DMIST Publishes Final Standard for Position Transfers

DMIST,  the Derivatives Market Institute for Standards, published the Final Standard designed to improve the processing of position transfers in the exchange-traded derivatives markets. This is the third final standard published by DMIST, an independent organization formed by FIA in July 2022, to promote greater efficiency across the trading and clearing workflow.

The Position Transfer Standard covers the movement of open positions between accounts—whether within a single clearing member firm or across different firms. Position transfers play a critical role in managing risk, optimizing margin, correcting allocations, balancing portfolios, changing clearing relationships and handling ownership changes due to mergers or acquisitions.

Currently, the position transfer process is largely manual. By introducing a standardized approach, DMIST aims to strengthen operational efficiency and resiliency, lower regulatory and operational risk by reducing manual intervention, and improve communication between clearing members and clients. This new standard lays the groundwork for greater automation of the process going forward.

Samina Anwar, senior director of global derivatives operations at Cargill and chair of the DMIST Sponsor Board, said: “Position transfers are crucial for clients to manage risk and optimize margins efficiently. A standardized approach ensures a more streamlined, consistent process for clients and fewer errors. Clearing members, clients, clearinghouses, and service providers collaborated to create this standard, which demonstrates the value of bringing together a diverse range of industry participants to discuss and shape solutions that benefit everyone.”

Tim Hoopes, executive director, Morgan Stanley and leader of the DMIST Position Transfer Working Group: “This standard introduces a new level of consistency and structure to the position transfer process. It harmonizes and streamlines two critical steps in the process: communication from the client to the clearing member, and from the clearing member to the central counterparty (CCP)—while also drawing a distinction between simple and complex transfers.”

Don Byron, executive director, DMIST: “This is a real success story for both the industry and DMIST. The Position Transfer Standard will drive meaningful change. The clearing members, clients, CCPs and service providers who collaborated during the standard development process can be proud of what they have achieved.”

DMIST also is releasing the Average Pricing Implementation Guide. The Average Pricing Standard applies to all CCPs globally. It calls for CCPs currently offering Average Pricing to review their functionality and adapt to the minimum functionality standards set out in the Standard.For CCPs that currently do not provide on-CCP Average Pricing, the guide provides a detailed roadmap to develop globally recognized Average Pricing functionality. The guide covers how the standard should be applied, provides a CCP workflow, methods for calculating average price and cash residuals, and more information on technology considerations.

Source: FIA