02.01.2012
By Terry Flanagan

Post-Trade Services Surge

Omgeo reports 38% increase in users of its Central Trade Manager platform.

As regulatory change continues to focus attention on risk management and cost efficiencies, post-trade services, such as central trade matching, offer upside in the form of greater automation and reduced settlement failure.

Omgeo reported a 38% year-on-year increase in the number of investment managers and broker/dealers using Omgeo Central Trade Manager (Omgeo CTM), its strategic platform for the central matching of cross-border and non-U.S. domestic equity and fixed income transactions.

Market participants, in response to regulation, are seeking out platforms that afford them greater visibility into how their trading counterparty’s are managing trading errors and exceptions in the back office, while enabling them to accelerate the trade process at a time when settlement cycles are shortening.

“Central matching grants users the ability a view into how their trading partners are managing exceptions prior to settlement and in turn reducing counterparty risk,” Steve Matthews, chief operating officer at Omgeo, told Markets Media.

Central trade matching provides enhanced settlement efficiency and reduced trade fail rates. Same-day affirmation rates on Omgeo CTM average 93 percent, versus locally matched trades with same-day affirmation rates averaging only 72 percent.

Unique requirements are associated with matching cross-border and non-U.S. equity transactions, and fixed income transactions.

“From a cross border perspective, time zone differences can be a challenge,” Matthews said. “As firms look to gain access to new markets and pools of liquidity, back office personnel on one side of the globe may not be able to resolve trade exception with their counterpart until a day or even two after the trade date.  When you think of that in the context of shortened settlement cycles, you can quickly see that risk comes to the forefront.”

For large-value fixed income trades, matching and agreeing the terms of the block trade are crucial to reducing counterparty settlement risk.

“Having block trade information carry through from the front office to the middle and back office is a fundamental component of straight through processing as well as a critical piece of information that helps the back office to solve trade exceptions,” said Matthews.

Omgeo CTM was developed in response to U.S. regulatory proposals to move from a T+3 to a T+1 settlement cycle. During the past decade, the central matching service has evolved into a trade lifecycle management solution which offers various features including trade valuation, settlement notification, file mapping, trade enrichment, trade notification and benchmarking,

Omgeo continues to build a globally linked community on Omgeo CTM, where broker/dealers and investment managers have access to the largest group of counterparties for central trade matching.

In response to evolving market needs and community feedback, Omgeo has developed its core product over the past 12 months by investing in asset class expansion and growth in emerging markets including China, Chile and India.

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