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DTCC to Introduce Settlement Matching
March 11, 2013
DTCC moves to match details of trades before settlement. NYSE Euronext to provide trading services in a co-location facility at the Japan Exchange. BNP Paribas Services and Euroclear Bank launch a joint tri-party collateral management arrangements initiative. SunGard and J.P.Morgan Clearing Corp. to provide one-stop access to custody and settlement services for multiple funds.
Depository Trust & Clearing Corporation: The post-trade processing utility said it would allow matching of transaction details, before settling takes place.
The industry services organization said its Depository Trust Company (DTC) subsidiary will provide participants with the ability to “authorize or match” transactions before it attempts to process these transactions for settlement. This will eliminate reclamation transactions or “reclaims,” which occur when a participant attempts to return a transaction made earlier in the day.
Settlement Matching will be introduced in two forms:
• Affirmed institutional transactions handled by any qualified vendor will be sent to DTCC and automatically trigger the settlement match, in what will be known as passive matching. Exemptions will allow receivers to pause or withhold the transaction from settlement until credit decisions are reached, when necessary.
• Unaffirmed institutional, non-institutional trades and other transactions submitted by banks, brokers and their service providers will be matched using the existing Receiver Authorization Delivery (RAD) process. That system enables clients to review and either approve or cancel the transaction, avoiding reclamations and thereby promoting intraday settlement finality.
Trades cleared through National Securities Clearing Corporation, the U.S. central counterparty and a DTCC subsidiary, are currently pre-matched, locked in and not available for reclaim. These transactions will not require Settlement Matching.
The changes will take place for all DTC customers by the end of 2014, the utility said.
Settlement Matching is intended to eliminate any credit and liquidity risk associated with same-day reclaims.
NYSE Technologies: The technology division of NYSE Euronext said it will begin providing a range of managed services from the Japan Exchange’s (JPX) co-location facility.
The services will include high-speed access to the Tokyo Stock Exchange’s cash and derivatives markets. The access can include network devices and servers on demand, combined with trading and market data feeds.
Customers also can run applications o a wide range of NYSE Technologies’ products, from market data to order routing.
The services will be available starting in May .
BNP Paribas Services: The global custodian and Euroclear Bank announced joint tri-party collateral management arrangements via Euroclear’s Collateral Highway.
The initiative enables mutual clients to access securities held at BNP Paribas Securities Services as collateral for tri-party operations conducted by Euroclear Bank.
BNP Paribas and Euroclear Bank entered into a collaboration agreement in 2012 and have since been working together to develop the joint initiative.
