DTCC is working with Cboe Clear Europe to deliver an enhanced post-trade workflow for over-the-counter (OTC) cash equities trades, designed to help increase settlement efficiencies across UK and European markets.
The service will bring OTC cash equities trades into Cboe Clear Europe’s cleared environment, which can then be netted against on-exchange transactions for settlement purposes, delivering potentially significant efficiencies. The first effort in this initiative to link DTCC’s CTM to Cboe Clear Europe’s CCP is projected to go live in Q2 2025.
Val Wotton, managing director and general manager, DTCC Institutional Trade Processing, said: “Cboe Clear Europe’s extensive venue coverage combined with CTM’s large client base will deliver increased operational efficiency and netting opportunities across European trading venues.”
DTCC and Cboe Clear Europe will develop a proof of concept that links DTCC CTM’s tri-party trade matching workflow with Cboe Clear Europe. This connection will allow prime brokers to receive a golden copy of transaction details when a match is achieved between a hedge fund and executing broker via DTCC’s CTM service. Once the prime broker enters into this tri-party match, CTM automatically sends those matched trades to the CCP, providing netting and clearing benefits to mutual clients.
The new workflow will help reduce operational and settlement risk, as well as post-trade friction as additional markets consider and prepare for accelerated settlement.
The proposed benefits of the initiative include reductions in post-trade processing time, risks associated with OTC transactions and settlement costs between executing brokers and prime brokers. It is anticipated that the joint solution will also help facilitate a reduction of capital requirements when moving from OTC to CCP settlement as well as lower trade fails and defaults.
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