Clearing Systems Go Real-Time

Terry Flanagan

Fixed income trades traverse front- to back-offices seamlessly.

Clearing and settling fixed income trades has traditionally been less automated than for equities, requiring more manual steps and greater room for error.

That’s starting to change, however. Broadridge Financial Solutions has announced that its Securities Processing Solutions Fixed Income division has expanded its ClearancePro processing capabilities to integrate with CDS Clearing and Depository Services (CDS), Canada’s national securities depository, clearing and settlement hub.

The integration with CDS enables subscribers to eliminate the use of manual tickets and fully process all CDSX-eligible trades entered into any trade processing solution and process them directly through CDS for clearance and settlement.

“ClearancePro directly connects our client’s back-office processing system with CDS to create a straight-through trade-flow for all CDSX-eligible trades,”  Chris Fedele, senior director, securities processing solutions, U.S. fixed income at Broadridge Financial Solutions, told Markets Media.

This eliminates the previously manual process of entering trades directly into the CDS terminal and separately booking the trade into a clients middle and back-office systems, said Fedele. It also allows for the bilateral, real-time flow of messaging, including potential exceptions, clearance status, etc.

“This ultimately speeds up exception identification, provides real-time status, allows customized handling/routing and lowers the risk associated with potential errors,” Fedele said.

In addition to eliminating manual steps and enablling straight-through processing, the integration allows use of a built-in rules engine to improve handling of trades based on customized conditions.

For example, unmatched trades and advisories can be routed to specific individuals for handling based on pre-defined parameters. Overall, this lowers potential risk associated with manual entry by enabling use of complete straight-through-processing from back-office to clearance and settlement.

CDS currently provides several methods for reporting and managing non‑exchange trades, including fixed-income transactions. Participants can report new trades and modify existing trades using the batch trade entry service, or can submit trade messages to CDS through its InterLink service.

With ClearancePro, managers rely less on the CDS terminal, thereby improving on-demand front-/middle-office reporting capabilities, Fedele said.

“Integrating the ClearancePro solution directly with a users back-office processing permits trades to flow freely, in real-time, through the entire trade lifecycle,” said Fedele. “By not using a CDS terminal a user’s risk of introducing errors decreases through the elimination of redundant dual-entry process.”

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