1 / 14

BDUG Panel Discussion Omgeo & DTCC Driving Same Day Affirmation Rates:

BDUG Panel Discussion Omgeo & DTCC Driving Same Day Affirmation Rates: Positioning for Settlement Matching & Shortened Settlement Cycles. Industry Campaign to Drive “Trade Date Matching” Multi-pronged effort leveraging pricing, new tools & consultation.

alayna
Download Presentation

BDUG Panel Discussion Omgeo & DTCC Driving Same Day Affirmation Rates:

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. BDUG Panel DiscussionOmgeo & DTCC Driving Same Day Affirmation Rates: Positioning for Settlement Matching & Shortened Settlement Cycles

  2. Industry Campaign to Drive “Trade Date Matching”Multi-pronged effort leveraging pricing, new tools & consultation Omgeo’s multi-year plan to raise SDA rates and lower costs SDA Rates • Prime Brokers • Custodians • Brokers • Institutions • Voice of client • SDA analytics • Billing & usage • Affirmation incentives • Best practice price alignment • Settlement Matching • BCG & DTCC study • SDA & Central Matching • Eliminate reclaims • Shorten settlement cycles • Increase affirmation rates

  3. Omgeo Community TradeSuite ID OTM & CTM SDA: Alignment with Industry Best PracticesIncenting Same Day Affirmations (SDA) & Central Matching Investment Manager Supporting industry initiatives to facilitate settlement finality & shorten settlement cycles – SDA & Central Matching recognized as key building blocks to achieving industry goals . Broker T T T+1,2 T+1,2 94% ($) T+3+ T+3+ 5% 75% n/a 1% ($) 19% Post-Execution Pre-Settlement n/a 38% 6% n/a 51% ($) Custodian 11% n/a ($) T+1,2 T T+3+ n/a ($) n/a n/a n/a ($) n/a n/a ($incentive/transaction) ($) ($) Omgeo’s Affirmation Incentive Program Driving Higher SDA PDQ SETTLEMENT Settlement Performance %* % Omgeo Pricing Incentive** ($) CTM/Central Match Workflow OTM/Central Match Workflow Confirm Affirm Workflow DTCC *Omgeo Internal Data June 2012 (US) **Per billed transaction Omgeo Confidential Effective Date for Omgeo’s Affirmation Incentive Program

  4. Same Day Affirmations Provide Higher Value Implementing price reductions & incentives 6% Miscellaneous: Other DTCC Ineligible Confirms (Fed, Foreign, etc.) * Auto-Affirm Transactions Only Omgeo Confidential

  5. SDA Analysis: Key Omgeo Target SegmentsFocus on the “Affirming Parties” (Institutions & Agents) • Affirmations controlled by Prime Broker • Highly concentrated target group • Highly automated processes • Precedent set for high SDA rates Prime Broker 24% of Total Vol 37% of DTCC Vol • Affirmation rates influenced by Custodian • Very broad client segment • Perception affirmations cost more • IMs not receiving confirms (manual processes, global clients, etc.) Confirm Affirm 24% of Total Vol 37% of DTCC Vol • Affirmations automated by TradeMatch, in most cases • “Auto Affirm” transactions yield highest SDA rates • “Match-only” configuration inhibitor to SDA rates • Allocation and Broker input timing a factor OTM Central Match 17% of Total Vol 26% of DTCC Vol Omgeo Confidential

  6. SDA Analysis: Workflow BreakdownConfirm Affirm vs. Central Match (OTM) Broker Input Rate on T SDA Rate T+2 Rate Affirmation Rates 26% 74%* 100% DTCC Eligible Volume * Includes Prime Broker Volumes Note: Based on August data

  7. SDA Analysis: Prime Broker Low SDA rates, high T+2 rates Top Volume Prime Brokers (Performing Role of Institution & Agent) T+2 Industry Ave Affirmation Rates SDA Industry Ave 1 2 3 4 5 6 7 8 In Random Order Above Average SDA Rate Below Average SDA Rate Above Average T+2 Rate Below Average T+2 Rate

  8. SDA Analysis: Agent BanksAbove average SDA, low T+2 rates Top 10 Volume Agent Banks (Combined Confirm Affirm & OTM Workflows) T+2 Industry Ave Affirmation Rates SDA Industry Ave 1 2 3 4 5 6 7 8 9 10 In Random Order Above Average SDA Rate Below Average SDA Rate Above Average T+2 Rate Below Average T+2 Rate

  9. SDA Analysis: InstitutionsCentral Match driving higher affirmation rates Top 10 Volume OTM Institutions (Central Match Workflow) T+2 Industry Ave Affirmation Rates SDA Industry Ave Above Average SDA Rate Below Average SDA Rate Above Average T+2 Rate Below Average T+2 Rate Top 10 Volume Confirm Affirm Institutions (Agent Affirming as Institution or on Behalf of Institution)) In Random Order T+2 Industry Ave Affirmation Rates SDA Industry Ave 1 2 3 4 5 6 7 8 9 10

  10. SDA Analysis: Increasing SDA in Short Term Initial findings and recommendations Prime Brokers • 3 of top 8 have 89%+ SDA rate - 4 are below average w/high T+1 • Move affirmation timings from early T+1 to late on T • Target 5 high volume clients to achieve above average rates • Exhibits lowest SDA rates, especially “Agent as Institution”, “Agent affirming party” • Work with Custodians to explore inefficiencies • Make recommendations and target potential savings • Target high volume clients to achieve above average rates Confirm Affirm OTM Institutions • Auto Affirm” yield highest SDA but anomalies exist “Match Only” clients yield lowest SDA • Move “Match Only” to “Auto Affirm” & investigate anomalies • Work with Brokers & Custodians to explore inefficiencies • Target low SDA clients to achieve above average SDA rate

  11. Potential SDA ImprovementsTargeting select Prime Broker, Custodians & Institutions 17% Increase

  12. Introducing New Data Service in 2014“Omgeo SDA Analytics” • Guide for Omgeo SDA reviews & client consultation process • Identify weaknesses • Make recommendations • Flexible ongoing client analysis tool • Affirmation rates and performance • Operating efficiencies • Counterparty efficiencies & performance • Determine institutional set-ups & workflows • Workflows (i.e. Confirm/Affirm vs. OTM) • Matching processes, (i,e, “Auto Affirm” or “Match only”) • Affirming party (who did the Affirmation?, Agent or Institution?) • Identify client internal accounts (AIA, BIA, etc.) • Evaluate PDQ settlement rates • Breakdown of delivers vs receives • Identify exemption rates • Clarify TradeSuite ID invoices • Transaction volumes by workflow category, asset class, client type, etc. • Bill types, affirmation discounts, etc.

  13. SDA MISSION: Benefits to the IndustryEye on US market readiness Settlement Matching Efficiencies • Supports settlement finality via “Passive Matching” • Reduces risk of reclaims • Reduces fails & settlement risk • Enables operating efficiencies – middle & back offices SSC Preparedness • Meets requirement for T+1 settlement • Reduces systemic market risks • Enables more streamlined STP • Reduces credit risk Cost Reduction • Omgeo transaction costs • Operational costs – middle and back office • Fails and related financing costs • Cost benefit from SSC (BCG Study)

  14. Thank you Gregory.johnston@omgeo.com

More Related