3 Brokers Go Live on SWIFT’s Block Trade Messaging Service
January 26, 2012
When it comes to post-trade processing in block trading, dealers, investment firms and brokers all have to be on the same page. And the numbers need to match up exactly across the board.
Which is perhaps the main reason, pension fund asset manager Legal & General Investment Management (LGIM), Morgan Stanley and another unnamed global broker have just signed on as users of the Global Electronic Trade Confirmation (GETC) messaging service from the Society for Worldwide Interbank Financial Telecommunication.
For the past year, these firms have been working on a framework for making block trades using SWIFT’s decentralized approach to confirmation. The approach relies on existing infrastructure already in place for exchanging trade messages.
“The hard part in deploying the system to automate GTEC for block trade allocation and confirmation processes was getting investment managers, brokers and traders to agree to exactly what was needed to ensure that all the post trade numbers were the same for everyone,’’ said Arun Aggarwal, managing director UK, Ireland and Nordics at Swift.
LGIM, Morgan Stanley and the other brokerage house produced an implementation guide that finally satisfied all parties, SWIFT says. The SWIFT GETC implementation guide ensures uniform adoption of, and processing around, the equities and fixed income ISO message suite covering blocks, allocations, confirmations, cancellations and affirmations, SWIFT asserts.
“The SWIFT GETC proposition protects our very high automation rates and gives us a reliable platform for continued for continued [straight-through processing] evolution, using agreed market standards,’ says Lee Toms, head of operations at LGIM. “We are delighted to put our strategy in motion. I would like to thanks the brokers who have gone live so far including Morgan Stanley, and I would encourage all of our peers and brokers to join us.”
Another benefit of GETC: SWIFT claims that users don’t have to re-architect their middle or back office systems. “Global ETC over SWIFT enables you to re-use your existing STP system, workflow and exception management; it is the least-risk, least-cost solution,” Aggarwal says.
It also benefits firms such as Morgan Stanley that want to continue using local matching engines, rather than central ones, says Aggarwal.
SWIFT competitor Omgeo has been moving customers onto its Central Trade Matching (CTM) system since 2009. Omgeo had been offering a decentralized matching capability, Oasys Global, in parallel with CTM, but that became unfeasible.
SWIFT sees the block trading market breaking down into three categories: clients that want a centralized matching system for post-trade processing; those seeking a decentralized system; or those looking for a hybrid. SWIFT obviously can appeal to firms looking for either of the latter two.
Read Tower Group Report on SWIFT v. Omgeo in Electronic Trade Confirmation
