Large numbers of buy-side firms are looking to improve reconciliation processes for their derivatives trades following the introduction of new regulation.
Client numbers for TriOptima’s triResolve service have shot up in recent months as more firms seek to comply with upcoming OTC derivatives regulations in the US and Europe.
On 15 September, guidelines published by the European Securities and Markets Authority (ESMA) in February, came into force, requiring firms to reconcile their portfolios and introduce processes to identify, record and monitor disputes related to their derivatives contracts.
The triResolve service, which enables countparties to reconcile their trades and comply with ESMA’s guidelines, has seen significant client growth since ESMA’s rules were published, increasing by 152% to over 700 clients in the past 8 months with a significant proportion signing on since September.
James Hollands, head of sales for triResolve, said: “This year has seen portfolio reconciliation rules in the European market infrastructure regulation and Dodd-Frank come into force and a lot more firms have had to begin reconciling their trades.
“The service is attracting a lot more buy-side and other non-bank market participants, including corporates and asset servicers.”
More than half of firms using the service are buy-siders, with approximately 44% being asset managers, pension funds and hedge funds, and the remainder consisting of corporates and other non-sell-side businesses.
A number of firms based outside of the US and Europe are also looking to reconcile their OTC derivatives trades, despite a lack of regulatory requirements for them to do so.
“It’s noteworthy that we’re also seeing a lot of Asia Pacific subscribers, even though they’re not obliged to reconcile, and this is partly due to their counterparties needing to reconcile but it’s also about introducing good practice,” explained Hollands.