Cboe Clear first CCP to connect to DTCC’s CTM tri-party matching workflow

DTCC announced it is working with Cboe Clear Europe to deliver an enhanced post-trade workflow for over-the-counter (OTC) cash equities trades to help increase settlement efficiencies across UK and European markets. The service will bring OTC cash equities trades into Cboe Clear Europe’s cleared environment, which can then be netted against on-exchange transactions for settlement purposes, delivering potentially significant efficiencies.

CTM is DTCC Institutional Trade Processing’s (ITP’s) central matching service for cross-border and domestic transactions across multiple asset classes, including OTC and on exchange cash equity transactions, with over 6,000 clients in more than 80 countries.

As part of this initiative, DTCC and Cboe Clear Europe will develop a proof of concept that links DTCC CTM’s tri-party trade matching workflow with Cboe Clear Europe. This connection will allow prime brokers to receive a golden copy of transaction details when a match is achieved between a hedge fund and executing broker via DTCC’s CTM service. Once the prime broker enters into this tri-party match, CTM automatically sends those matched trades to the CCP, providing netting and clearing benefits to mutual clients.

The new workflow will help reduce operational and settlement risk, as well as post-trade friction as additional markets consider and prepare for accelerated settlement.

“We are pleased to be working with Cboe Clear Europe on this important initiative to bring greater post-trade efficiencies to the industry as the global markets look to accelerate to a T+1 settlement cycle. Cboe Clear Europe’s extensive venue coverage combined with CTM’s large client base will deliver increased operational efficiency and netting opportunities across European trading venues,” said Val Wotton, managing director and general manager at DTCC Institutional Trade Processing, in a statement.

“We are excited to be the first CCP to connect to DTCC’s CTM tri-party matching workflow,” said Vikesh Patel, president of Cboe Clear Europe, in a statement. “This joint solution enables us to bring greater efficiencies to our clients, helping to optimize their current post-trade workflows and operational processes as the global financial markets look to accelerate settlement cycles.”

The benefits of this initiative include reductions in post-trade processing time, risks associated with OTC transactions and settlement costs between executing brokers and prime brokers. It is anticipated that the joint solution will also help facilitate a reduction of capital requirements when moving from OTC to CCP settlement as well as lower trade fails and defaults.


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