Omgeo and the Depository Trust & Clearing Corporation (DTCC) are to establish a user-governed global repository to store and communicate the “golden copy” of standing settlement instructions (SSIs).
This undertaking is part of an overall effort to standardise and centralise key client reference data functions and place them under user governance.
Omgeo ALERT, a web-based database for the maintenance and communication of SSIs, will serve as the foundation for this service. ALERT will be the industry-wide SSI repository and communication hub, coordinating and distributing SSIs between trade counterparties and supporting settlement across all markets and asset classes globally.
The objectives of the initiative include:
1) Promoting 100 per cent compliance with local market standards and SSI data quality by enabling global custodians and prime brokers, the ultimate owners of SSI data, to update and maintain accurate “golden copy” SSI details automatically on behalf of their clients.
2) Providing “open access” by establishing standard interfaces to make the ALERT SSI data available to any third-parties such as broker/dealers and third-party transaction service providers meeting objective criteria set forth by user governance.
3) Establishing a robust SSI exception process to manage and resolve SSI-related errors.
4) Continuing to expand ALERT’s capabilities across asset classes and markets with the aim of near 100 per cent coverage in all major jurisdictions.
The first phase of the SSI initiative will be to enable global custodians and prime brokers to update and maintain accurate SSIs in ALERT. This functionality is expected to be implemented in Q1 2014.
By creating a central SSI communications hub, market participants can consolidate SSI information across all counterparties, matching platforms and asset classes into one database, ALERT, thereby reducing risk and cost.
“The ALERT SSI initiative is a tangible example of the efforts being made by the Industry to standardise and centralize key client reference data functions and place them under user governance, with the result that the post-trade area of the financial system will be more efficient, less risky and less costly,” says Andrew Gray, managing director and head of core business management at DTCC and chairman of Omgeo’s board of managers. “It is well known that inaccurate, non-automated SSIs are a primary reason for trade failures, and this initiative will significantly contribute to significantly improving the control environment in this critical area.”
Mark Bouchea, executive director of product management at Omgeo, says: “Market participants will benefit from even greater efficiencies and cost reduction in trade processing as ALERT is enhanced to deliver on the promise of serving the industry as its SSI communications hub. The ability to access properly maintained SSIs is a key factor in operational risk mitigation, particularly as the global momentum towards shorter settlement cycles increases. The highest degree of accuracy will be needed in order for firms to adhere to shorter settlement time frames.”
ALERT is the industry’s largest web-based SSI database, used by over 1,800 firms globally. The service holds over five million settlement instructions on nearly 500,000 accounts.