FinanceFeeds Editor-in-Chief Nikolai Isayev interviewed Joanna Davies, head of FX and Securities at OSTTRA, about ETD timeliness and data standards.The conversation quickly moved to the crux of the problem – it’s possible to meet the time requirement in a standard, but the trade in the end account can still be incorrect.
OSTTRA offers post-trade ETD services that include the creation of a trade order ID which persists across the workflow, tying together the data fields and thereby supporting data accuracy and ultimately timeliness. This real-time post-trade solution transforms the inaccuracies in the ETD allocations process, increasing operational efficiency and reducing risk
Joanna Davies explains: “We bring together a network of market participants – we have 120+ buy-side clients, 40 executing brokers, and 20 clearing brokers on our ETD solution that has been serving the post-trade community for more than 10 years. The latest iteration of this service, already in production and being leveraged today by members of our community, adds layers of data accuracy which increases our network participants’ operational efficiency and facilitates achieving the DMIST proposed timeliness standard.
OSTTRA is leveraging assets across the organisation and is moving the post-trade ETD conversation forward through the establishment of interoperability with OSTTRA triResolve’s comprehensive total equity reconciliation solution. The integration will ensure that trades, which are booked and confirmed via ETD ClientLink, seamlessly flow into the OSTTRA triResolve system, facilitating T+1 trade, portfolio and margin reconciliation services.
This development helps clients who are looking to streamline their ETD reconciliation and automate the entire margin and settlement workflow. This helps operations team to detect and resolve potential data breaks on T+. Stay at the forefront as OSTTRA progresses this new development:
According to the latest data compiled by FIA, worldwide volume of exchange traded derivatives reached 10.57 billion contracts in March, the highest level ever recorded.
This was up 24.9% from February 2023 and up 54.2% from March 2022. These volume increases can strain existing manual processes. Consequently, we’ve seen a real uptick in enquiries from investment management institutions looking to transform the efficiency of their ETD processing and create trade certainty in uncertain times against a background of rising demand for ETDs.
A second factor driving recent growth in ETD post-trade processing is regulation: In response to the Uncleared Margin Rules (UMR), investment management firms explored options to reduce their UMR exposure by assessing the use of EFRPs for OTC FX forwards. OSTTRA is partnering with leading brokerage firms to provide seamless and automated reporting of EFRPs to exchanges.
OSTTRA has been working with fellow DMIST members to identify a possible data standard for post-trade processing of ETDs. Significantly, as part of this process, we have provided data and analysis that takes the industry much closer to defining this standard, as detailed in the DMIST Annual Progress Report for 2023.
The application of a common data standard is being proposed to increase data quality, create operational efficiency, and reduce systemic risk by minimising breaks on trade date.
Data and analysis from OSTTRA-led sessions with other DMIST participants has been contributed to DMIST’s data and information working group, resulting in significant progress in defining any proposed data standard which will support the DMIST draft standard on timeliness.
Together, these standards represent a significant step towards increasing efficiency and resiliency in ETD markets. OSTTRA will continue to actively gather information on different firms’ requirements to ensure all major use cases are considered and the OSTTRA ETD network is consulted in any new data standard.