Buy-side firms account for almost two-thirds of users of triResolve, the portfolio reconciliation and dispute resolution service operated by TriOptima, a post-trade OTC derivatives processing unit of inter-dealer broker ICAP.
The service has experienced a 340% growth in subscribers since 2013, largely the result of portfolio reconciliation and dispute resolution requirements in the US Dodd-Frank Act and the European market infrastructure regulation, both of which impose a new regulatory framework on OTC derivatives users.
Buy-side users of triResolve include asset managers, hedge funds, pension funds, insurance firms, corporates and utilities, but the sell-side continues to account for the vast majority of trades by volume. TriResolve currently has around 1,100 users.
CEO Raf Pritchard said triResolve is adapting its service to buy-side needs. “We’re continually refining the service to better serve smaller firms. Many funds are also offered triResolve through their hedge fund administrators or asset servicers,” he said.
Although EMIR and Dodd-Frank differ in detail, the new rules oblige many OTC derivatives market participants to reconcile portfolios at specific intervals based on size of portfolio, resolve disputes within set timeframes and report unresolved disputes.
As well as helping derivatives market participants to establish workflows for portfolio reconciliation and dispute resolution, triResolve also compares transaction data with trade repository information sent to regulators. Under EMIR, European buy-side firms started reporting all derivatives transactions – listed and OTC – in February this year. From 11 August, market participants that exceed the clearing threshold will be required to provide daily reports on mark-to-market valuations of positions and on collateral value.
“If buy-side firms are delegating reporting, it’s not clear how their counterparts will report collateral management data. The industry is in the process of addressing these issues and clarifying the mechanics with market participants and the regulators,” said Pritchard.