange a call with a member of the Team please email info@osttra.com.

Novation and backloading of 70,000 trades for G15 bank restructure

Client type:  G15 Bank

 

Challenge:

Following internal restructuring, a G15 bank approached Custom Processing to facilitate the novation and backloading of bilateral trades across OSTTRA MarkitWire.

 

OSTTRA Solution:

Following a review of the scope of work, the G15 bank leveraged the Custom Processing team to handle all activities pertaining to the novation and backloading of trades across OSTTRA MarkitWire

 

OSTTRA Delivered:

 


Customer Benefits

 

Focused, Tried and Tested

 

For more information or to arrange a call with a member of the Team please email info@osttra.com.

OSTTRA MarkitWire CLS Connectivity Service: US Bank

Client type:  US Bank

 

Challenge:

A US bank has seen significant expansion in their cross currency trading book over the last three years. The trading expansion has increased settlement risk for the bank given the large notional exchanges across multiple counterparties, and settling payments on a gross bilateral basis results in operational inefficiencies, liquidity constraints and substantial Herstatt risk. These trades were already confirmed on the OSTTRA MarkitWire platform.

 

OSTTRA Solution:

The OSTTRA MarkitWire to CLS connectivity service helps firms to net the initial and final exchange settlements within the cross currency transaction seamlessly as part of the confirmation process. The client signed up to the service and went through a rigorous UAT cycle including hundreds of test deals across eligible products and currencies. OSTTRA MarkitWire successfully confirmed the transactions and delivered initial and final exchange instructions to CLS, enabling the client to validate and sign-off on their technical requirements.

 

OSTTRA Delivered:

 


 

Customer Benefits

Fully automated and configurable workflow for cross currency swap settlements via the market-leading platform – OSTTRA MarkitWire

Focused, Tried and Tested

 

 

For more information or to arrange a call with a member of the Team please email info@osttra.com.

CCP technical testing in preparation for CCP transition events

Client:  Global financial institution

Challenge:

A global financial institution faced difficulties and challenges testing and validating their OSTTRA MarkitWire development and in assessing downstream reporting impact for CCP transition events, in preparation for the LCH basis swap splitting and LCH Libor transition dress rehearsals. Due to the finite number of dress rehearsals available in UAT, and tight internal timelines, the client required technical sign-off prior to such dress rehearsals.

 

OSTTRA Solution:

OSTTRA developed and delivered an E2E solution and test harness to simulate CCP transition events with clients, with OSTTRA acting as the CCP and running the CCP transition events on behalf of the client. The client signed up to test and simulate five trades in total. OSTTRA successfully cleared and ran conversions on all five trades, enabling  the client to validate and sign-off on their technical testing.

 

OSTTRA Delivered:

 

 


 

Customer Benefits

 

Effective, streamlined, and flexible solution and process to simulate CCP transition events

 

Focused, Tried and Tested

 

Validation of production data ahead of CCP conversion event dress rehearsals

Client:  Global bank

 

Challenge:

A Global bank faced challenges to replicate and get their cleared production like trades and portfolio, into OSTTRA MarkitWire UAT. The trades were needed for use in the LCH Libor transition dress rehearsals so that the client could validate its production data in UAT and identify any issues in advance of the LCH Libor transition go-live.

 

OSTTRA Solution:

OSTTRA built and developed a new solution and offering, to upload and have production simulation trades in UAT, which could then be used by the client for CCP dress rehearsals. A process was designed to ensure effective and efficient delivery of the service and the bank signed up. OSTTRA was able to successfully create and deliver 2500+ trades in UAT for the client and the majority were successfully converted by LCH.

The bank was also able to identify some of their own internal issues following conversion.

OSTTRA Delivered:

 


 

Customer Benefits

Effective, streamlined, and flexible service to replicate production simulation trades in UAT for CCP transition events

 

Focused, Tried and Tested

 

OSTTRA MarkitWire CLS Connectivity Service: Global Tier 1 Bank

Client type:  Global Tier 1 Bank

 

Challenge:

A Global Tier 1 bank has seen growth in their cross currency trading book post the COVID-19 pandemic. The trading expansion has increased settlement risk for the dealer given the large notional exchanges across counterparties and settling payments on a gross bilateral basis results in operational inefficiencies, liquidity constraints and substantial Herstatt risk. These trades were confirmed on the OSTTRA MarkitWire platform with counterparties already utilising the settlement service.

 

OSTTRA Solution:

The OSTTRA MarkitWire to CLS connectivity service helps firms to net the initial and final exchange settlements within the cross currency transaction seamlessly as part of the confirmation process. The client signed up to the service and went through a comprehensive UAT cycle including thousands of test deals across eligible currency pairs. OSTTRA MarkitWire successfully confirmed the transactions and delivered initial and final exchange instructions to CLS, enabling the client to validate and sign-off on their technical requirements.

 

OSTTRA Delivered:

 


 

Customer Benefits

Fully automated and configurable workflow for cross currency swap settlements via the market-leading platform – OSTTRA MarkitWire

 

Focused, Tried and Tested

 

 

For more information or to arrange a call with a member of the Team please email info@osttra.com.

CDOR countdown: OSTTRA powers through 300,000 trades in major benchmark shift

LONDON 26 June 2024 – OSTTRA, a global post-trade solutions provider, has processed over 300,000 cleared Canadian Dollar Offered Rate (CDOR) trades through CCP Sync on its MarkitWire platform for more than 60 customers over the past month, as the industry moves towards finalising the transition to Canadian Overnight Repo Rate Average (CORRA) on 28 June.

The Canadian Dollar Offered Rate (CDOR) is the latest legacy benchmark rate, commonly referred to as the IBORs (Interbank Offer Rates), being replaced with new alternative transaction-based benchmark interest rates in the majority of regions across the globe. Transitioning these benchmarks affects a significant portion of the swaps market and OSTTRA customers. Interest rate swaps use benchmarks like LIBOR or its replacements (such as CORRA) to determine floating rate payments.

CCP Sync supports the transition events and allows OSTTRA MarkitWire to capture the results of any post clearing activity, including compression, from multiple CCPs, delivering the results to customers in a consistent format via existing connectivity.

Melissa Younger, Head of Rates & Credit Trade Processing at OSTTRA, added: “Our ability to process such a high volume of CAD trades successfully highlights our commitment to facilitating a smooth transition for our customers, who value our expertise and partnership. Comprehensive support, consistent processing across multiple CCPs and innovative solutions are key to ensuring the industry continues to adjust smoothly to new benchmark rates.”

OSTTRA triReduce compressed USD 684billion in the new benchmark during the week following the LCH transition event.

The market will turn its attention to the Mexican TIIE and Euroyen TIBOR in Q4. In the run up to these events, OSTTRA will provide customers with testing that mirrors live infrastructure, alongside technical support to ensure readiness for the dress rehearsals that run in advance of live events with multiple CCPs.  As customers seek to reduce their exposure to legacy benchmarks, OSTTRA triReduce has already completed a record H1 in MXN at CME with USD 1.4 trillion compressed and more cycles scheduled.

To find out more, talk to a member of our team at at info@osttra.com.

OSTTRA Launches New Service for Cross-Currency Swap (CCS) Conversion From LIBOR to Risk-Free Rates

LONDON, 07 June 2023 – OSTTRA, the global post-trade solutions company, today announced it has successfully delivered the first cross-currency swap conversions of USD/SGD swaps from SOR to SORA. The service will expand to cover other indices subject to cessation in the coming months.

OSTTRA has been working with the industry since 2021 to enable market participants to overcome the complex challenge of transitioning from legacy Libor benchmarks to new risk-free rates (RFRs). The latest service, an industry first, facilitates the multilateral conversion of uncleared cross-currency swaps away from legacy benchmarks to alternative risk-free rates (RFR).

The conversion process generates overlay transactions, in the form of market standard interest rate swaps and overnight index swaps, which are submitted to clearing, minimising the risk and present value (PV) impact. Any remaining PV impact from the overlay trades is settled in cash between the participants of the conversion run, making the process market risk neutral.

The first multilateral conversion, for USD/SGD swaps, was completed by eleven market participants, whilst a second conversion was performed by twenty-one participants ahead of CCP conversion for the SGD SOR benchmark. The service is also available to customers with legacy benchmark exposure in cross-currency swaps referencing other indices subject to cessation, including those in MXN, PLN, ZAR and CAD.

The new conversion service is delivered by OSTTRA triReduce and triBalance, while connectivity to CCPs for the overlay swaps is provided via OSTTRA MarkitWire. The process has been carefully coordinated with a highly engaged group of market participants.

“As one of the largest market makers in SGD derivatives, DBS is actively working with OSTTRA to convert its bilateral SOR cross currency swaps into SORA in preparation for a smooth industry transition to SORA. Through close collaboration with key industry players, an innovative solution was developed to reduce legacy SOR positions in the industry in line with regulatory requirements.”

–  Andrew Ng, Group Head, Treasury & Markets, DBS Bank

“OCBC Bank is proud to have participated in the inaugural CCS conversion in the SGD rate derivative market. We remain committed to working with the industry and our clients towards the transitioning of SOR to SORA, and the overall development of Singapore as a key financial centre.”

– Kenneth Lai, Head, Global Treasury, OCBC Bank

“UOB has been actively working with OSTTRA and is pleased to have participated in the Bilateral USD/SGD Cross-Currency Swaps conversion from SOR to SORA. This partnership paves the way for a smooth IBOR transition for SOR/SORA. We are very encouraged by this collaboration and look forward to working closely with the industry participants and OSTTRA in the future development of the SGD derivatives markets.”

– Leslie Foo, Group Head, Global Markets, UOB

“Our engagement with the industry over the last two years highlighted that market participants are committed to finding innovative solutions to reduce their exposure to legacy benchmarks. We are pleased to provide our non-cleared conversion service to help market participants overcome the technological and operational challenges of implementing fallback procedures and waiting until the deadlines for the respective legacy rates.”

– Vikash Rughani, Business manager at OSTTRA triReduce and triBalance

 

Find more information on how OSTTRA is supporting benchmark reform here.

 

From Faxes to Fintech: OSTTRA MarkitWire – Reflecting on 20+ years of industry evolution

The financial markets have undergone a dramatic transformation in the past two decades, and OSTTRA MarkitWire has been at the forefront of this evolution. From its origins replacing fax-based confirmations to its current role as a leading fintech platform, OSTTRA MarkitWire has helped shape the post-trade landscape and actively participated in the evolution.

Momentous change in financial markets

Looking back, the sheer magnitude of change is striking. Gone are the days of cumbersome manual processes, when boxes of derivative confirmations were couriered to counterparties to agree trades, or trade records were faxed over archaic technologies. Today’s seamless electronic post-trade processes have come a long way, driven in part by new technology but also by market events. And while not all those events have been anticipated or welcome, the challenges they presented have spurred innovation and ultimately benefited the entire industry. The ramifications of the global financial crisis have shaped much of today’s over-the-counter (or OTC) derivative trade workflows. Legislation has been passed and successfully rolled out across market jurisdictions.

Reflecting on the past twenty years, we feel it’s essential to pause and appreciate the industry’s remarkable evolution and accomplishments, and the role OSTTRA MarkitWire has played. But the journey doesn’t end here. OSTTRA remains committed to partnering with clients to navigate the challenges and opportunities that lie ahead. Synergies across the OSTTRA business mean clients will have single streamlined workflows across large data sets; a marked difference to a past world of siloed interactions.

20 years of evolution

The story of post-trade processing is a journey of evolution, driven by technology vendors but guided by financial institutions. In the early days of SwapsWire, the original name for OSTTRA MarkitWire, the focus was on building a platform that could connect counterparties for electronic trade confirmation in the interest rate derivatives market and then quickly progressed to support clearing. This marked a significant step forward from the manual processes that dominated the industry.

Since then, the service has evolved into a comprehensive platform driven by straight-through processing (STP), significantly reducing operational risk by minimising human intervention. Today it comfortably processes tens of millions of trade records yearly, supporting rates, credit, equity, and repo transactions across 34 currencies and various product sub-types, with connectivity to 12 CCPs and multiple venues supporting 8 venue types. Building on this success, OSTTRA MarkitWire is transforming the bilateral repo market with our standardised, automated affirmation and confirmation workflows, while working with our customers to prepare for the incoming clearing mandates in the United States.
Furthermore, OSTTRA Trade Manager interacts seamlessly with OSTTRA MarkitWire providing investment managers and fund administrators with a consolidated matching and confirmation workflow across asset classes.

OSTTRA MarkitWire has a proven track record of supporting the industry through periods of significant change and uncertainty. When the Lehman Brothers crisis emerged in 2008, we worked with our clients and clearing houses to assist in an orderly transition of portfolios. The partnership has continued through the rollout of clearing best practices and mandates worldwide with OSTTRA MarkitWire connectivity extended to relevant CCPs, not only for clearing but also for post-clearing events, including the cleared trade IBOR transitions. The service now includes CLS settlement and connectivity to trade repositories for regulatory reporting.

In this era of complex and intense regulatory debate, OSTTRA has remained a steadfast partner, providing clients and partners with automated, digitised solutions, helping to manage the cost and complexity of change.

 

Consensus building – the keystone for centralised adoption

One of the most important roles a scaled technology provider can play is to act as a forum for rational industry-wide decision making. The industry expresses its mutual needs, and we provide intelligence, expertise and insight on how workflows can evolve to satisfy new regulations efficiently.

Market participants can struggle to collaborate and find cost-effective solutions to benefit the industry without setting off legal alarm bells. We have provided a safe forum for discussion since the initial launch with a member group of 23 businesses interested in standardising inter-dealer messaging in the rates market. Today we engage with a network of over 1,600 active participants across multiple working groups and the network continues to grow, particularly in emerging markets where the demand for market infrastructure increases.

With our partners we have taken the industry on a journey, drawing on new technologies and techniques as they have become available. That journey is not stopping now; on the contrary, OSTTRA marks a shift into a new gear, with the promise of compelling and synchronised benefits to our customers.

Marrying ‘T0’ and ‘T+’ post-trade processes

As OSTTRA, we have aligned our services to enable frictionless workflow for confirmation and reconciliation processes. Our full legal confirmation remains the key cog in our credit, rates and equity businesses – providing a golden source of agreed electronic derivative contract information to market counterparties, and creating a point of agreement and standardisation that enables trust.

Using this record in downstream T+1 activities lowers the resource burden for operational teams managing increasing volumes and system complexities. In today’s environment of ever-increasing regulatory scrutiny, banks must conduct assorted reconciliations across their technology infrastructures to ensure data accuracy and compliance. This includes reconciling data between their own global business units, between counterparties, with clearing houses and also the data they report to trade repositories.

Given OSTTRA’s interconnected post-trade services and 20 year track record, we are uniquely positioned to assist the industry in navigating these processes. This is our bread and butter. Increasing STP, harnessing the power of data, enabling synchronised analytical processes and allowing customers to optimise their resources most appropriately aligns with our vision and track record of marrying post-trade processes for the benefit of the industry.

In delivering for our clients i.e., by connecting OSTTRA MarkitWire and our portfolio reconciliation service, OSTTRA triResolve, we endeavour to add further use cases that bridge the synergies within OSTTRA. Future cases will span different asset classes and platforms, amplifying the resource optimisation benefits our customers are continually searching for and removing redundant processes for good.

Partnering with the industry through Interest Rates reform and transition

Financial market professionals will be well-versed with the global introduction of overnight risk-free rates (RFRs), replacing legacy interbank offered rates (IBORs), across multiple markets and currencies. For over 20 years the legacy OSTTRA businesses have helped navigate industry change like central clearing, regulatory reporting, compliance timeliness, and disclosure of material economic terms (METs). Benchmark reform is no different.

OSTTRA MarkitWire’s CCP Sync services for Rates initially focused on netting, compression, and portfolio transfers. By listening to multiple CCP updates and absorbing trade messages back into customer systems via existing APIs, we enabled advantageous STP workflow and mitigated the need for customers to build additional post-trade connectivity. As clearing continues to evolve across various jurisdictions, this connectivity remains as important as ever.

Enter benchmark reform through clearing events – the process of running high-risk, multi-year projects of transitioning millions of trades from IBOR rates to new RFRs. Using our CCP Sync service, hundreds of customers have avoided expensive ‘blue ocean’ builds and instead utilised the OSTTRA MarkitWire connectivity to multiple CCPs and coverage of key market currencies, to achieve transitions in an automated manner. We partnered with the industry through the initial IBOR transitions in 2021 and the notable USD Libor transition events in 2023 – the work continues today.

As various markets and regulators continue to review and update legacy rates – most recently Canada, and looking ahead to Mexico, Japan and Israel – rest assured the OSTTRA team is on-hand to deliver exceptional CCP Sync services that reduce cost and risk through low latency and resilient frameworks. We have no doubt legacy rates will remain in certain markets, and that’s OK; our aim is to partner with the industry across their broader portfolios of trades, be they cleared or non-cleared, and when the time is right, we’ll be there to support rates transition activity.

 

It’s not about the destination, it’s about our journey together

So the question is, where does the industry go from here? With a backdrop of exciting new technologies such as distributed ledger and artificial intelligence (AI), our experts are naturally following these developments and applying innovative and incremental changes to our products, for example, OSTTRA Trade Manager’s Paper Digitisation module. We view these changes as natural improvements to the existing products that have served the industry so well.

Most importantly, we look to our clients to shape our functionality roadmap. Their input may be driven by technology, the pursuit of greater operational efficiency, or challenges arising from new ideas or regulatory and compliance needs. Whatever the use case, we are committed to working collaboratively with the industry. We are not in the business of advocating shiny new technologies for their own sake, our philosophy is to advance the needs of the industry, building on 20 years of connectivity, evolution, resilience, partnership and transparency.

Two decades of experience have prepared us for the next chapter of post-trade. We’re embracing the challenge and the technology, collaborating with our clients to build a future defined by efficiency, innovation, and connectivity. The future is post-trade, and it starts now.

For more information, contact info@osttra.com

Services