New York-based Global Electronic Markets (GEM) has licensed the trade comparison component fof its FpML Mediator software to T-Zero, the credit derivatives trade affirmation platform.
The integration of the software will enable T-Zero’s buy-side clients to perform trading activities such as assignments and early terminations on Credit Default Swap (CDS) trades with the assurance that they are in synchronization with the trade state maintained by the Depository Trust Clearing Corporation (DTCC)’s Deriv/SERV derivative trade confirmation service.
T-Zero has integrated the FpML Mediator trade comparison component with an existing service that is in place with numerous buy-side and dealer clients. When a T-Zero client wishes to perform a transaction on an existing CDS, T-Zero retrieves the deal’s details from DTCC and uses GEM’s component to compare the client’s version of the trade with that retrieved from DTCC. T-Zero says this fresh enhancement will save clients the effort of searching for the applicable trade and minimize the operating risk of selecting the wrong trade.
The full version of FpML Mediator provides automated trade matching and rule-based trade validation of OTC derivatives and other financial instruments, enabling market participants to minimize mismatches and reduce the time frame for processing. The software supports any OTC instrument that has an FpML protocol or extension, such as IRS, Credit Default Swaps (CDS) and Equity Swaps. It also supports cash equity or fixed income instruments that can be identified with a CUSIP, ISIN or other standard identifier.FpML Mediator can also perform high-speed matching without requiring any shared fields, cross-version reconciliation, and support for break workflows.
“We recognize the challenges faced by our clients in maintaining position records for the ever-expanding volume of CDS and are always exploring ways to add efficiencies for our clients in the trade and post-trade processes such as Novations and Terminations,” says Mark Beeston, CEO of T-Zero. We are first using the matching component of FpML Mediator to add efficiencies for our clients’ CDS post-trading processes, and then over time we plan to extend the use of the product to other instruments and purposes.”
“Trade confirmation and position reconciliation for OTC Derivatives remain complex problems that many firms could manage manually when volumes were smaller. In today’s environment, financial institutions are finding that tools such as FpML Mediator and the T Zero service are essential to keep pace with the volume and reduce operational risk,” adds Brian Lynn, CTO of GEM.