With volumes of OTC derivative instruments expanding in the marketplace at a rapid pace, and new products entering the financial arena with increased frequency, automated services have become essential tools for both the dealer community and buy-side firms in order to reduce risk and remain operationally efficient.  The industry is constantly expanding the types of OTC derivative products necessary to be eligible for matching and confirmation services.

The DTCC Trade Information Warehouse is a critical part of how automation can be achieved in the OTC derivatives community globally.  To ensure that the most up-to-date contract details are stored in the Warehouse, trades made prior to the Warehouse’s launch need to be re-matched and loaded into the Warehouse’s database. This process is known as “backloading”, and involves a considerable amount of effort for trading counterparties, including a formal re-documentation of contract details and clean-up of any mismatches.  The Warehouse includes a “backload” function that provides tools to compare and correct portfolios between parties to a trade and to compare and reconcile portfolios with the information previously confirmed in Deriv/SERV.  Beginning with the Warehouse’s launch in November 2006, all new trades submitted to Deriv/SERV for electronic confirmation are sent straight to the Warehouse.  For trades that predate the Warehouse launch, global dealers and buy-side firms need to backload them into the system to utilize the full efficiency and automation that the Warehouse has to offer. Trades outside the Warehouse will not benefit from standardized, automated payment processing or credit event automation – all of which are in, or soon-to–be-delivered to, production.

ATI can assist in the challenging task of migrating your “old” trades into the Trade Information Warehouse. 

We can provide advantages to your firm, including:

• Access to a comprehensive centralized trade database with the most up-to-date record of each derivative contract.
• Simplification of counterparty trade reconciliation.
• Achieving a centralized processing capability to standardize and automate “downstream” processing of payments and other post-confirm processes (i.e. payments, credit events).
• Creation of a primary record of the trade, which serves as the “official legal record” over and above any records held by the parties to the trade.
• Automatic update of assignment, termination, and amendment records.
• Cost reduction across entire firm enterprise on both system and resource levels.

Backloading is progressing rapidly, and the Warehouse now holds close to two million contracts. The excellent progress to date shows a serious commitment by the major OTC derivatives dealers to strengthen the market infrastructure, by consolidating their trades into an automated, standardized environment.

Benefits will expand as the Warehouse’s functionality moves beyond credit derivatives.  The Warehouse is designed to extend to other OTC derivatives products including interest rates, equities and commodities.  Moving your trade portfolio details into the Warehouse will help your firm gain the efficiency it needs to compete effectively in the marketplace.

Speak to ATI about how we can help…