J.P. Morgan FX Prime Brokerage turns to OSTTRA to cut Designation Notice onboarding times


FX prime brokers face cost and complexity challenges managing Designation Notices. These FX tri-party credit agreements tend to be managed on a variety of in-house and third-party platforms, resulting in complex, duplicative workflows and the potential for errors in the setup and maintenance of credit lines.


Our solution

OSTTRA Designation Notice Manager, powered by Traiana, has been adopted by J.P. Morgan FXPB as a single platform to establish, monitor, amend and terminate Designation Notices across all Executing Broker (EB) relationships, including EBs not on the OSTTRA Designation Notice Manager network.

The solution integrates seamlessly with OSTTRA CreditLink, synchronizing limits for real-time monitoring and control of trading activity.

During the project, the OSTTRA team worked alongside J.P. Morgan FXPB to onboard more than 2,000 designation notices. This has resulted in streamlined workflows with the all the EBs already on our network, as well as the ability to manage ‘offline’ EBs using the same tools and processes.

By fully adopting OSTTRA Designation Notice Manager, the team at J.P. Morgan FXPB have seen an improvement in DN onboarding times from up to 8 weeks to less than 3 weeks


“Standardising the management of our DNs on OSTTRA Designation Notice Manager has delivered real advantages. Having all DNs in a single system, managed through a common process has brought efficiencies, cut onboarding times and reduced the potential for errors.”

“The ability to automatically synch limits with OSTTRA CreditLink is also a key benefit, ensuring limits are maintained and monitored in real time.  We look forward to working with OSTTRA on the next level of integration, incorporating additional FXPB agreements such as Reverse Give Ups, Double Give Ups and Switches.”

Leah Mallas, Global Head of FX Prime Brokerage and FX Clearing at J.P. Morgan


Customer benefits

Effective, streamlined, and flexible Designation Notice management and intraday risk limit monitoring.

Operational efficiency

Enhanced credit risk management

Streamlined infrastructure onboarding


To learn more about Credit Management, click here or contact us at info@osttra.com.

Best FX post-trade provider: OSTTRA TriOptima

Best FX post-trade provider: OSTTRA TriOptima


Supplying both multilateral compression and optimisation services to global FX markets, consistent high performance from TriOptima has seen the firm go from strength to strength in challenging times.
This year’s best FX post-trade provider – named at the FX Markets Asia Awards – is TriOptima. A market leader in portfolio compression, TriOptima has more than 260 clients worldwide. It is the only market player providing both multilateral compression and an optimisation service for FX markets, helping clients simplify operations and optimise resources, limit risk and reduce counterparty exposures. TriOptima continues to refine its service and make portfolio management simpler for the industry.

Phil Junod, senior director, triReduce and triBalance business management at TriOptima, says the company’s solution is highly customisable to reduce risk and exposures. “We have a holistic solution that considers the all-in cost of running a derivatives portfolio and the risk exposures in the portfolio,” he says. Two methodologies are offered – to either compress or optimise – and customers can then focus the specific event on reducing gross notional, capital and margin.

For compression, the triReduce CLS FX service provides capital optimisation and risk mitigation for the global FX market, joining its triReduce compression service to CLS’s infrastructure and market connectivity. Clients benefit from enhanced capital efficiency and leverage ratios, lower operational risks and costs, and actively managed counterparty credit risk. For optimisation, the triBalance solution is one of the most complete services on the market over the broadest range of initial margin (IM) silos across FX, rates, equities and commodities. triBalance helps clients reduce portfolio volatility, limit potential future exposure and manage counterparty risk exposures across multiple risk classes.

Junod says: “We offer this holistic solution, where you are able to address those counterparty risk exposures through different means and you’re able to target exactly what you are looking to minimise.” He explains the importance of a solution that focuses on counterparty risk: “There is a large amount of uncertainty in the market and this, together with expected regulatory changes in major jurisdictions next year, all put the spotlight on counterparty risk exposures.”

This has been a solid year of growth for TriOptima. The triReduce CLS FX compression service helped to eliminate $9.1 trillion of gross notional value from its FX forward portfolios in 2019 – a record for the service. And, despite extreme market volatility in 2020, the service has compressed $4.9 trillion since the start of the year, a 55% increase year-on-year for the service. In addition, the triBalance team is focused on the strength of its services offered when the pandemic first hit.

“Throughout March and April,” says Junod, “we were able to deliver our services consistently and without any disruptions. This is testament to our own capabilities, but also to how important it is to the market to be able to leverage services such as those we offer.”

triBalance has consistently delivered weekly cycles for several years. Over the past year, TriOptima completed the first multilateral optimisation of commodity standard initial margin model (Simm) exposures (using gold and FX), further helping its clients optimise their uncleared margin rules counterparty exposure. This move represented the first optimisation cycle across both FX and commodities exposure silos simultaneously, and worked to further grow overall IM optimisation efficiency, providing a more comprehensive tool to optimise Simm exposures.

Next year, TriOptima plans to continue its drive to improve counterparty risk offerings to the global markets – and to do this in a measured and deliberate way. As Phil notes: “Looking back, we have focused on developing very specific solutions for our customers; however, in the future, there is going to be a much greater focus on achieving synergies for our customers, so that we can address multiple issues simultaneously.”

Keeping the solution holistic and deliberate in TriOptima’s strategies will offer continued success for itself and the markets it serves.


As published in FX Markets in their November 2020 issue.

Herstatt Risk is No Old Hat, Half a Century on from Herstatt Bank Collapse

The 27th of June 2024 marked 50 years since the collapse of German-based Herstatt Bank showed financial institutions the drastic consequences of unchecked settlement risk in foreign exchange markets. But half a century on, ‘Herstatt risk’ – otherwise known as FX settlement risk – appears to be rising for financial institutions.

Let’s briefly revisit what derailed Herstatt Bank all those years ago to grasp the threat to markets today. Essentially, the firm’s risky bets and mismanagement led to substantial losses forcing authorities to close the bank. The speculative US dollar transactions were taking place across different time zones, meaning that many of Herstatt’s counterparties paid in their side of the trade, but received nothing back from the German bank after the regulators shut the firm. Herstatt Bank’s inability to fulfil its payment obligations wreaked havoc across global financial markets, with counterparties out of pocket for the money they never received – a perfect encapsulation of FX settlement risk which coined the term ‘Herstatt risk’.

The crisis conveyed a clear lesson to markets: the longer one party must wait for the other to meet its obligations, the higher the risk of financial losses or disruptions – possibly with systemic ramifications. Thankfully, Herstatt bank had a small footprint at the time of its collapse. But the issue of FX settlement risk lingered unaddressed for decades until the establishment of widespread payment-versus-payment (PvP) mechanisms for exchanging currencies, a process which sees both sides of a trade simultaneously exchange the currency they owe.

PvP has drastically reduced the risk of settlement failure in global FX markets. These safeguards have largely proven effective in mitigating settlement risk in FX markets over recent years. It’s notable that during major market crises of the last 20 years, in particular the great financial crisis and the Covid-19 market disruption, markets have not witnessed a Herstattesque event.

Unlike with Herstatt bank, the current factors causing an elevated risk of settlement failure in currency markets are not risky bets and bank mismanagement. Instead, it is two powerful changes in market dynamics:

  1. changes in regulations related to settlement timelines, i.e. T+1 settlement; and
  2. an uptick in emerging market currency trading.


Settlement at risk
With US securities now trading on a T+1 settlement regime, asset managers, custodians and banks are grappling with the fallout in currencies. In the run-up to the go-live of T+1, much was made of the potential dangers of compressed settlement timeframes in currency markets. In the initial aftermath, we are yet to see the dangers born out in major incidents of FX settlement failure. However, the shortened cycle adds pressure on a system already at capacity.

T+1 arrived against an already deteriorating backdrop, with growing concern from the likes of the Bank for International Settlements that Herstatt risk is on the rise. It cites the growing share of trades that settle without PvP protection as one of the main factors behind the elevated risk of settlement failure, driven primarily by the increase in emerging market currency trading, typically not eligible for today’s PvP mechanisms.

In fact, at the end of 2022, financial institutions sent $2.2tn worth of currencies to counterparties every day without knowing for certain whether they’d get paid. This is according to BIS data which shows a concerning trend: in 2019, just $1.9tn of transactions settled without PvP protection, an amount that rose 15% in the following three years.

Avoiding another Herstatt
Whether for the inter-bank market, bank to client, or custodians supporting their asset manager clients, the two factors together increase the importance of new alternative PvP systems to add on to the current structures that facilitate safe settlement and netting in foreign exchange markets. This is especially true for the emerging market currency challenge.

Broadening the narrow spectrum of 18 currencies currently eligible for PvP settlement would be a good place to start in tackling rising FX settlement risk, helping to address the growth of emerging markets and the swell of volumes in these non-PvP-protected currencies. In particular for the Chinese Renminbi, which is climbing up the ranks of daily FX trading volumes.

Rapid advances in technology are also opening new ways for risk management across all stages of the trade lifecycle, and FX settlement should be no different. Peer-to-peer networks, distributed data applications and shared workflows make FX exposures fully traceable across entire networks, with atomic settlement providing the speed to conduct trades efficiently in times of market stress. Meanwhile, in normal market conditions, network services enable users to optimise liquidity management through the use of netting and payment orchestration, which in turn minimises funding requirements and costs, in addition to reducing settlement risk.

But as always, an industry-wide paradigm shift requires extensive collaboration among peers and competitors. This may seem a dubious prospect, but the alternative is to wait for an FX settlement failure to hit the headlines, hopefully in a less spectacular fashion than the Herstatt collapse of half a century ago. The latter must not be considered an option. After all, while history seldom repeats itself, it often rhymes.

To find out how OSTTRA can help mitigate bilateral FX settlement risk between participants, watch this brief explainer video or contact us using the form below.

OSTTRA and Baton Systems partner to launch FX PvP service, mitigating settlement risk in FX markets

OSTTRA will operate an on-demand payment-versus-payment (PvP) service, powered by Baton’s proven distributed ledger technology, designed to mitigate settlement risk in the US$2.2 trillion of daily FX turnover settled outside CLS. The service will be open to FX market participants globally – including market maker banks, investment managers, and large corporates. Initial participants include HSBC and Wells Fargo.

LONDON, 06 March 2024 – Global post-trade solutions provider, OSTTRA, announced today the launch of an FX PvP settlement orchestration service designed to mitigate bilateral settlement risk between participants, while optimising intraday funding, liquidity, and credit risk.

The launch of the new OSTTRA service comes after the Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) last year advocated an increase in the adoption of PvP in FX transactions to reduce FX settlement risk (or “Herstatt risk”). As of April 2022, the Bank for International Settlements (BIS) said that there could be settlement failures in US$2.2 trillion daily deliverable FX turnover, because it either sat outside PvP platforms or as “on-us without loss protection” trades.

The PvP service will be delivered on proven distributed ledger technology (DLT) from Baton Systems (Baton) and marks a significant milestone in increasing market wide access to PvP, helping to address FX settlement risk concerns. The focus will be on settling flows not currently settled on CLS, including non-CLS eligible transactions such as offshore Chinese renminbi, which has almost doubled in the percentage share of global FX trading volumes from 2019 to 2022 according to BIS. Bank and non-bank market participants will also have much greater flexibility to settle FX transactions intraday, without being tied to the CLS cut-off window.

The launch represents the first step in a broader OSTTRA strategy to improve the market structure of OTC markets. It is intended that the service will evolve to include settle-to-market functionality, significantly reducing derivative counterparty exposures, therefore reducing the regulatory capital required under SA-CCR (Standardised Approach to Counterparty Credit Risk).

The decision to partner with Baton follows an extensive market review and due diligence process conducted by OSTTRA. Baton’s solution already orchestrates the settlement of billions of dollars every day, with settlements to date exceeding US$8.1 trillion in value.

Under the terms of the partnership, OSTTRA will take on the operation of Baton’s award-winning Core-FX service, including administration of the rulebook, which governs the end-to-end process and encompasses the secure orchestration of funds, and which provides the framework for achieving final settlement. HSBC and Wells Fargo, early adopters of Core-FX as part of the HSBC FX Everywhere initiative, will join the OSTTRA operated service during the first half of 2024.

Mark Williamson, Global Head of FX & Commodities Partnerships & Propositions at HSBC, commented: “Since 2018, HSBC FX Everywhere has used Baton’s Core FX technology to settle 16 million FX trades across 13 different currencies totalling US$8.1 trillion. Using OSTTRA as a post-trade platform, the wider market will now be able to use the same technology to reduce their FX settlement risk through PvP settlement and compression, as well as optimising their cash flows. Overall, this will significantly mitigate Herstatt risk in the market.”

Chris Leaver, Chief Strategy and Marketing Officer at OSTTRA, added: “There’s huge scope for further post-trade efficiencies across OTC asset classes: this new service represents an important milestone in the evolution of our FX network, extending existing workflows to reduce settlement risk for thousands of OSTTRA clients. We’re excited to have chosen Baton as a partner in this first step of our journey – their proven technology leads the market in real-world, production DLT solutions for institutional capital markets”.

Arjun Jayaram, Founder and CEO of Baton Systems, further commented: “We’re excited to be collaborating with OSTTRA. OSTTRA is a leading player in the post-trade arena with extensive market reach. Through this strategic partnership, we will jointly accelerate and globally scale access to PvP settlement whilst enabling the Baton team to continue innovating and deploying operationally resilient solutions that deliver modern, cloud-based interoperable technology stacks that make our markets more inclusive, safer, and more efficient.”

Baton Systems is the global fintech company transforming the entire front-to-back post-trade process, introducing interoperable and connected digital market infrastructures from trade matching through to settlement. Empowering financial institutions to take control with automated and configurable rules-based workflows, access to real-time information, and on-demand settlement, Baton’s DLT-based solutions are redefining what post-trade processing should look like: fully connected, friction-free, flexible, and transparent.
Founded in 2016 by Silicon Valley technologists and capital market specialists, Baton’s solutions are now being used by several of the world’s largest financial institutions to facilitate the movement of billions of dollars of cash and securities on a daily basis.

Find more information on how OSTTRA is orchestrating PvP Settlement at www.osttra.com/pvp.


If Amazon did T+1 Settlement: How Post-Trade Operations Are Moving Towards Real-Time Control

From monitoring bank balances to tracking package deliveries, we’ve grown accustomed to having information at our fingertips. But what about the state of post-trade operations in the capital markets? As regulations tighten and demands for efficiency are increased by the transition to one-day settlement cycles in US securities, the need for real-time visibility and control in post-trade operations is becoming paramount.


The act of onboarding clients and the processes around trade allocation, confirmation and affirmation are unlikely candidates for headlines about transformative technology innovation when pitched against the thrill of front office trading and the excitement that AI and blockchain technologies still generate. And usually they can’t compete – even if all institutional trading relies on the efficient and robust running of post-trade systems behind the scenes.

But this year is post-trade’s time to shine. The SEC’s decision to shorten settlement times to T+1 has sparked a rush of interest in the sector: once the bonnet was opened, market participants started wondering if it was time for a full vehicle inspection. Even though the focus of the regulation for T+1 settlement is securities, there is an indirect effect on FX and fixed income too, and many firms are now taking an holistic view on operations processes across all asset classes. Shorter FX trading-settlement timeframes reduce the window for resolving issues, necessitating efficient and timely technical account onboarding, data completion, and issue escalation, especially given the complex, multi-regional nature of cross-asset processes.

Our Onboarding, Connectivity and Operations service enhances post-trade operations and connectivity, enabling clients to efficiently monitor and manage their networks. Just as your smartphone app keeps you informed about your financial health and the whereabouts of your Uber ride, post-trade operations now require a similar level of real-time transparency and accessibility at a time when supervisors’ stance towards operational challenges is becoming increasingly unforgiving. The pressure is on for banks and investment managers to demonstrate full control over their post-trade processes. Like tracking your Uber’s journey, operational teams need to know where trades stand, identify bottlenecks and errors, and take proactive measures to ensure timely settlement.

Regulation and oversight as key drivers

A single change in the overall financial market ecosystem often has ripple effects across the whole network, with some consequences more noticeable than others.

In the case of moving to a 50% shorter settlement time for US securities, market participants in FX will have 83% less time to perform post-trade processes than in the current regime, according to calculations from industry association AFME.(Source)

Another key consideration is whether the shorter timeframe will affect performance, or in other words whether the risks of failed trades and operational errors would increase. The short answer, according to both AFME and buy-side industry participants, is an overwhelming yes.

Post-trade efficiency is firmly in the sights of regulators and industry oversight bodies. In currency markets, the FX Global Code of Conduct is calling for better operational processes, including more timely confirmations as well as a general technology upgrade to increase efficiency and accuracy. The standard-setting body for OTC derivatives, ISDA, continues to focus on give-ups and the timings associated with communications around them.

In European securities markets, the settlement discipline regime of the Central Securities Depositories Regulation (CSDR) has introduced several measures to reduce the number of settlement fails, to prevent such failures and to cajole market participants into settling accurately on the intended dates.

In the futures markets, FIA and DMIST, the Derivatives Market Institute for Standards, jointly announced the publication of the Final Standard for Improving Timeliness of Trade Give-Ups and Allocations, designed to improve the delivery and processing of allocation instructions by establishing 30-minute timeframes for completing steps in the allocation process .

In summary, regulators and oversight bodies are quite clear in their messaging to market participants: operational failures such as trade breaks, and system outages will be met with a zero-tolerance policy from rule makers, and full historical post-trade transparency and visibility is a must.

Change for the better: real-time service monitoring and more

To comply with these rules, market participants need to have more granular visibility into what happens to trades after execution, which in turn requires infrastructure and service providers to step up their game in areas such as flexibility of access, onboarding and integration, among others. That means it’s all eyes on onboarding, connectivity and operations.

Achieving this operational upgrade is more complicated than it sounds, due to the complexity of the post-trade ecosystem and the varying levels of technology requirements participants have. Legacy and fragmented post-trade infrastructures across multiple systems and vendors have to be consigned to the past in favour of a single, more closely-coupled system.

It’s in everyone’s interest to have better visibility into the health of the systems, services and counterparties involved in the affirmation, matching, confirmation and clearing of trades. Consider your Fitbit alerting you when your heart rate spikes unexpectedly. Similarly, in post-trade operations, timely alerts and diagnostics are crucial for identifying and resolving issues before they escalate. Whether it’s pinpointing delays in trade processing or diagnosing connectivity issues with counterparties, the ability to swiftly address problems is vital. With T+1 settlement approaching, the stakes are higher than ever, akin to keeping a close eye on your health indicators to prevent potential complications and unpleasant surprises.

Just like we have become accustomed to skipping queues through self-service, banks and investment management firms are requesting greater autonomy with respect to the initial integration and technical onboarding of their systems and underlying clients through self-service tools. The expectation is that this should be combined with greater visibility into the health of their post-trade networks and services including the physical and logical connections used to carry messages between market participants, all supported by a comprehensive customisable reporting suite. This includes greater flexibility with respect to accessing services, which is fueling demand for Single-Sign-On (SSO) and operational dashboards driven by real-time data accessed via API.

In response, OSTTRA has developed a new service for its clients – OSTTRA’s Onboarding, Connectivity and Operations (OCO) Suite – enabling network participants to track the health of their post-trade operations across asset classes and counterparties. The initial release provides enhanced system monitoring:

OSTTRA for Onboarding, Connectivity and Operations provides granular visibility into what happens to trades after execution.

Get granular visibility into what happens to trades after execution with OSTTRA OCO.


While the cost of operational failures has never been higher, regulatory and supervisory forces are combining with business needs to create an unusually difficult landscape to navigate. This is why market participants need to move towards a single screen to view operational processes and away from the current, fragmented approach.

This desire is reflected in the exchange traded derivatives (ETD) market, according to the findings of a March 2024 listed derivatives study, produced by Acuiti in association with OSTTRA: Almost 90% of ETD market participants surveyed said that it would be either crucially or very important to have a consolidated view of T+0 and T+1 processes, a desire particularly evident among the sell-side. The biggest benefits of such a view would be in risk reduction according to survey respondents, but there are also perceived upsides in operational efficiency and costs.

Clearly, as the industry prepares for an unyielding approach from regulators around trade breaks and systems down time, market participants need better visibility into the health of their systems, networks and trade status as well as an easier ride in terms of interacting with and managing processes.

When a Prime Experience Comes to Post-Trade Operations

Against an accelerated market dynamic, market participants want greater autonomy to go at the pace needed to bring solutions to market quickly. They are asking for the ability to use self-service tools during the initial integration and technical onboarding of their systems and underlying clients and they want to combine these with a greater level of visibility into post-trade networks and services, in a way that’s personalised and intuitive, just like the everyday instances of self-service we’ve all become used to.

After all, this already happens in other areas of life: the ability to track packages, taxis and food orders after the purchase is taken for granted in most customer-facing areas. Amazon customers rarely need to call the Amazon helpdesk because the service interface gives you all the info you need about your past and pending orders, orders currently out for delivery, mechanisms for raising queries and product how-to features, among other things.

For post-trade, this means an increased granularity and visibility into connections that handle messages between participants, both physical and logical, and a comprehensive and customisable monitoring suite. There is also growing demand for creating a Single Sign-On entry point for services in the same bucket to streamline workflows and step-up efficiencies.

Abundant data and the ability to easily channel information through automatic API connections has given rise to expectations that processes and exceptions should be viewed in real-time in a convenient format such as a dashboard.

But it’s not just ease of access and user experience that’s driving the quest for efficiency in post-trade, and it’s not just regulatory change either. As large financial market players continue to face headwinds, even marginal improvements along the post-trade lifecycle can make a meaningful difference to balance sheets.

In the year ahead, these headwinds will persist, according to consulting firm Deloitte, which predicted in its 2024 outlook for financial services that “banks’ ability to generate income and manage costs will be tested in new ways” while noting that “multiple disruptive forces” are conspiring to reshape the foundations and the architecture of banking and the capital markets industry.

These factors are making it imperative for market participants to see and manage the whole picture, not just parts of the post-trade jigsaw puzzle. It’s a small surprise, then, that Acuiti’s study predicts a push towards consolidation of vendors and processes, as market participants strive to reduce complexity. The survey found that the overwhelming majority of companies are now looking to consolidate their relationships with vendors to those that can offer comprehensive post-trade services covering the full lifecycle of trades.

What It Takes To Turn Post-Trade Into A Five-Star Rated Experience

Just like when you decide to cancel your booked Uber ride when your driver is stuck in unexpected traffic, market participants should be notified about any and all events that impact trade matching. Factors to monitor should include physical and logical connectivity, system outages, platform performance as well as failed and pending messages, which impact match statuses, trades processed and associated market participants.

Trades could fail for a variety of reasons but market participants get little actionable information about such events at the moment. Better visibility into what happens to trades before they arrive at the back office is one of the key areas where there is demand for improvements, especially if there are operational reasons involved in a failure.

Rather than just identifying that there is a discrepancy, market participants should be able to tell which trades are having issues due to operational reasons and where those problems are before failures happen. The ability to see in real-time the status and health of trades as they traverse trade lifecycles and ecosystems would reduce the chances of errors creeping in unnoticed and resulting in failures or broken trades.

Similarly, dealing with exceptions should be easier and solved in a way that allows firms to track, manage and resolve these issues as soon as possible and in a structured manner. Automating incident management and allowing both parties to track them, enhancing both inter- and intra-company collaboration and enabling remediation are actionable steps for the industry.

Reporting is also ripe for upgrades and it’s an area where market participants would benefit from better visibility into operational and trade level metrics as well as the ability to compare and benchmark firm-level performance against peers. Having more control and autonomy over the format and frequency of these summaries and insights would allow institutions more flexibility to prove good performance and regulatory compliance.

Standardising how post-trade information is accessed and distributed is also something where efficiency gains need to be made. Adopting API connectivity for post-trade workflows and operational data access would significantly upgrade the quality of the user experience and increase the utility of the data and information.

These are just some of the examples that could benefit the overall ecosystem and promote the health of both the post-trade networks and its participants. The Onboarding, Connectivity and Operations service for OSTTRA clients aims to address this challenge by offering a seamless way of increasing transparency and control of post-trade operations:

OSTTRA for Onboarding, Connectivity and Operations

What three words for the post-trade path ahead: volatility, risk and control

Equity markets are surging to new highs and risky assets continue to remain buoyant despite interest rates in major economies staying at multi-decade highs. The approval of Bitcoin ETFs has launched crypto on Wall Street for real, in a year when the world’s population is heading into a record number of elections. Rate cuts, new dynamics in some markets and quite a lot of event risk are conspiring to lay the groundwork for elevated volatility.

For traders, this is great news because high volumes and volatility promise the possibility of rich pickings. From an operational point of view, it’s a more mixed outlook that will be about balancing the need to manage operational risk with the need to heed the shareholder call to achieve operational efficiencies that shore up margins.

As this financial landscape evolves rapidly over the next year, the accelerated evolution of post-trade towards on-demand operational insight and real-time monitoring is not merely a regulatory necessity but a strategic business imperative. Just as we rely on seamless digital experiences in our daily lives, financial institutions must adapt to this new paradigm: Instantaneous visibility and control aren’t just conveniences; they’re essential tools for mitigating risk, ensuring compliance, and optimising performance. With T+1 settlement leading the charge, the push for transparency and efficiency will extend beyond equities to encompass other asset classes like FX and fixed income, and far beyond the borders of the United States of America, with post-trade pundits expecting a move to T+1 in the UK and the EU in 2025.

Learn more

Our OCO suite helps OSTTRA clients improve operational control and reduce operational risk through the delivery of automated service connectivity, self-service onboarding, real-time service monitoring and exception management, and customisable reporting. To find out more, please visit OSTTRA for Onboarding, Connectivity & Operations.

Firms Seek Optimisation Gains as UMR and SA-CCR Bite

A wider range of market participants is taking advantage of service providers such as OSTTRA’s optimisation cycles to drive margin and counterparty credit risk efficiencies across asset classes including FX, rates, equities, commodities and credit.

With the transition to a new capital regime on counterparty risk and uncleared financial instruments largely complete, in the past year, market participants have increasingly turned to service providers such as OSTTRA to reduce gross notional and counterparty exposure in the most efficient manner.

Since the last phase of the uncleared margin rules (UMR) was rolled out in September 2022, coupled with the shift from the current exposure model to the standardised approach to counterparty credit risk (SA-CCR), market participants across most jurisdictions have been compelled to closely monitor their exposure to each counterparty to minimise the amount of initial margin they would potentially need to post.

“Through our services, clients can significantly optimise counterparty credit risk across multiple bilateral relations without impacting their market risk profiles,” says Christina Högegård, Business Manager, triBalance and triReduce at OSTTRA. “In doing so they reduce their initial margin under UMR, their cleared initial margin and their capital requirements under SA-CCR and the internal models method (IMM).

“By regularly using a service like OSTTRA triBalance, our clients can continuously lower the amount of margin they need to post. Optimising their exposures across multiple counterparties means they can reduce the amount of regulatory capital held for that purpose, freeing it up for use elsewhere,” she explains.

Until recently, optimising counterparty risk was largely the concern of global systemically important banks (G-SIBs). As more firms are captured by UMR and with the new capital regime in place, that concern has filtered down to smaller sell side players that have joined OSTTRA’s network in growing numbers over the past year. The buy side is also showing increased interest in optimisation.

By connecting G-SIBs with wider banking, buy-side and central counterparties across its global network, OSTTRA helps market participants optimise capital allocation and counterparty credit risk across a range of asset classes including FX, rates, equities, commodities and credit. Interest has grown – particularly among market participants with significant exposure to the rates and FX markets, as record breaking optimisation cycles in these asset classes are regular occurrences.

Optimisation runs

To generate the best results, market participants take part in regular optimisation runs, the frequency of which depends on the asset class they wish to optimise. The most frequent runs are conducted for FX, and participants can optimise initial margin, leverage ratios or risk-weighted assets – or all three at the same time.

Frequency is driven by demand and is based on what market participants feel works best for the exposures they have in a particular asset class. So, currently, rates run bimonthly, equities monthly and credit runs on an ad hoc basis.

“With weekly FX optimisation runs, we give participants the opportunity to optimise initial margin frequently and see that the benefits last for some time. Some choose to optimise weekly and some less frequently. In addition to initial margin, they can also optimise SA-CCR and IMM [exposures] in the same runs, as often as they wish,” says Högegård.

“The incremental benefit of optimising more frequently needs to be weighed against the resources used and additional notional put on. However, the benefit is greatest the day after the optimisation run and, with a fully automated process, participants could optimise every day.”

At the start of a run, market participants upload the exposures they wish to optimise to the OSTTRA triBalance portal along with any conditions they would like to apply. An optimisation algorithm analyses clients’ chosen exposures and provides them with a detailed proposal outlining how their portfolio can best be optimised according to their requirements. Each optimisation run will typically start and be finalised within half a day.

The potential for optimisation of any given portfolio is contingent on its inherent composition, the asset classes involved and on the directionality of the trades. On the back of increased volatility and high interest rates, the optimisation potential of each run increases accordingly.

“Regardless of their motivation for using our services, the ability to face as many counterparties as possible is important in terms of getting the most out of the service,” concludes Högegård.

OSTTRA was named Best compression/optimisation service for FX at the FX Markets e-FX Awards 2023.

To find out more, contact info@osttra.com.

BidFX Connects to OSTTRA to Streamline OTC FX Client Clearing

LONDON, SINGAPORE 14th February 2022 – BidFX, the leading cloud-based provider of electronic foreign exchange trading solutions, is introducing support for FX clearing to investment managers via OSTTRA’s clearing connectivity service.

Integration with OSTTRA’s clearing connectivity solution provides Bid FX clients with the ability to submit trades directly to leading CCPs. Participants trading on BidFX can benefit from having their FX NDF trades submitted directly for clearing, at multiple CCPs, without the need to build out direct clearing connectivity. BidFX clients wishing to clear trades will immediately benefit from an established community of more than 30 executing bank clearing counterparties

With the implementation of phase six of the Uncleared Margin Rules (UMR) later this year (September), buy-side firms looking to optimise their balance sheets will currently be weighing up whether, or not, to clear more of their FX trades. As investment managers evaluate the costs and operational challenges of these margin requirements, the connectivity between BidFX and OSTTRA will benefit those who choose to clear more of their FX flow.

Alan Dweck, Chief Operating Officer at BidFX, added: “Buy-side firms trading large volumes of non-cleared FX OTC trades may face additional operational overheads due to UMR. Our initiative with OSTTRA provides these participants with a much-needed range of options for clearing and seamless trading ahead of UMR phase six.”

Patrick Philpott, FX Product Strategy, at OSTTRA, concluded: “Adding BidFX to the existing OSTTRA clearing community increases the options available to market participants wishing to benefit from the efficiencies of FX Clearing with central counterparties. The final phase of UMR reinforces the industry’s focus on initial margin and enhanced standards, and we look forward to working with BidFX and the wider market to ensure widespread access to clearing.”

Combined 24hr FX Optimisation and Compression cycles

OSTTRA is now running FX optimisation and compression cycles together within 24 hours. Customers can optimise on multiple risk factors simultaneously whilst also benefiting from  compression to minimise gross notional.


Changes in capital regulation taking effect:

Over the course of 2022 we saw an increased client focus on optimising using risk-based capital models (SA-CCR & IMM), as well as on reducing SIMM and CCP IM using the OSTTRA  triBalance service. However, overlay trades to optimise these risk objectives are notional additive, and gross notional reduction remains relevant for many participants.

By combining compression and optimisation, we can offer customers a solution that provides optimisation of multiple risk factors including SA-CCR, RWA, UMR IM, gross notional, and more, all within a 24 hour window.





To discuss your FX optimisation needs, contact info@osttra.com.

OSTTRA Capital Optimisation – Now with SwapAgent

We are pleased to announce that the OSTTRA triBalance Capital Optimisation service is now live with SA-CCR optimisation of settled-to-market netting sets by proposing new overlay trades designated into SwapAgent. This functionality is now available in both our Interest Rate and FX optimisation runs.

In December last year we completed the first Interest Rate cycle where we optimised bilateral and cleared exposures alongside participants settled-to-market exposures. The first FX cycle to include SwapAgent overlay trades followed shortly thereafter and was completed in January.

“Leveraging SwapAgent and its STM procedures presents new opportunities for our clients to further reduce capital costs under SA-CCR.”
Christina Högegård, Business Manager OSTTRA triBalance


Counterparty credit risk impacts a firm’s cost of trading due to capital requirements, driven by RWA and Leverage Ratio, and funding costs driven by Initial Margin. We are running frequent optimisation cycles in both FX and Interest Rates where our customers can proactively manage RWA and Leverage Ratio requirements, calculated using SA-CCR or Internal Model Method, while simultaneously optimising Initial Margin


Semi-annual FX and interest Rate Capital Optimisation


“We welcome OSTTRA triBalance using SwapAgent’s risk management and standardisation process for the bilateral market as a building block in their margin and capital optimisation.”
Nathan Ondyak, Global Head of SwapAgent


To discuss your capital optimisation needs, contact info@osttra.com.


FCMs tap OSTTRA for FX Client Clearing

FCMs continue to expand their use of OSTTRA Clearing Connectivity and OSTTRA LimitHub as a result of increased demand for FX Client Clearing. Adoption of the FX service allows FCMs to take advantage of cross-asset CCP Connectivity, at what could prove to be an inflection point for FX clearing as volumes continue to increase. The FCM can provide pre-trade or post-trade approval for FX, regardless of whether trades are executed in a cleared liquidity pool, and/or off venue.

“We’re pleased that our clearing connectivity and credit risk services are helping more firms adopt client clearing, in the face of UMR and additional capital efficiency drivers.”
Steve French, Head of Product Strategy – OSTTRA

The OSTTRA Clearing Connectivity service supports the full clearing lifecycle from trade submission to trade novation, including the client trade take-up workflow used by an FCM in conjunction with OSTTRA LimitHub. Established in 2013 in response to CFTC regulations, the OSTTRA LimitHub service supports both pre and post-trade limit checking for OTC cleared instruments including Rates, CDS and FX NDFs and is utilised by 18 FCMs supporting 900 Clients across 24 trading venues, at 5 CCPs.

“UBS chose to adopt the OSTTRA Clearing Connectivity and OSTTRA LimitHub services as part of our workflow for ForexClear transactions to streamline and scale up clearing processes as part of our Next Generation platform integration.”
Nick Short, ETD Client Consulting – UBS


For more information on OSTTRA LimitHub, click here or contact us at info@osttra.com.