This Week: Nasdaq/FIA Tech, DTCC, Acadia, and more

Nasdaq to integrate clearing platform with FIA Tech’s Trade Data Network

Nasdaq will soon contribute post-trade data from its clearing platform, Real-Time Clearing, to the Trade Data Network, a golden source of clearing activity run by FIA Tech. The Trade Data Network gives market participants the tools to improve middle- and back-office processes, including trade-date clearing, give-ups, fee and commission management, and eliminating duplications.

Post-trade data for exchange-traded derivatives is highly fragmented between central counterparty clearing houses, which often collect and present data differently. Through the Trade Data Network, CCPs stream data to a single location, where it is accessed by the clearing participant and their client, giving both parties transparency on the status of their trades across multiple CCPs.

Nick Solinger, CEO at FIA Tech, describes the Trade Data Network as a safe escrow of all the data that is exchanged between the clearinghouse and clearing member. “What we construct is a single trade lifecycle that shows the client exactly where their trades are in that lifecycle, kind of like package tracking on DHL,” he tells WatersTechnology.

Access to this data improves operational resiliency (allowing market participants to recover data if the clearing member or CCP goes down) and drives standardization (helping to benchmark clearing brokers and identify bottlenecks).

On a good day, Solinger says, around 2-3% of exchange-traded derivatives transactions might experience a processing issue. “For the clients, it’s often difficult to know where that issue originates. Is it something that went wrong with their order as it executed? Is it something that went wrong in the back office of their clearing firm? Was it something that was wrong with the buy-side firm’s systems not sending post-trade data the right way? All those pools of data historically have been separate silos, and they only get joined up with duplicative reconciliations and matching tools,” he explains.

Gerard Smith, head of post-trade product strategy for Nasdaq’s financial technology business, tells WatersTechnology that buy-side customers, in particular, often seek greater transparency on the processing of their trades. “Typically, a buy-side participant and their broker can be active in upwards of 30 different markets. If you’ve got 30 different markets all doing more or less the same thing, but in slightly different ways, that causes friction and it drives up cost,” he says.

The addition of Nasdaq to the network is significant because of its market share—it powers the largest number of listed and OTC CCPs. “In particular, they cover a lot of markets that are the regional or national derivatives exchanges all around the world. So in terms of extending our global reach, they really were the natural and critical partner for us to establish,” Solinger says.

DTCC sees same-day affirmations rise after T+1 go-live

This week, North America moved to an accelerated settlement cycle, with transactions settling by the day after trade date. The Depository Trust & Clearing Corporation, which settles the vast majority of securities transactions in the US, has pointed to higher same-day affirmation rates as evidence of a smooth transition. The organization says that 95% of trades were being affirmed on trade date as of May 29, compared to just 73% at the end of January this year, before the switch.

Prime broker affirmation rate stood at 98.6%, up from 81% in January, while custodian or investment manager affirmation rates were 84.3%, up from 51% in January.

Meanwhile, fail rates for continuous net settlement were down to 1.9% on May 29, below the May average of 2.01% for T+2 settlements.

Clearing fund requirements are also down, according to DTCC. In a T+1 environment, the NSCC Clearing Fund decreased to $9.1 billion, down 25% from the past month’s average value of $12.2 billion in a T+2 environment.

Acadia updates Open Source Risk Engine, including GPU compatibility

Acadia, a provider of risk management services for the derivatives industry, has announced the 12th release of its Open Source Risk Engine (ORE), a framework for pricing and risk analysis based on the open-source library QuantLib.

The newest release of ORE completes a financial instrument rollout across all risk classes covered by the service: commodity derivatives, credit derivatives, interest rate and bond derivatives, and hybrid products represented using scripted payoffs. The update also comes with extensions of market risk and initial margin analytics, including stress testing in the par rate domain, historical simulation VaR, backtesting, P&L and P&L explain, XVA stress testing and sensitivity analysis.

The update also allows the use of Adjoint Algorithmic Differentiation (AAD) to compute sensitivities, and supports the use of GPUs to parallelize computations.

Ouinex selects Netdania to build crypto trading platform

Blockchain solutions vendor Ouinex has chosen trading software and analytics provider Netdania to power its cryptocurrency trading platform. The collaboration will keep Netdania’s interfaces, but use Ouinex’s backend technology.

Apex Group renews partnership with NeoXam for portfolio management

Following its acquisition of Maitland in December 2022, Apex Group has announced that it will continue deploying NeoXam’s portfolio management solution in its South African offices. In a press release, Apex said that it hopes to expand its presence in South Africa.

NeoXam’s PMS offers holding analysis of real-time and historical data, order generation and routing, and pre- and post-trade compliance checks.

ISITC launches executive leadership committee

ISITC, a trade organization for financial services professionals, has announced the formation of an Executive Leadership Committee (ELC). The committee will work closely with the board of directors, supporting ISITC’s working groups, forums, task forces, and staff.

Inaugural members of the ELC include:

• Erica Borghi, former ISITC chair of the board, currently a partner at EMR Consulting Partners.
• Jason Brasile, a vice president in the product management group at State Street.
• Jocelyn Flaherty, director of business event marketing for DTCC.
• Lisa Iagatta, Director of Operations at WisdomTree.

The ELC’s efforts will focus on areas such as the new way of working, emerging regulations, digital assets, ESG, and the shortening of the settlement cycle.