Omgeo Launches Custodial SSI Service

Terry Flanagan

Omgeo, a wholly owned subsidiary of The Depository Trust & Clearing Corporation, has launched new global custodian and prime broker automation capabilities in Omgeo ALERT, its online global database for the maintenance and communication of account information and SSIs.

A new Global Custodian Direct feature enables global custodians and prime brokers to electronically maintain timely and accurate SSI data in ALERT on behalf of their clients. Currently, investment managers perform these updates manually.

“We’re trying to automate the flow of data from the custodian to the investment manager or from the prime broker to the hedge fund.” Bill Meenaghan, executive director of ALERT product management at Omgeo, told Markets Media. “We expect most of the builds to be by custodians rather than prime brokers, but we’re happy to work with either one.”

GC Direct is an end to end flow of SSI data from the global custodian/prime broker to an investment manager acronym on ALERT and subsequently out to the broker/dealer. Investment manager/hedge fund clients will connect to the global custodian/prime broker’s GC Direct acronym and request the SSI details through an ISO 20022 approved message process. The SSIs will be automatically returned from the global custodian/prime broker’s SSI repositories and will be auto-enabled within the investment manager/hedge fund’s acronym.

By adopting this new model the buy side has effectively shifted the responsibility of SSI maintenance and distribution to the global custodian/prime broker.

“It’s been an ongoing discussion between the buy side and the custodians,” said Meenaghan. “The custodians are creating accounts and sending out the data to the investment managers. The investment managers therefore don’t see it as their data, they see it as the custodians’ data that they’re using. What we’ve done is tried to get into the middle of that and just talk to the custodians about what we would have to put into place to allow for that data to flow electronically.”

He added, “We’ve seen research that shows about 30 percent of failed trades are connected to SSIs, and we’ve been tasked with trying to help and remedy that situation.”

An initial group of five custodians, including State Street, have demonstrated their enthusiasm and commitment to this project by planning to go live with the Omgeo ALERT GC Direct feature in 2015, and Omgeo anticipates high participation from the entire custodian bank community.

Dick Taggart, a member of the Omgeo Board of Managers and executive vice president at State Street, also serving as chairman of DTCC’s SSI Utility Product Governance Committee, said in a release: “By enabling global custodians to access and update ALERT automatically via GC Direct, we add significant efficiency and risk reduction to the industry. SSIs will be more complete and accurate, which helps reduce fail risk, and Omgeo’s establishment of a true SSI Utility under the DTCC umbrella reduces costs and risk for all subscribers and participants.”

GC Direct represents a further phase of a four-phase plan to create an SSI Utility. Manual service bureau functionality for data resolution has been released and will be automated in a later phase. Expanded asset class coverage was released earlier this year with additional support for Collateral SSIs due in 2015, plus an enhanced API for third-party transaction services.

“The main goal we have for the SSI Utility is to get to 100 percent coverage,” Meenaghan said. “Probably the biggest component that we’re being asked to cover is around collateral SSIs. So that’s in development right now and we’ll be releasing collateral SSIs towards the end of this year.”

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