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Stepping Out with DTCC’s Central Trade Manager

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Posted In: Institutional Capital Markets
Published: 29/04/2020

Adrian Krasnoff, Senior Product Owner, looks at the changes to US domestic trade processing as businesses prepare for the decommissioning of OASYS.

 

  • 2021 cut off for DTCC replacing OASYS with CTM as the central matching platform
  • Consolidation of system landscape for international and domestic trades
  • New opportunities for automation could benefit broker-dealers

With millions of trades taking place around the world daily, the industry relies on systems to connect buy side and sell side participants. Electronic Trade Confirmation (ETC) protocols — like OASYS™ and Central Trade Manager (CTM)™ from DTCC — streamline trade processing between investment managers and broker-dealers.

In a major change for the industry, DTCC is decommissioning OASYS service access — the centralised matching system for US domestic trades — while offering existing clients a path to move onto CTM by April 2021 or choose alternative services.

For many broker-dealers, this transition could feel like a major headache. But it presents a great opportunity to take the next step on your automation journey.

Why the shift from OASYS to CTM?

OASYS has a firm foothold in the US domestic market as it supports ‘step-outs’ — where a broker or investment manager can nominate alternate brokers to settle the trade (known as ‘give-up’ trades in the Australian market).

While CTM has been popular for international markets for years, most US firms have not moved to CTM as it could not support step-outs for US domestic trades. This required broker-dealers to support both OASYS and CTM – with the inherent additional infrastructure costs.

But now that’s changing – investment managers will now be able to assign step-out trade and allocation details securely via CTM for light touch confirmation and affirmation workflow efficiency.

While that certainly makes things easier, there is still a lot of work to do with shifting middle office infrastructure and workflows from OASYS to CTM.

The systems will continue to run parallel until OASYS is cut off in April 2021 but the smart choice is getting out ahead of the deadline. CTM is buy side driven; investment managers will dictate when they’re ready and you will need to be ready.

The automation opportunity

There’s plenty of upside from the transition to CTM. While trade costs may not decrease, consolidating onto a single platform for trade confirmations can unlock significant opportunities for automation.

Some areas we expect broker-dealers to see improvements include:

  • Increasing straight through processing – with post trade allocations and confirmations workflow consolidated through CTM, rules-based workflows can be applied to handle processing so no manual intervention is required
  • Automating step-outs – executing brokers can receive Step In/Out Broker Detail details including Market Participant Identifier to facilitate the street side broker to broker clearance between the two parties
  • Minimising mis-matches with Buy side – bespoke client requirements handled automatically by the middle office system with flexible matching and tolerance profiles
  • Managing commissions – track and report Research Commission and Step-Out broker commissions
  • Monitoring in real-time – near real-time interactive monitors to allow operational users to focus on exceptions and achieve exceptional matching rates

Managing the change in Syn~TAC

To support the transition, GBST delivery teams are focussed on upgrading clients to CTM and working with them to configure the static information and workflows for each counterparty. The migration to CTM can be phased as buy-side clients adapt their systems, enabling you to minimise migration risk.

Talk to GBST about getting ahead of the CTM transition with Syn~TAC to meet your middle office needs.

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