Markit. a provider of financial information services, has launched an FX trade confirmation service, which matches FX option trade terms to generate legally binding trade confirmations that are recorded centrally, allowing counterparties to manage trade lifecycle events more efficiently.
Citi and JP Morgan were the first to confirm FX options trades using the new service which is part of the MarkitSERV trade processing platform. More than 50 asset managers are among the firms recently signed to use the service.
Markit’s service also provides electronic, auditable tools for managing options exercise, updating records dynamically. This helps reduce risk by replacing manual processes such as chat, email or phone.
Mike Lawrence, managing director, chief administrative officer, Foreign Exchange and Local Markets at Citi, says: “The bilateral confirmation process plays a central role in mitigating operational risk. While the cash FX market has well established automated confirmation practices, it is encouraging to see innovation in more complex products and new tools that help the industry become more efficient in managing the post trade requirements of FX derivatives.”
Claudia Jury, cohead of Currencies & Emerging Markets at JP Morgan, says: “This type of initiative helps to increase efficiency and mitigate operational risks within OTC derivatives and creates mutual benefit for the banks and their clients.”
Conrad Kwok, managing director, FX Derivatives, DBS Bank says: “Centralising the management of FX options will help reduce operational risk and lower costs for banks. The market will benefit from the ability to move current manual processes to an electronic platform. This service integrates trade confirmation with exercise management and that is an innovation we welcome.”
Eric Teo, cohead of Investment Operations at Alphadyne Asset Management, says: “The ability to centrally match and confirm FX options via MarkitSERV – which we already use for our rates workflows – will help us manage the post trade lifecycle more efficiently.”
Matthew Hill (pictured), director and head of Markit’s FX trade confirmation service, says: "The pace of innovation in trade execution must be matched by advances in post trade processes and we are pleased to have worked with the industry to develop this new service for the FX markets. We are committed to helping our customers find efficient solutions to operational challenges and will soon expand this confirmation service to additional FX products.”
